Global trade wars escalate.

 CHINA'S ELECTRIC CARS HAS THE WEST ALARMED

EUROPE TAKES CENTER STAGE

We all remember when Trump was is office he used tariff's as a tool to remove tariffs from U.S. exports and to negotiate deals to lower the trade deficit. He put tariffs particularly on steel and aluminum manufacturing because it was evident the if not protected the U.S. would soon have no domestic manufacturing. Many of the U.S. allies complained because it affected then also. but the reality is in the U.S. and in the allies situation most were refab companies that shaped Chinese steel into products like sheet or rods from bulk steel manufactured in China.

The motto was reciprocity or removing tariffs from both countries. It was also negotiated that China would buy huge amounts of U.S. grain in an attempt to lower the trade deficit. That deal has now fallen as new tariffs on silicon chips are being pursued by the U.S. 

The tariffs today are now much more an attempt to damage the economies of China and others, this is coupled  with abusive language and insults that are without a doubt counter productive. It seems these are short term emotional policies that have not taken into account the long term consequences.

Much of this started with the Ukraine conflict were in an attempt damage Russia, Europe at the insistence of the U.S. cut off their use of Russian energy products. It resulted in severely higher prices for energy, the closing of many manufacturing plants and decline in the economies in Europe. It also cost Germany their lucrative market for luxury cars in Russia.

The U.S. attempted to contain China by restricting electronic chips from the U.S. and then China began their own manufacturing and one can expect they can replace those hi end chips from Taiwan, which is only miles away and does 50% of its business with China.

Now the latest is Electric cars in Europe. The EU want near 40% tariffs on Chinese electric cars, but it appears China is ready to retaliate by tariffing luxury fashion goods and wine from France and Italy, dairy from the the netherlands and luxury cars from Germany. China is the dominate world market for those goods. This creating a serious dilemma in the Eu. Spain has refused to cooperate in these tariffs because of a threat of massive pork sales to China.

The problem is that the west is in reality dependent on China in many ways. One is that lower priced products from China has restrained the U.S. inflation rate by sending much of that devalued money overseas and keeping prices down at home.

China has near 6 billion other buyers that it cultivating through trade deals and diplomacy.  It can buy grain from Brazil, Argentina and Russia and can also buy wine from Chili. At the same time much of that world will jump at the chance to buy low priced electric cars and other goods.  

It is looking like trade war is not the answer, but it is going to a very difficult  learning experience for all involved.