In The Lonely Bull

Chess players are very aware that the white pieces do not have all the moves; the black pieces move too.  It might be good for our trade war strategists to be reminded of this.  Our tariffs, trade restrictions, and other moves have been met with responses.  China has been able to off-set some of the effect of our tariffs by letting their currency decline relative to the U.S. dollar.  They have also found other suppliers to supply them with much of what we had been selling them.  The result is that our trade deficit with China has been increasing; it had been $40 billion a month and is now running at $50 billion.

The Bull stated some time ago that we may need to adjust our strategy to prevail in this trade war.  There is no doubt this war has been needed, but we need to find a way to win.  It may be that the U.S. go it alone approach could use some allies.  Many other major economies in the world have many of the same issues with China that we do.  Instead of letting them pick up markets that get taken away from us, we could use their help.  “America First” should not be America alone.

We may want to remind ourselves of our objectives.  It is not managed trade.  We have wanted the same access to the Chinese market that they have to ours.  Our intellectual property needs to be protected with mechanisms for redress.  A level competitive field for our industries is also a must; not subsidized advantage.  Many state-owned companies in China get various forms of subsidy.  Getting China to buy more soybeans does not solve any of these issues.

The Lonely Bull

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