I was blown away when I traveled to the Midwest for my job setting up the interior of a chain of restaurants 20 years ago to see White guy painters. Most framing, roofing, painting, etc. jobs were entirely "Latin" American even then back home.
The Trump tariffs
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That has definitely changed brother, while there are still white laborers out here in the Midwest the Latin Americans have definitely moved in....and it's the obscure ones not just Mexicans.
My greasy Italian friends who own construction and concrete companies are ecstatic that they don't have to compete with them so much anymore.
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We have the same thing in Australia. Many of our construction workers are from Latin America (Colombians, Brazilians, Argentinians, Chileans, etc). It has pushed the wages down to rock bottom levels in construction to the point where a lot of construction jobs only pay 10 - 15% more than working as a supermarket cashier which is hardly any incentive to wreck your body with demanding physical labour. If they stopped the immigration, wages for construction workers would quickly go up by 50% from current levels so locals would actually be enticed to take up those jobs.
I wrote earlier on this thread earlier this week that China has restructured their economy since the last Trade War in preparation for this and they are well prepared. I still stand by that - even more so after observing the discourse from Vox, Conservative Tree House, Western Media, and the actions between the Nations as well as the Bond Market. In fact, I believe you're experiencing information asymmetry in your media now and they are still using the same baseline assumptions on China from over a decade ago.
The problem with his post here is that he's looking at the small picture and items and is still assuming that China is reliant on US Exports and Exports in general. In fact, the US Treasury Secretary, Scott Bessent still holds this view (0:49) from this interview with Tucker late last week.
China is NOT reliant on Export. Their exports are 19.7% of their GDP since their peak at 30% in 2007. The World Average is 29.3%. US is at 11%, Japan at 21.8, South Korea at 44%, Vietnam at 87%, Netherlands 88.5%. To say that China is an export country in light of this data is foolish which is what Scott did in his interview with tucker.
So how much pain will China experience in this trade war? The US accounts for 15% of China's export and you can roughly estimate that is less than 3% of China's GDP. If you want to account for transit exports, perhaps +2%? That's not even enough to overcome China's annual growth rate at 5% - and with the growth rate of ASEAN countries, you can give it a couple years until they fully replace the loss from American customers so the pain will be temporary but not revolutionary.
No one in China is afraid or worried about their financial future. So the odds of a successful regime change operation will not work.
Bessent's ignorance on China does not shock me given his history and this account from a colleague of mines. He built his career working with George Soros' fund. You will notice that the Western Media play up to the funds' success in breaking the bank of England. What they are afraid of sharing with you is that the Soros Fund had a role in the Asian Financial Crisis as well. They have managed to wreck the financial economics of Southeast Asia but how is their record against China & Hong Kong? All Ls. Observing from Hong Kong, I was worried that Bessent would learn from his experience but it is obvious that he is still the same arrogant character so old habits die hard.
How Hong Kong survived the 1998 financial crisis
Backed by Beijing, the Hong Kong Monetary Authority made the controversial decision on August 14, 1998, to defend its financial market against international speculators.
news.cgtn.com
The best George Soros can do against China now is gatekeep his audience away from witnessing material prosperity & progression in China like he desperately did with the Beijing Olympics after his failure against China.
Lets dig deeper at what goods China and the US trade between themselves.
If you look at what US Exports to China, a lot of these items are easy to substitute through their BRI / ASEAN countries. Farming Commodities, they have reached out to Brazil. Semiconductors, they are catching up and are perhaps a year behind now.
America will need to find another source of Rare Earth, setup sufficient mining & refining operations. As well as becoming self-sufficient at producing antibiotics. I checked through ChatGPT and it will take a decade to become self-sufficient to replace Chinese imports but I'm sure there's someone in this board that'll give a better assessment on this challenge if the status quo remains the same.
The Bond Market.
This exchanged between Watters and Jessica was very amusing to me as Watters insults Jessica for bringing up a very valid point in this Trade War. She tries to bring up that the market saw Greek bonds as a safer investment than US Bonds and Jesse shuts her down as that is too blackpill for his audience.
You see, the US Bond Yield represents the US Government's ability to issue debt and maintain trust that the debt will be repaid. If the US Gov't has trouble issuing debt - then USD advantage is over. The advantages that the US Consumer has in purchasing imports will be gone.
Trump is already getting some pressure to back off on the Trade War but if the Bond Yields for UST stays above 5% then its likely over for the Trade War - and the victim will be USD as a reserve currency.
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Exactly this. Especially if you got rid of the foreigners, and got rid of or drastically cut welfare. Currently there is a whole underclass with no incentive to work.
Just a couple hours after my post. I see this as a start of the capitulation in the trade war.
5D chess, the Art of the Deal, etc.
This whole liberation day and tariff war has been a huge debacle. He's already folding because of the bond market.
I agree that it would greatly benefit the US long term to re-industrialize, but this whole tariff plan has been amateurish. Trump should fire his economic advisors and hire more competent people.
A steadier, more realistic plan to re-industrialize starting with sustainable and targeted initiatives to build local supply-chains and infrastructure to rebuild certain industries is needed. Once this has been established, then some targeted tariffs on certain manufactured goods that you want to re-shore would be effective.
However, this whole "let's wage economic war on the whole world" ploy is threatening to implode US financial markets. Pure idiocy.
This whole liberation day and tariff war has been a huge debacle. He's already folding because of the bond market.
I agree that it would greatly benefit the US long term to re-industrialize, but this whole tariff plan has been amateurish. Trump should fire his economic advisors and hire more competent people.
A steadier, more realistic plan to re-industrialize starting with sustainable and targeted initiatives to build local supply-chains and infrastructure to rebuild certain industries is needed. Once this has been established, then some targeted tariffs on certain manufactured goods that you want to re-shore would be effective.
However, this whole "let's wage economic war on the whole world" ploy is threatening to implode US financial markets. Pure idiocy.
This isn't capitulation, it's common sense. You don't tariff the things that we can't make ourselves. This is a massive shift in trade policy and can't expect to have all the details ironed out from the start.
Then why is putting tariffs on natural resources that the USA don't have and cannot produce? Yes, it will bring in tax revenue, but the cost of these commodities will increase.
There's no strategy or common sense to this trade policy shift.
Critical minerals (as well as pharmaceuticals) are exempt from the tariffs.
Critical minerals sidestep US ‘Liberation Day’ reciprocal tariffs
Discover how critical minerals exemptions from Trump’s tariffs impact the market and what it means for participants today.
www.fastmarkets.com
Just two examples among many: his reciprocal tariffs affect things like coffee, which the USA doesn't produce, and he also a 10% on Canadian heavy crude oil, which the USA doesn't have the ability to replace with local production (most USA oil production is light crude).Critical minerals (as well as pharmaceuticals) are exempt from the tariffs.
Critical minerals sidestep US ‘Liberation Day’ reciprocal tariffs
Discover how critical minerals exemptions from Trump’s tariffs impact the market and what it means for participants today.
Caduceus
Heritage
Re-industrialing or bring back manufacturing to the USA would take between 10 to 20 years to actually be accomplished.
Countries like Russia and China can do things like this easily because they essentially have the same type of government (or ruling class) for decades on end.
The USA on the other hand has a radical change of the ruling class almost every 4 or 8 years and as such, it's almost impossible to do, as after each election they immediately undo all the projects and plans of the previous administration.
So unless you transform the entire political system in the USA, long term projects and plans can never be successfully implemented.
I agree.
What about the EPA and all the regulations on manufacturing that accelerated their leaving the US for less regulated countries? No sense in bringing back manufacturing just for it all to be unprofitable and at the mercy of lawyers. They need to commission a committee to study why manufacturing left in the first place, I'll bet it wasn't just about union wages.
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I told everyone here that Trump would have to backtrack last week, and got nothing but crap for it as usual.
Iakobos
Orthodox
Well said & probably the biggest reason for pessimism in American politics. What we need is a system like ancient Rome where in times of crisis the country's leader gets pretty much unlimited authority, and then the system reverts to normal when said crisis is resolved. I don't see this happening in the USA without showing the lefties whining about Jan 6th what an actual coup looks like, which is too much to expect from Trump. Plus once that genie's out of the bottle there is probably no reverting back. But desperate times require desperate measures.
And beyond this, the same types of men (Trump and co.) who gutted the US of its industrial (and moral) base and got in bed with China in the first place are the same types of men who will now get rich (again) going in the opposite direction by bringing industry back to America. (((They))) are the problem now pretending to be the solution.
This would require Trump and co. calling out the jews and Israel for killing JFK and creating a world of free globohomo porn and financial usury which ain't gonna happen. They're addressing surface level problems instead of (((root causes))).
This backtracking is not a good look, and lends credence to Trump's critics who claim he's just flying by the seat of his pants with this whole thing. I fully support the Trumpian/MAGA goal of reshoring much of our advanced manufacturing and industrial capacity (for both economic and national security reasons), but it's becoming increasingly difficult to defend the means by which Trump is pursuing this agenda. It's honestly starting to feel like Trump and his team don't fully understand the economic machinations at play here - most specifically in regard to the role of the USD as the world reserve currency and how that necessarily entails trade deficits for the United States, as we must literally "export" USD to the rest of the world.
The economic and financial status quo of the U.S. was obviously not sustainable long term, and drastic changes were necessary to address the severe structural problems we're facing. But this sort of boneheaded blundering going back and forth with tariffs is clearly not the answer we were looking for, and is most definitely not reassuring in regard to Trump's ability to actually begin correcting these serious issues.