On April 10, last year, Donald Trump, who understands poefectly well that free trade with China must stop, put a tariff of 145% on all Chinese goods coming into the US.
That is the exact right tariff for neutralising the desequilibrium created by cheap production costs in China.
But president Trump is being very badly advised ecomically by his advisers, and was not warned that this ‘shoot from the hip’ would create two major problems.
The easily foreseeable problem of the two is that we need stuff from China that we cannot produce ourseves anymore. The ability of China to stop these essential goods to come to us at all, would be impossible to sustain. Trump would have to stop the tariffs.
The somewhat less foreseeable, second pronblem was that Beijing, in retalkiation, also stopped export of rare earths that we need for for smartphone screens, electric vehicle motors and for wind turbines.
So Trump had to backtrack almost immeduately by dropping this 145% tariff. The result?
– American loss of face and,
worse,
– a chaos and loss of faith in ourselves in our handling of the Chinese free trade problem.
After that, Trump did onme thing very well. He immediately set up an energetic American activity to find rear earths ourselves, everywhere possible on our globe and to be able to extract these earths from the rocks where they usually are embedded. This search will hopefully make us independent from China for these rare earths soon. Hopefully in a year from now, by mid 2027.
So far so good and so bad.
With friendly greeting,
Edouard Prisse