There are press reports announcing a “deal” with China, effective May 14.
Untrue. It’s really not a deal at all.
This is more like a negotiated ceasefire in a long war, while the serious peace talks get underway.
Both sides agreed to lay down their arms — the massive 125%-plus punitive tariffs on each other’s goods that have stalled the markets for the past month and have caused empty ships and jam-packed ports and railyards. Importers have cargo on its way, cargo that they simply can’t afford at 150% to 170% or even more, so it sits in limbo, awaiting answers.
We allowed it to go on for a month before declaring a pause.
Yes, it spooked Wall Street. But it did more than anything else has in decades to awaken America to a problem: the fact that our economy is terribly dependent on China for the products we make and sell.
“Oh, sure,” I hear you say. “We knew that already. We already knew that all our clothing and toys and housewares and home décor is made in China. We can live with that. It’s not like it’s a national security problem.”
But that’s the problem. It is national security.
We make our own washing machines and dryers, our own cars and planes, our own metal working machines and food processing equipment. That’s what counts, and it’s made here.
Yes. But these machines are made here only if we can get the parts. And far too many of the parts, for far too many years now, are made in China. You can’t make the refrigerator without the compressor. You can’t make the washing machine without the motor. You can’t make the home furnace without the heating element.
Remember four years ago, during what they named “the supply chain crisis,” when Chairman Xi Jinping kept shutting down whole cities for a month at a time, allegedly due to COVID-19 outbreaks? Huge manufacturing centers like Shanghai and Shenzhen, Wuhan and Chengdu were locked down, with manufacturing and shipping banned, in some cases multiple times.
Because of those distant lockdowns, our American automakers were shut down, too — not of their own choice, but because a vehicle that’s 95% finished still can’t roll off the lot if it’s waiting for a dashboard, or a starter, or a printed circuit board to be shipped from a city that’s been frozen by a distant dictator.
People started to realize then that it wasn’t just American retailers that are too dependent on China; it’s American manufacturers as well. But the Biden-Harris regime tamped down such talk and blamed the containership lines or the seaports, saying the problem was unorganized transportation. The political party that had long been bankrolled by Chinese interests could never allow the message to stand that America is dangerously addicted to Chinese components.
That mistake won’t happen this time. The Trump-Vance administration is making sure Americans understand that our industrial dependence on China isn’t healthy. It may have taken a month of 145% punitive tariffs to drive home the point, but now it’s undeniable.
What if it weren’t a tariff that we could just turn on and off at will? What if the holdup were a Chinese blockade, or another series of Chinese urban lockdowns? Or the worst of all: What if the holdup were a shooting war?
It is still likely — some believe it’s more likely every day — that China will start a war of annexation in the near future. Taiwan, perhaps? That’s the obvious target. But China’s recent saber-rattling has included encroaching on the territorial waters of Japan, Malaysia, the Philippines, even New Zealand.
The USA isn’t going to start a war. But it looks ever likelier that China will. And when that happens, we will be unable to import anything from China, because we’ll be on the other side, defending the countries China has attacked. If American industry is still dependent on China for critical parts when that day comes, we’re all in trouble.
There will be an end to this current trade war. After the 90 days are up, we will probably see some flat, predictable, elevated tariff across the board with China. President Trump estimates something around the 80% mark, give or take.
But if American businesses heard only that number, and started doing the math to figure out how to tweak their profit margins to absorb an 80% long-term tariff level, then they have totally missed the point of this exercise.
Yes, there will be a tariff, but the goal is not to get people to pay it. The purpose of this tariff — the highest we apply to the goods of any country on Earth — is to remind people that we should not be buying things from China. Period.
The purpose of this tariff war is to forcibly wean American businesses off this addiction. If patriotism and self-interest won’t do it, then perhaps a tariff will. One way or the other, find new vendors in other countries, as soon as possible.
Remember that the fundamentals are still the same and will never change as long as Xi Jinping and his politburo rule in Beijing:
- China manipulates currency so its suppliers can artificially undercut other honest suppliers.
- China offers its companies direct subsidies to undervalue its goods, dumping classes of products on the United States (and others), in order to wipe out competition.
- China uses slave labor and child labor, especially in the Uyghur region but not only there. It’s everywhere.
- China pretends to have private property rights, but it’s still a communist country. Every business — even a joint venture with an American conglomerate — has the Chinese military as a silent partner. No matter what they claim, there are no true intellectual property rights in China. Every tool and die, every work instruction and training program, is essentially state property. Your patents, trademarks, copyrights, and trade secrets are only as private as Xi Jinping wants them to be on any given day.
These are the fundamentals, but there’s more still when you look at the big picture.
- China regularly announces its intent to take over Taiwan and everything touching the South China Sea.
- China clearly developed the COVID-19 virus, either intentionally or unintentionally released it, and allowed it to spread worldwide before saying a word about it.
- China locked countless innocent sick people in their buildings in 2020, sealing up their doors and windows and filling the towns with mobile crematoriums for months. (Many have let themselves forget about this moment, but we simply cannot let this be forgotten.)
- And if China would lock down whole cities in 2020 and 2021, there’s no reason to assume it won’t do it again.
There is only one conclusion to draw: With or without high tariffs, American industry must become independent of China.
Many American businesses don’t want to break the happy relationships they have with Chinese vendors with whom they’ve worked for decades. That’s understandable, even laudable.
But the United States cannot afford this dependence. We can’t afford to keep sending a trade surplus of U.S. dollars to China to spend, buying American equities, American real estate, American farms. We can’t afford to keep funding China’s military expansion. We can’t afford to keep rewarding China for violating the rules of international trade that the rest of the world must live under.
But most importantly, we have to restore the growth of American manufacturing. And you can’t do that when China holds a potential kill switch over every American product’s Bill of Materials.
John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer, and speaker. Read his book on the surprisingly numerous varieties of vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris years (Evening Soup with Basement Joe, Volumes I, II, and III), and his most recent collection of public policy essays, Current Events and the Issues of Our Age, all available in eBook or paperback, only on Amazon.
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