So if China sells everything to us and we impose tarrifs, they look at their growth rate and think, “sure we can survive a few percentage point drop in growth but I bet the US will hurt more.”
Inflation will be the result of a tarrif war.
I think the imbalance between trade FROM China, and the trade to China, is enormous.
Huge.
China is now for the very first time in over one entire generation, looking at an America saying it is time to play fair.
China has NEVER played fair.
Maybe they will.
We will see.
China was the good guys, back in the last global conflict. They and us, fought the Japanese and suffered greatly from that conflict.
The thing is, now things are MUCH different. China is now a fully developed country.
They produce as much (more actually) than we do. And the trade balance is massively unbalanced.
Trump is the very first politician, in either party, who is saying America needs to produce in America once again.
That is long, long overdue.
China may play well, and this may work itself out, and things will be wonderful.
Or China may insist on continuing to cheat America on the trade front.
Their choice.
Trump will decide, now in 26 days.