Playing Chess With World Trade

America has been on the wrong end of bad trade deals for a long time. We watched our manufacturing jobs leave America after NAFTA. We watched the steel industry disappear after being undercut by Chinese steel held up by subsidies by the Chinese government. President Trump is a businessman. As a businessman, he is trying to level the trade playing field. In some areas he is getting cooperation at home and abroad; in some areas he is not. China has been a difficult country to deal with regarding trade. The uneven playing field they have enjoyed for years has been very profitable for them. Because their economy is based on an uneven playing field, they are reluctant to make changes. Their economy is currently struggling, and if President Trump stands his ground, the Chinese economy could face serious challenges. That’s where we are. There is, however, some positive news about where we might be headed.

Ed Morrissey at Hot Air posted an article today about a possible breakthrough in the talks with China.

The article reports:

Did China finally blink in Donald Trump’s trade war? Trump himself seems to think so. At the G-7 summit, Trump told reporters that a statement earlier in the day from a top official in Beijing showed that China had finally expressed a real interest in redefining the trade relationship between the world’s top two economies. It’s “the first time” that Trump sees China acting in good faith, he said

The article continues:

After rapid-fire escalations in tariffs by both sides, China’s vice premiere called for “calm.” Liu He also declared Beijing’s willingness to conclude a trade agreement and called for talks to begin immediately:

“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” Liu, who is President Xi Jinping’s top economic adviser, said, according to a government transcript.

“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world,” he added.

U.S. companies are especially welcome in China, and will be treated well, Liu said.

“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” he added.

“We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”

The last time we thought we had a deal, the person who made the deal was executed when he returned home. Hopefully this time will turn out better for everyone.

Trying To Level The Playing Field Has Its Challenges

Fox Business posted an article today about the devaluing of the Chinese yuan. The devaluing of the Chinese currency (currency manipulation) has been used by China for decades to grow their economy at the expense of America. It has been used to lure manufacturing away from America, impact our trade balance, and generally work against the American economy. We have needed to combat this practice for decades, but no President had the courage.

The article reports:

The onshore Chinese yuan weakened to worse than seven per U.S. dollar, hitting its lowest level since 2008, as Beijing looks to cushion the blow from Trump’s tariffs. A weaker yuan makes Chinese goods cheaper for overseas buyers, which may be necessary as China just lost its spot as the US’s biggest trading partner.

Trade data released Friday by the Department of Commerce showed U.S. imports from China fell by 12% in the first six months of the year, allowing Mexico to supplant it as the U.S.’s biggest trade partner.

“China dropped the price of their currency to an almost a historic low,” Trump tweeted Opens a New Window. on Monday. “It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!”

Last week, Trump said beginning Sept. 1 the U.S. would place a 10% tariff on the remaining $300 billion of Chinese goods. He went ahead with the announcement despite objections from his advisers.

The president warned he could “always do much more” with respect to tariffs, adding the 10 percent tax could go “well beyond 25 percent” if necessary. Earlier this year, the administration placed a 25% tariff on $250 billion worth of Chinese goods.

Weakening the yuan isn’t the only form of retaliation Beijing took on Monday. It also ordered state-owned enterprises to stop purchases of U.S. agricultural products, according to a Bloomberg report, citing people familiar with the situation.

That is a reversal from just last week, when Beijing said it had purchased several tons of U.S. soybeans Opens a New Window. as a gesture of a goodwill amid trade negotitations. Before the trade war began, China was the largest buyer of U.S. soybeans, accounting for 70% of all purchases, but their imports have fallen by 97% since the trade war began.

The article notes:

Over the weekened, The Trump administration pushed back against the idea the trade war was hitting the wallets of U.S. consumers.

“China has strategically gamed the tariffs by slashing their prices and by devaluing their currency,” White House trade advisor Peter Navarro told “Fox News Sunday.”

This trade dust-up with China may get ugly, but it is something that has to be done.

The Coming Election Impacts Foreign Policy

Yesterday The Washington Free Beacon posted an article about China’s plans to influence the 2020 presidential election.

The article reports:

In his conversation with Levin, Gertz (Washington Free Beacon senior writer Bill Gertz) reflected on his interview with Guo, who told Gertz earlier this week that the Chinese government has been deploying a prolonged campaign to defeat President Donald Trump in 2020. Gertz asserted the Chinese government may try to wait out Trump’s time in office so it can negotiate trade deals with a new Democratic president if Trump loses in 2020.

Trump announced Thursday he would impose an additional 10-percent tariff on certain Chinese exports as a trade agreement between the United States and China has yet to materialize.

“The China threat to me is the most serious threat facing the country,” Gertz told Levin.

He pointed to the economic integration between the U.S and China and how those relationships make it difficult for lawmakers and military officials to address Chinese aggression head-on, which he referred to as “an existential threat.”

The article concludes:

“There’s a major push right now to try and build up of American courses in Asia so we won’t have to go to war with China,” Gertz said of the government’s efforts to deter a war hypothetical war with China.

Looking towards the presidential race, Gertz warned the Chinese government would prefer to have a Democrat in the White House.

“It’s going to be a huge problem if the Democrats retake the administration,” Gertz said, pointing to former Vice President Joe Biden’s recent downplaying of threat China poses to the United States.

Gertz pointed out that during the Obama presidency the Chinese government expanded their presence in Asian waterways, in addition to ramping up their theft of intellectual property from American companies and entrepreneurs.

This may be the reason the negotiations with China have become so difficult–China is waiting for a President who will cave into their demands. It is obvious that President Trump is not that person.

By undermining President Trump since he was elected, the Democrat party has made international trade negotiations much more difficult. Creating an even playing field in trade with China would result in continued growth of the United States economy. It is time to repair the damage bad trade deals have done in the past.

An Entirely Predictable Outcome

The Washington Free Beacon posted an article today about some recent statements by top Iranian leaders.

The article reports:

Top Iranian leaders issued a series of warnings on Tuesday, telling world leaders it is on the brink of restarting a significant portion of its most contested nuclear work, including the enrichment of uranium to prohibited levels that could be used as part of a weapons program.

With tensions mounting between the United States and Iran following a bevy on new sanctions issued by the Trump administration, Iranian leaders warned their counterparts in Europe that the country will begin to enrich uranium—the key component in a nuclear weapon—to levels needed for weapons research.

Iran also will begin to stockpile low-enriched uranium instead of shipping it out of the country, as it had been doing under the nuclear agreement. The Islamic Republic also will stop exporting its heavy water reserves, a nuclear byproduct that can provide a plutonium-based pathway to a weapon.

Both of these moves are enflaming global tension surrounding Iran’s nuclear program, which the country has used to receive billions in sanctions relief and cash windfalls as a result of the Obama administration’s accord. Iranian leaders insist that if Europe does not reject the new U.S. sanctions and help Tehran bypass them, they will stop adhering the nuclear deal, which several European counties are still party to.

Does anyone actually believe that Iran suspended its nuclear program while the treaty was in effect?

The article concludes:

Iran also is seeking to have its international oil trade restored.

The Trump administration, after a protracted inter-agency fight, decided last month to stop issuing sanctions waivers to several countries purchasing large amounts of Iranian crude oil. The removal of these waivers effectively killed Iran’s oil trade.

Keivan Khosravi, a spokesman for Iran’s Supreme National Security Council, said all banking and oil rights must be immediately restored or Tehran will continue with efforts to ramp up prohibited nuclear work.

“As the honorable president declared, concurrent with the SNSC statement, Iran will continue subsequent and staged steps to stop nuclear deal undertakings based on the UNSC statement until the status quo of its oil sales and banking transactions return to the conditions that prevailed before the U.S. withdrawal from the nuclear deal,” Khosravi wrote in a memo published Tuesday by Iran’s state-controlled press.

Translated loosely, this means that the sanctions are working and we need to leave them in place. If Iran does ramp up its nuclear program, we need another computer virus to slow it down. The reactor sites are hidden too deep underground to be bombed successfully, but an electronic attack on their computers and power grid would probably slow them down for a few years at least. The answer to the problem of a nuclear Iran is an Iran not controlled by the mullahs. That is a possibility as the younger generation tends to lean toward western ideas, but those that make those tendencies known wind up in prison or dead. Iran needs another revolution. The sanctions and the economic hardship they cause make that revolution a possibility.

One thing I believe we need to consider is a lesson learned in recent years about setting up democracies in places that do not understand freedom. It seems that in order to create a free county, you need brave men of integrity willing to lead a revolution and fight for freedom for all people. You can’t come in and just plant a democracy. Planting a democracy is somewhat like helping a baby chick hatch–the baby chick needs the hatching process to gain the strength to survive. If you help a baby chick hatch, it will not survive. It seems that in recent years we have learned that democracies have the same problem–they have to do their own hatching. When the work is done for them, the wrong leaders rise and the people gain new despots–they don’t gain freedom.

Tariffs And Trade Negotiations

John Hinderaker posted an article at Power Line today about the ongoing trade negotiations with China. It is an open secret that China has been stealing American intellectual property for years. They have also engaged in other unfair trade practices such as manipulating their currency. What is happening now is that President Trump is trying to make the playing field more level. There will be opposition. There also may be some short-term losses for Americans, but the President is doing what needs to be done.

The article includes the following cartoon:

That about sums it up.