Big Trouble in Chinese Trade

As our poorly-planned trade war with China continues and intensifies, it’s important the we know exactly what we are fighting for.  Unless we know that, it will be impossible to know if the costs are worth the victory.

Should we win this trade war (looking less and less likely with every turn), it might end up being a Pyrrhic Victory.  Pyrrhic was a Greek king who fought the Romans a couple of centuries before the birth of Jesus Christ.  He won a very large battle, but lost half of his army doing it. “If we are victorious in one more battle with the Romans, we shall be utterly ruined,” he said and then set sail for home.

This trade war (coupled with other idiotic trade disputes like tariffs on Canadian aluminum under the hilarious guise of national security concerns) is devastating our ag economy.  These Trump Tariff Taxes are going to borne by our citizens and much of the burden will fall upon those whom can least afford it.  Being labeled as an undependable supplier after the Carter Afghanistan Embargo with Russia lingered for two decades.  These actions by President Trump are likely to paint our America as a bad trading partner for an entire generation even if the wars end tomorrow; which they will not.

One of the main concerns the President has with China is something called “forced technology transfer”.  If you have a business and you want to sell your product directly to Chinese people and businesses, China insists that you form a joint-venture with Chinese citizens.  That way there is always some Chinese ownership benefiting from sales inside China.  Inside these forced partnerships, they insist on total transparency.  That includes total access to all of your business’s records.

Through these forced partnerships, Chinese businesses get access to all the technology from every company doing business in China.  Patent protection means nothing and secrets are not kept.

But this is where we need to back up a step.  If IBM, Ford, Microsoft, 3M and Lockheed/Martin want to sell in China, nobody is forcing them.  In reality, companies that go there to do business go with full knowledge of China’s rules and regulations.  Nobody makes them set up business in Chin
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They want access to that huge population, but the “forced technology transfer” is known well beforehand.

China is a “bad actor” on the international trading stage.  That is not in question.  The questions go deeper.  Shouldn’t we have lined up allies before starting a trade war with a series of Tweets?  Shouldn’t we have had some idea of strategies before we set out to ruin our ag export markets for an entire generation?  Shouldn’t we have had some idea what our objectives should be and what attaining those objectives might cost us?

We should also remember that China owns much of our national debt.  They could call debt at any time and that gives them a very powerful card to play.  When we owned most of Europe’s debt after WWII, President Eisenhower used that leverage to end the Suez Crisis.  England and France had no choice but to concede.

The fear is that we are playing an international trade game of chess with a president who isn’t even capable of playing checkers.  From the looks of the opening moves, President Trump looks more like the Tic-Tac-Toe type…and only if he is always allowed to move first.  He seems to be a bully who just blusters until he gets his way or else he walks away.
Well, walking away from this is no longer an option.  Tariff taxes are rising as commodity prices are dropping.  He firmly secured the damage.  Now can he attain the objectives?  Is the damage worth the objectives when companies always knew about forced technology transfers?

Donald Trump simply has to be limited to being a One Term President.  He belongs with Nixon, Harding, Hoover, Pierce and Buchanan on some monument that is the opposite of Mount Rushmore.  A bully playing Tic-Tac-Toe does not belong in the Oval Office.

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