Buddhist Catholic Contemplative Evangelical General Christian Hindu Jewish Latter-day Saint Muslim New Visions Progressive Christian

Beliefs

Topics

Columnists

Resource Library

Research Tools

Video

Podcasts

Thought Readers

Faith In Media Tracker

Newsletters

Ad-Free & Subscriber Log-In Subscription Support

Follow Patheos

Home
Evangelical
Politics and Religion
China’s Weapons in the Trade War

China’s Weapons in the Trade War

Last updated on: April 9, 2018 at 5:45 am by Gene Veith

0 Comments

China’s Weapons in the Trade War 2018-04-07T11:47:05-04:00 Gene Veith

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

President Trump recently slapped $50 billion worth of tariffs on Chinese goods. Whereupon China slapped $50 billion worth of tariffs on American goods. So now President Trump is imposing an additional $100 billion worth of tariffs against China. So China says that it will respond in kind.

This is in line with President Trump’s practice of tit-for-tat, escalating retaliation, of hitting back harder whenever someone crosses him. But so far this has been limited to personal vendettas and insults on Twitter. But now the president is employing the tactic via the American economy.

The president has said that “trade wars are good and easy to win.” Yes, there will be “pain,” he said in response to the latest escalation, but that will be good for us. Maybe.

But trade war may be easy for China to win, due to three weapons that still-Communist country has in its arsenal.

China Finances Our Federal Debt

China is the largest holder of American debt, after our own Federal Reserve, holding $1.7 trillion in U.S. Treasury bonds. A couple of months ago, a false rumor that China was going to slow or halt its purchases of U.S. Treasuries sent the stock market into a nosedive.

But if China should decide to unload its Treasuries and stop buying them, the U.S. would be in trouble. That is being described as China’s “nuclear option.” And the timing is not good. Thanks to the budget and spending plan recently passed, the United States will government will be running up an even bigger debt and will need China to buy even more Treasury notes.

China Has a Monopoly on Rare Earth Metals

One bright spot in American manufacturing is electronics. To build heavy-duty batteries, smart phones, hard drives, lasers, wind turbines, radar, smart bombs, and other sophisticated military equipment, you need rare earth metals (dysprosium, neodymium, gadolinium, and ytterbium). The United States actually has quite of bit of those raw materials, but their processing into usable form is difficult and hard on the environment.

China, which doesn’t have to worry about environmentalists, has cornered the market on rare earth metal production. We, along with the rest of the world, are totally dependent on China for our supply.

The United States used to have a company that processed rare earth metals, but under the Clinton administration, which permitted the deal to go through, it was purchased by China. Still, the company operated one plant in Indiana. But under the Bush administration, which permitted the deal to go through, the factory was closed and production shifted to China.

According to the report linked above, China has already played the Rare Earth card in a trade dispute with Japan, so it isn’t afraid to use this particular weapon.

China Doesn’t Have to Worry About Voters

But the biggest advantage China has in a trade war is that, being a Communist dictatorship, it doesn’t have to worry about the economic impact on its citizens. America, on the other hand, does.

If a trade war produces “pain,” as the president says it will, Chinese consumers who have to deal with shortages and higher prices will not vote the Communist regime out of office, since there is no voting in China. Any consumer protest would only risk its participants’ social credit scores.

The American public, though, does not suffer “pain” stoically. Higher prices will trigger inflation, and a reduced market for American goods will make lots of people lose their jobs.

Tariffs on Chinese goods will show the public just how much we depend on that country for good that we take for granted, from clothing to television sets to everything made with steel (automobiles, buildings, bridges). The cost of tariffs is always passed along to consumers, unless the price becomes prohibitive, in which case the product is no longer available. This will mean “pain” for Walmart shoppers, new car buyers, small business renters, infrastructure investors, and just about everybody.

Tariffs on American goods will cause “pain” especially to farmers, who have become dependent on China’s vast market for food products. Currently, lots of other countries have agricultural surpluses that can easily fill the gap, should China decide to go elsewhere to buy food. Also factory workers in the manufacturing sectors that China hasn’t already supplanted–heavy equipment, sophisticated electronics, consumer goods–will suffer “pain” if China switches to other suppliers.

Americans put through this “pain” are also voters. The farm states play an important role in electing Republicans, but will they re-elect the Republicans who violated traditional Republican free-trade principles and whose policies are putting farmers out of business? And what about the factory workers who rallied to Trump’s promise to make American great again? A trade war could cause working class voters to go back to the Democrats.

Yes, protectionist policies theoretically could spark American-made alternatives–such as rare earth metal processors–but that would take time. The midterm Congressional elections are in November.

Yes, Democrats tend to also favor protectionist policies, so angry consumers and workers would have little choice. But chances are, their wrath will be directed against incumbent Republicans.

Notice how the American government’s economic policies over many administrations–deficit spending, allowing corporate monopolies, inattention to national security implications–have worked to give China power over us.

Photo: President Xi Jinping, Kremlin.ru [CC BY 4.0 (http://creativecommons.org/licenses/by/4.0)], via Wikimedia Commons

President Donald Trump

Previous Post

April 6, 2018

A Close Reading of Leonardo's "The Last Supper"

Next Post

April 9, 2018 Not the Empty Tomb, but the Risen Christ

Recent Comments

0 | Leave a Comment

"I know wired earbuds are making a comeback (I never stopped using them as I ..."

reg

Luther on Tools

"VCRs, tape decks, and cassette players are all having a revival among a segment of ..."

Tom Hering

Luther on Tools

"As a (retired) lawyer I see potential liability from sharing things like power or sharp ..."

reg

Luther on Tools

"I am not sure the items you mentioned, though disused, discontinued, discarded, could be considered ..."

reg

Luther on Tools

Browse Our Archives

Select a Category America Apologetics Art baseball Bible Blog Christ Church crime Culture Economics Education Ethics Family Food Football Government History Holidays Holy Week Humor International Islam Language Law Life Issues Literature Media Medicine Movies Music Nature News Personal Philosophy Politics psychology Reformation Religions Sacraments Science sex Social Science Sports technology television terrorism Theology Uncategorized Vocation war

Select a Month October 2026 September 2026 August 2026 July 2026 June 2026 May 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 September 2025 August 2025 July 2025 June 2025 May 2025 April 2025 March 2025 February 2025 January 2025 December 2024 November 2024 October 2024 September 2024 August 2024 July 2024 June 2024 May 2024 April 2024 March 2024 February 2024 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 June 2022 May 2022 April 2022 March 2022 February 2022 January 2022 December 2021 November 2021 October 2021 September 2021 August 2021 July 2021 June 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007

TAKE THE

Religious Wisdom Quiz

Who was the ruler of Egypt during Joseph's time?

Select your answer to see how you score.

Cyrus Caesar Nebuchadnezzar Pharaoh

Books by This Author Books by Gene Veith

See All Titles »