Trump’s China tariffs will dramatically increase prices in the US – Harry Broadman

 

Harry Broadman

While the stiff inflation rate was one of the key reasons US voters preferred Trump over Harris, Trump’s announced China tariffs would increase the costs for US consumers, warns Harry Broadman, former U.S. assistant trade representative in the George H. W. Bush administration in Dow Jones.

Dow Jones:

Among the biggest uncertainty is the issue of tariffs, what products they will hit and what technology sectors could be hurt. The bottom line, though, on tariffs is that they will lead to increased goods prices.

“Trump’s plans will make us worse off economically,” said Harry Broadman, a principal at WestExec Advisors, senior economist at the Rand Corp. and former U.S. assistant trade representative in the George H. W. Bush administration. “In the short run, the consumer or individual will pay higher prices for imports and that means the cost of what they are buying has risen significantly. That means you are going to have inflation, people will find their disposable income decreased.”

During his first term in office, Trump’s administration imposed tariffs on a wide range of products from China, but the tariffs he has discussed for his next term are even higher and could be more detrimental…

During his first term in office, Trump’s administration imposed tariffs on a wide range of products from China, but the tariffs he has discussed for his next term are far higher and could be more detrimental.

“It would be one thing if Trump said, ‘I am going to work with the G7 leaders’,” Broadman said. “That is what needs to be done, but instead individual country leaders become susceptible to sweetheart deals with China.” He said if the U.S. does not work with other countries, China will retaliate. “You do it arm-and-arm with allies. Because what China will do is play off importing nations off other importing nations.”

More in Dow Jones.

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Why Chinese prefer Trump over Harris – Shaun Rein

 

Shaun Rein

According to Shanghai-based analyst Shaun Rein, most Chinese prefer Trump over Harris because they expect Trump to be more transactional, while they feared Harrid would lead a more ideological struggle, he tells CNBC.

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What means Trump’s victory for the China trade – Ashley Dudarenok

Ashley Dudarenok

Now the USA has elected Donald Trump as its next president, traders in China are bracing for another backlash, reports trade expert Ashley Dudarenok on its LinkedIn page. “Trump’s proposed 60% tariffs on Chinese imports + 10-20% on other global goods would set US tariff levels at their highest since the 1940s,” she writes.

Ashley Dudarenok:

It’s official. Trump wins the US election. 🙈 Before the win was official, “Trump announces win (特朗普宣布胜选)” and related hashtags had already racked up 420 million views on Douyin. Many likened the election to a gender reveal party, with one comment saying, “Congratulations USA, it’s a boy!”  Meanwhile, many are focused on real impacts, asking, “Will gold prices drop?” 👇 More below.

With Trump back in office, China’s economic policymakers are bracing for a new wave of trade policy challenges.

📊 According to China Economist, a Trump victory could require China to increase fiscal stimulus by 10-20%. This is more than what might be needed under a Harris administration.

📊 Trump’s proposed 60% tariffs on Chinese imports + 10-20% on other global goods would set US tariff levels at their highest since the 1940s.

📊 Out of 27 Chinese exporters with at least 15% of sales in the US that Reuters spoke with, 12 plan to speed up relocation if Trump returns to the White House.

📊 Four other companies, still based entirely in China, would open factories overseas if Trump raised tariffs. The remaining 11 had no specific plans but were concerned about losing US market access.

✔️ China’s approach will be crucial for its export sector and global supply chains as it navigates this new chapter in US-China trade relations.

✔️ The China’s National People’s Congress Standing Committee is meeting in early November to finalize a stimulus plan size, likely making a decision by Friday, November 8.

More at LinkedIn.

Ashley Dudarenok is a speaker at the China Speakers Bureau. Would you like her to be at your meeting or conference? Contact us or fill out our speakers’ request form.

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The current state of US-China relations – Victor Shih

 

Victor Shih (left) at the discussion

China expert Victor Shih, Director of the 21st Century China Center at the University of California San Diego School of Global Policy and Strategy, discusses the current state of US-China relations with Bill Gertz of the Washington Post, covering questions like, “Is China an existential threat or a competitor?” and “Is China trying to replace the US as hegemon?” at PNYX.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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New China hands have limited opportunities – Victor Shih

 

Victor Shih

Tense relations between China and the US, a pandemic, and limited access to the country are firmly limiting a new generation of China hands to explore a career in the second economy of the world, says China professor Victor Shih in the South China Morning Post. “China was [once] seen as a kind of land of opportunity for young foreigners. That is no longer the case,” said Shih,

The South China Morning Post:

Victor Shih, a China scholar at the University of California San Diego, said reduced economic opportunities, combined with China’s zero-Covid approach, have put foreigners off China who might otherwise be interested in the country.

“China was [once] seen as a kind of land of opportunity for young foreigners. That is no longer the case,” said Shih, who regularly visited the mainland for decades until the pandemic. He described the “golden period” for aspiring China experts as spanning the 1990s to 2017-2018 when foreign nationals with “some Chinese skills” and China knowledge had ample job opportunities in Hong Kong, Macau and mainland China.

Shih echoed the view that Beijing’s restrictive entry policies during the pandemic have made China a less attractive place to be. Indeed, a three-month mass lockdown in Shanghai from April 1 to June 1 prompted many foreigners to flee the commercial hub.

More in the South China Morning Post.

Victor Shih is 

How China-US relations keep on deteriorating over the decades – Kaiser Kuo

 

Kaiser Kuo (right)

China watcher Kaiser Kuo describes at the Varn Vlog how US-China relations went downhill since the 2008 financial crisis, and how that did not improve after President Joe Biden took over from Donald Trump. Also: how the Red Deal in China is changing domestic relations in China.

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Full reshoring is not an option for US companies – Sara Hsu

 

Sara Hsu

Former US president Trump tried to get US companies to return from China, but reshoring has been marginal compared to other logistic disruptions, says financial analyst Sara Hsu in an interview with the China Business Review.   “The focus has shifted away from reshoring to rightshoring,” she adds.

The China Business Review:

CBR: Many have said that uncertainty is the new normal. How does a company go about de-risking its supply chain to account for the unknown?

Dr. Hsu: There are several actions companies can take to de-risk their Chinese supply chains. The first is to map their supply chains across tiers. This will help firms to understand the extent to which they are dependent on particular suppliers. More firms are doing this now in order to prevent bottlenecks. The second action that companies can take is digitizing the supply chain. This can improve data collection and end-to-end visibility by tracking raw materials to the finished product, as well as vehicles that transport the goods. Digitization can be used throughout a variety of processes, including inventory management, finance, logistics, operations, quality control, and sales. The third is to model risk assessment under different scenarios in order to identify vulnerabilities and potential risks. This can help firms to prepare for the worst-case scenario, which after COVID-19, seems more like a possibility than in the past. Addressing potential risks allows companies to remain agile even during external disruptions. Finally, US firms may attempt to diversify outside of China. Having the ability to move production to another location if needed can improve supply chain resilience.

CBR: Supply chain shifts away from China have been very a slow creep rather than a mass exodus, with most companies not planning to leave any time soon. Do you see reshoring initiatives accelerating, slowing down, or continuing gradually in the future?

Dr. Hsu: I don’t think full reshoring is a serious option for many US multinationals due to generally higher labor costs. However, I think companies will diversify outside of China to become more agile in their supply chain management and reduce the possibility of disruptions. Some firms have already diversified to Vietnam, Thailand, Malaysia, and Mexico. Vietnam is particularly popular as another supply chain destination due to its low labor costs, while Thailand has improved its ease of doing business, streamlining the process for obtaining construction permits and improving minority investor protection. Malaysia has a strong legal system and well-developed infrastructure. Mexico benefits from its close proximity to the United States and “trusted partner” status for customs. Generally, especially after the pandemic, the focus has shifted away from reshoring to rightshoring, which focuses on placing production in locations that provide better efficiency and lower costs. This means that some critical processes may remain in the United States while others are outsourced to other countries. Rightshoring is leading to lower inventory costs as well as, in some cases, better intellectual property protection. This trend also produces lower lead times, which can help firms address the increasing demand for rapid product fulfillment.

The China Business Review.

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Biden follows – wrongly – Trump’s line on China – Ian Johnson

 

Ian Johnson

The new US president Biden is following closely his predecessor’s approach on China. Wrongly, says long-term China correspondent Ian Johnson in an opinion piece at the New York Times. “Washington’s plan appears to be to wait for the results of the comprehensive review of America’s national security policy toward China that Mr. Biden announced in February. This caution is a mistake,” says Johnson.

Ian Johnson:

Mr. Biden’s most effective attempt so far to reorient America’s China policy has been to re-energize U.S. alliances and international commitments. At a virtual summit last week, Mr. Biden and the leaders of Japan, India and Australia stressed the need for coordinated action to counterbalance China’s growing assertiveness in the Indo-Pacific region.

But that leaves unresolved almost all major bilateral issues, including: how to deal with the trade sanctions imposed by the Trump administration; China’s military expansion in the South China Sea; how to handle weapons sales to Taiwan; or what to do about Chinese tech giants, such as Huawei, that offer Western countries technology that is cheap but may be a Trojan horse for Chinese intelligence services.

Washington’s plan appears to be to wait for the results of the comprehensive review of America’s national security policy toward China that Mr. Biden announced in February. This caution is a mistake.

What’s needed are immediate low-rent measures to reverse the downward spiral in the two countries’ relations.

One, the Biden administration should offer to restart the Peace Corps and Fulbright scholarship programs in China, two key ways that Americans have learned about the country over the past decades. The Trump administration canceled both as part of an effort to isolate China. All that accomplished instead was to hurt America’s ability to train a new generation of scholars and analysts.

Two, in exchange for this, the U.S. government should stop vilifying China’s Confucius Institutes as sinister propaganda machines. These are largely cultural centers and much like educational outposts from other countries trying to push a good image of themselves. American universities should prevent Confucius Institutes from offering accredited courses — no university should allow a foreign government to set its curriculum — but the centers should be able to function off campus, much like Germany’s Goethe Institutes or British Councils do.

Three, the Biden administration should allow back into the United States some of the scores of Chinese journalists expelled by the Trump administration last year — provided that Beijing also agrees to welcome again accredited journalists from American news organizations and commits to not harassing them.

The Trump administration’s measures gutted America’s ability to understand China. China, by contrast, still has many reporters and diplomats, and tens of thousands of students in the United States.

Four, the U.S. government should lift restrictions on visas for Chinese Communist Party members wanting to travel to the United States. The policy was crafted to protect Americans from the C.C.P.’s supposedly malign influence. But the party counts some 90 million members, the majority of whom are civil servants doing normal jobs, not followers of some evil cult that needs to be kept at bay.

Finally, China should be invited to reopen its consulate in Houston, which the Trump team closed last year in retaliation for alleged espionage. In return, the Chinese government would allow the United States to reopen its consulate in Chengdu, which Beijing had closed in retaliation.

These are small measures, but they could be meaningful confidence-building steps and pave the way for more constructive exchanges later on thornier problems, such as the threat of war with Taiwan, conflicts in the South China Sea or industrial espionage.

Also: None of these measures are gifts; they require something in exchange. As such, they would serve as a test of Beijing’s willingness to improve relations. If Beijing turns them down, Washington will know much more clearly the scope of the problem.

Modest moves might seem less decisive than acting tough, but they are what, in the end, makes realpolitik real.

More at the New York Times.

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US President Biden will offer more certainty than Trump – Harry Broadman

  

Harry Broadman

Former White House official Harry Broadman looks at how US President Biden will act differently than his predecessor Trump. Biden will seek more alliances to face China on the international field, he tells at Bloomberg. Biden will listen to others, unlike Trump, Broadman adds.

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China stock at US exchanges: certainty is needed – Harry Broadman

 

Harry Broadman

Former US President Donald Trump tried to derail relations with China by banning stocks from Chinese companies at US stock markets. Now, under President Joe Biden, certainty for stock markets including the Chinese shares is key, says former White House advisor Harry Broadman at US News. Although there might be some other dangers.

US News:

The use of investment bans on Chinese stocks is a “curious tool,” says Harry Broadman, managing director with Berkeley Research Group, who has served in two White House administrations. He was chief of staff of the president’s council of economic advisers under President George H. W. Bush and then served as a U.S. assistant trade representative under President Bill Clinton.

“One would think having U.S. investors in [Chinese] firms could produce salutary outcomes for people interested in reforms,” Broadman says.

“You don’t need a Ph.D. in economics to understand that if you’re going to continue to change the regulatory treatment, including the listing and delisting of firms,” uncertainty will follow, Broadman says…

Another risk that’s generally well understood by investors is the tight control that Chinese President Xi Jinping and the Chinese Communist Party have over industries within their borders. Investors can’t expect to challenge unfair government policies with sound legal maneuverings as they might in the U.S.; China’s whims instantly become reality – just ask Jack Ma, the majority shareholder in Ant Group, whose IPO was unceremoniously put on ice in the wake of Ma’s criticism of Chinese regulators.

But there’s another risk that’s a bit more alarming, says former U.S. diplomat Broadman, and it’s arguably a much bigger concern for U.S. investors than any future delisting threat.

“I’ve been surprised that U.S. regulators over the years have treated Chinese firms and investments as being of the same quality as firms from the EU or Brazil,” Broadman says. “The notion that these firms are following international accounting rules is a bit of a fantasy,” Broadman says of Chinese stocks in general.

“The reason why U.S. regulators are interested in allowing these Chinese firms to be listed is you’ve got U.S. stock exchanges that are in competition (with other international) equity markets,” Broadman says.

“You come to the age-old question of public policy and what’s the right call to make. But I see no real discussion of the quality of their accounting. And I think it’s a big issue,” Broadman asserts.

More at US News.

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Stopping CCP members from entering the US is not a smart move – Victor Shih

 

Victor Shih

In a last-ditch effort to mess up the relations between China and the US, the Trump administration issued rules to prevent members of the communist party to enter the US. Political analyst Victor Shih explains in Politico why that is not a smart move.

Politico:

Beware unintended side effects of the new U.S. rules on CCP members entering the country. A White House rule announced earlier this month limiting Chinese Communist Party members to short, single-entry visas to the U.S. won’t have much practical impact with travel all but shut down, but as both countries’ populations get vaccinated and travel resumes, its practical implications could be problematic. Making it harder for CCP members to enter “would force U.S. businesspeople, academics and officials to go to China more often to meet with their counterparts, potentially exposing them to even more Chinese intelligence and influence efforts,” Victor Shih, political economy professor at U.C. San Diego, tells China Watcher. “Besides, I am sure the Chinese government would provide the real spies with covers that preclude Party membership, so a membership litmus test really doesn’t tell you much.”

— Better idea: Allow CCP members to renounce their Party. “Given that a good number of the smartest and most educated people from China had been inducted into the party early on, the U.S. should provide a path for citizenship even for party members,” Shih says. “Beyond signing a legally binding document prohibiting them from participating in party activities, they also can fill out a detailed questionnaire on how they joined the party. This would allow the U.S. to continue to naturalize the best and brightest from China without the cat and mouse game of people lying about their party membership.”

More in Politico.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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From teenage Chinese girls to Donald Trump: the Tiktok story -Matthew Brennan

 

Matthew Brennan

China internet guru Matthew Brennan summarizes his bestseller Attention Factory: The Story of Tiktok and China’s Bytedance and explains how Tiktok developed from a successful domestic tool for millennials into a short-video platform that even caught the attention from US President Donald Trump.

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Biden will not reset Trump’s China policy – Arthur Kroeber

 

Arthur Kroeber

The newly elected US president Joe Biden will reset some of Trump’s policies, like on the climate, but economist Arthur Kroeber says Biden will follow his predecessor on China, he tells in Bloomberg.

Bloomberg:

Anyone hoping for a full reset of Trump’s tariffs or technology restrictions will likely be disappointed as Biden will recalibrate rather than rip up those policies, according to Arthur Kroeber, a veteran watcher of China’s economy and a founding partner at research firm Gavekal Dragonomics.

“President-elect Joe Biden has pledged to ‘restore’ the U.S., implicitly to its pre-Trump state,” Kroeber wrote in a note. “This will not be possible for China policy.”

More in Bloomberg.

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Trump’s last ditch effort to ban China’s listed companies – Paul Gillis

 

Paul Gillis

In a last-ditch effort to cross China and hinder the president-elect Biden to set his own course, US President Trump has introduced regulation to ban Chinese companies from listing at US stock markets. Accountant specialist Paul Gillis looks at the ChinaAccountingBlog at the possible effect.

Paul Gillis:

The Wall Street Journal says the proposed regulation is expected to be issued for public comment in December but would be finalized under the Biden administration. It appears to be part of Trump’s attempt to rush through policies before he is removed from office, betting that Democrats will not have the political will to reverse them.

There are no details available at this time. The SEC and PCAOB have always had the power to do this, but it was considered a ‘nuclear option” that would be a step too far for the regulators. Congress stepped in to propose legislative changes, and the President established a working group that made similar recommendations as the proposed legislation.

I expect the proposed regulation will have a long transition period of at least a year. In the end I expect the issue will be resolved through normal diplomacy, with China agreeing to allow inspections by the PCAOB.

More at the ChinaAccounting Blog.

Paul Gillis is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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