Dealing With China II

Author: R. Alan Harrop, Ph.D

Question: Is China an ally, adversary, or enemy? The answer to this question should define how we interact with them. Clearly, China is not an ally. An adversary is one who acts in ways opposed to another’s interests. An enemy, is one who is seeking to injure, harm or overthrow another country. Let’s look at some facts.

China has stated that their intention is to replace our position in the world by weakening us and is committed to expanding their military and replacing the dollar as world currency with their yuan in order to do so. They are also enabling the smuggling of deadly fentanyl into our country which kills 100,000 of our youth each year. They steal our technology, ignore our patents and copyrights, and use deceptive trade practices. They recently sent a spy balloon over our country which the inept Biden regime failed to shoot down or take retaliatory action. They produced a deadly virus that killed millions throughout the world including thousands in the United States. They are sending thousands of their citizens over our border illegally. Currently there are over 350.000 Chinese students attending our universities, many of which have been caught spying for China. Also, China is apparently giving millions of dollars to the family of president Biden to control his decision making.

How do you think China would respond if we were doing these things to them? It is no wonder that they see us as weak, in decline, and ready for take over. The question, now that we recognize China as an enemy, is what action to we take to protect ourselves? First, elect a non-compromised president who has the courage to face the threat that China presents. Second, eliminate our dependency on China for essential manufacturing products and importantly, essential pharmaceuticals. Third, expel all Chinese in our universities. Fourth, impose draconian tariffs on all Chinese products until their enabling of fentanyl smuggling over our border is stopped. Fifth, prohibit the sale of any land or food processing companies.in our country to China.

These actions may seem extreme to some. However, history is replete with countries who were destroyed by not recognizing external threats. It is time to recognize reality and take appropriate action before it is too late.

It Begins Again

Hot Air posted an article yesterday about what is currently happening in Hong Kong.

The article reports:

When we were discussing China’s new “national security” law for Hong Kong yesterday, it was noted that pro-democracy advocates were already railing against the betrayal of the promises China made when taking over control of the city from Great Britain. Protests were planned, but pro-Beijing lawmakers were warning that any sort of public demonstrations could be dealt with harshly. Well, that took all of one day to come to pass. Despite concerns about a new wave of coronavirus infections, demonstrators took to the streets and were quickly met by police forces firing tear gas canisters indiscriminately into the crowds at a large shopping center. And then the arrests began.

…Tam Tak-chi, one of the city’s most well-known democracy advocates, was arrested shortly after the protests began. He had previously predicted that he would be detained if China moved forward with its new legislation and it turned out to be a self-fulfilling prophesy. He was charged with holding “an unauthorized assembly.”

The article concludes:

In that sense, much of the “freedom” enjoyed by Hong Kong since 1997 has largely been illusory anyway. China regularly intervenes in local elections if the residents begin electing too many people with crazy ideas about freedom and democracy. The top leadership positions, currently exemplified by Carrie Lam, are always held by pro-Beijing politicians who take their marching orders from the CCP. People have regularly been arrested in Hong Kong for demonstrating, giving speeches or contacting foreign media outlets, things that people in free nations simply take for granted.

Up until now, a certain amount of demonstrating and chatter about democracy has been allowed, apparently just to humor the locals. But now it appears that China isn’t going to even bother providing a fig leaf to the 1997 agreement they entered into. They’re probably sure that they can get away with it because nobody is going to risk going to war with them or attempt any sort of direct military intervention right on China’s doorstep to free Hong Kong’s citizens. And while it’s sad to say, they’re probably right.

This was predictable. I don’t know if the outcome would have been any different had the British not signed the treaty with China. However, we need to learn from what we are watching–China is not a reliable partner in any treaty. On May 5th, I posted an article citing a provision in the recent trade agreement (signed before the coronavirus outbreak in America) that says if there is a natural occurring disaster, the two parties will renegotiate. This is another example of the fact that China, under communism, is not willing to play fair on the international stage. Best wishes to the people of Hong Kong. I am not optimistic about your future.

A Step In The Right Direction

By now most Americans have realized that China is not our friend–they have stolen intellectual property for years, the have manipulated their currency to gain trade advantages, and they have gifted the world with the coronavirus. Well, someone in Washington is attempting to take action to prevent further bad behavior.

The Washington Free Beacon reported yesterday that Republican Senator John Kennedy and Democratic Senator Chris Van Hollen sponsored a bill in the Senate that could prevent some Chinese companies from listing their shares on U.S. exchanges unless they follow standards for U.S. audits and regulations. The bill passed by unanimous consent. It still has to pass the House of Representatives and be signed by President Trump.

The article reports:

“The Holding Foreign Companies Accountable Act” bars securities of any company from being listed on any U.S. securities exchange if it has failed to comply with the U.S. Public Company Accounting Oversight Board’s audits for three years in a row.

The measure also would require public companies disclose whether they are owned or controlled by a foreign government.

The bill is written to apply to all foreign companies, but it is targeted at China, and follows intense criticism of Beijing by Republican President Donald Trump that has been echoed by Republican and Democratic lawmakers.

Trump and other officials in his administration insist that China mishandled the novel coronavirus during the early weeks of an outbreak that has spread into a global pandemic that has killed more than 320,000 people and cratered global economies.

Beijing denies such allegations.

“There are plenty of markets all over the world open to cheaters, but America can’t afford to be one of them. China is on a glidepath to dominance and is cheating at every turn,” Kennedy said in a statement.

“For too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors,” Van Hollen said.

Let’s hope this bill becomes law.

Do You Think They Knew Something?

The American Thinker posted an article today about the recent trade agreement with China and the impact the coronavirus might have on that agreement.

The article notes:

Yet another indication that China knew it was about to release a deadly and destructive pandemic on the world is seen in its last minute insertion into the Phase 1 trade deal of a clause releasing it from its obligations under the deal in the event of a natural disaster. It is another reason why China pushes the wet markets story about the origin of the Wuhan virus and dismisses a leak from or accident at the Wuhan Institute of Virology as some tinfoil-hat conspiracy theory. If the lab origin for the Wuhan virus is officially confirmed, China’s economy is fatally screwed. 

The article quotes  K.T. McFarland, who served as Deputy National Security Advisor under Michael Flynn for the first four months of the Trump administration:

One of the reasons that they keep insisting, despite mounting evidence that it came from a lab in Wuhan, they keep insisting, no, no, it came from a wet market, or maybe it was America who did it.  They cannot admit culpability for the following reason, if they do, then there’s a clause that they put into the Phase 1 US-China Trade Deal, where in essence in this trade deal it said we would lift sanctions, we would lift the tariffs on them and then they would buy a lot of agriculture and other goods from us.

But there’s a clause that’s in there, a get out of jail free clause, which says, however, if there is a natural occurring disaster, the two parties will renegotiate.  In other words, China doesn’t necessarily want to keep the terms of the deal.  And so it’s very important for everybody, for them, to say, well, it’s a naturally occurring disaster coming out of the wet lab.  It wasn’t China who did that.

So not only do they give themselves an out for the trade deal, that they were pressured into signing, but they also will give themselves an out if companies and countries and individuals, all come to the International Courts and try to sue China.

The article notes that tariffs may be one way to force China to pay for its negligence in misinforming the world about the virus. I think that is a good idea.

Common Sense Has Entered The Building

On Wednesday The Daily Caller posted an article with the following headline, “‘Buy American’ — White House Confirms Executive Order That Will End Medical Supply Chain Reliance On China.” China is the last country in the world we want to be dependent on for drugs.

The article reports:

White House Director of Trade and Manufacturing Policy Peter Navarro confirmed Wednesday the administration is working on an executive order to eliminate the government’s reliance on foreign-made medical supplies.

The “Buy American” order comes on the heels of concerns expressed by senators during their Tuesday meeting with President Donald Trump on Capitol Hill.

…The order would prevent federal agencies from purchasing medical supplies, including face masks, gloves and ventilators, from China.

As the United States has battled the domestic spread of coronavirus, consumers were alerted to the fact that China manufactures an overwhelming percentage of the federal government’s medical equipment. 90 percent of all U.S. antibiotics were manufactured in China.

China has prevented the export of surgical face masks, severely limiting supplies in the U.S. and countries around the world.

Under the Trump administration, we have gained energy independence. Now it is time to gain pharmaceutical independence.

A Very Mixed Blessing

CNBC posted an article yesterday (updated today) that because OPEC has not been able to reach an agreement about oil prices with its allies (led by Russia), Saudi Arabia has cut its oil prices and increased its production. A price war is expected to follow. This is great news for consumers, but horrible news for American oil production.

The article reports:

U.S. West Texas Intermediate (WTI) crude and international benchmark Brent crude are both pacing for their worst day since 1991.

WTI plunged 18%, or $7.36, to trade at $33.92 per barrel. WTI is on pace for its second worst day on record. International benchmark Brent crude was down $8.44, or 18.7%, to trade at $36.80 per barrel. Earlier in the session WTI dropped to $30 while Brent traded as low as $31.02, both of which are the lowest levels since Feb. 2016. 

“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”

On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.

The article concludes:

“$20 oil in 2020 is coming,” Ali Khedery, formerly Exxon’s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc – may prove existential 1-2 punch when paired with COVID19.”

But others, including Eurasia Group, believe that Saudi Arabia and Russia will eventually come to an agreement.

“The most likely outcome of the failure of the Vienna talks is a limited oil price war before the two sides agree on a new deal,” analysts led by Ayham Kamel said in a note to clients Sunday. The firm puts the chances of an eventual agreement at 60%.

Vital Knowledge founder Adam Crisafulli said Sunday that oil “has become a bigger problem for markets than the coronavirus,” but also said that he does not foresee prices falling to the Jan. 2016 lows.

“Saudi Arabia can’t tolerate an oil depression – the country’s fiscal breakeven oil prices remain very high, Saudi Aramco is now a public company, and MBS’s grip on power isn’t yet absolute. As a result, the [government] won’t be so cavalier in sending oil back into the $30s (or even lower),” he said in a note to clients Sunday.

OPEC has played this game before. In the 1970’s oil crisis, OPEC boycotted America because of our support of Israel. When American energy companies responded by drilling wells to meet the need, OPEC dropped the boycott and lowered the price to put those companies out of business. I suspect there may be an attempt to do that again, but I am not sure we are as vulnerable as we were then. If America continues on the path to energy independence, our oil prices will be less vulnerable to foreign manipulation. We may have to pay a little more than the price the Saudis will drop to for our oil, but it would be worth it in the long run. Hopefully we have people currently in charge that are looking long term rather than short term.

President Trump And His Trade Policies

Yesterday Fox News reported that the US trade deficit has dropped for first time in 6 years because of the taxes President Trump has placed on China.

The article reports:

The U.S. trade deficit fell for the first time in six years in 2019 as President Donald Trump hammered China with import taxes.

The Commerce Department said Wednesday that the gap between what the United States sells and what it buys abroad fell 1.7 percent last year to $616.8 billion. U.S. exports fell 0.1 percent to $2.5 trillion. But imports fell more, slipping 0.4 percent to $3.1 trillion. Imports of crude oil plunged 19.3% to $126.6 billion.

The deficit in the trade of goods with China narrowed last year by 17.6 percent to $345.6 billion. Trump has imposed tariffs on $360 billion worth of Chinese imports in a battle over Beijing’s aggressive drive to challenge American technological dominance. The world’s two biggest economies reached an interim trade deal last month, and Trump dropped plans to extend the tariffs to another $160 billion in Chinese goods.

The article notes:

Overall, the United States posted a $866 billion deficit in the trade of goods such as cars and appliances, down from $887.3 billion in 2018. But it ran a $249.2 billion surplus in the trade of services such as tourism and banking, down from $260 billion in 2018.

America is a nation of consumers, so I suspect trade deficits are something that will always be with us, but as the manufacturing base in America expands and our trade policies become more balanced, I believe we will see lower trade deficits.

Good News For Britain

Breitbart is reporting today:

The government’s bill implementing the withdrawal deal has passed through both Houses of Parliament, meaning the UK will finally be leaving the EU on January 31st, 2020.

On Wednesday evening, MPs in the House of Commons rejected the amendments to the European Union (Withdrawal Agreement) Bill proposed by the House of Lords.

…In a brief comment after the bill passed, Prime Minister Boris Johnson said: “Parliament has passed the Withdrawal Agreement Bill, meaning we will leave the EU on 31 January and move forwards as one United Kingdom.

“At times it felt like we would never cross the Brexit finish line, but we’ve done it.

“Now we can put the rancour and division of the past three years behind us and focus on delivering a bright, exciting future — with better hospitals and schools, safer streets and opportunity spread to every corner of our country.”

It has been 1,309 days since Britons voted to leave the European Union.

The article concludes:

Leaked plans for the narrative on Brexit Day seen by the Dail Mail reveal that Cabinet ministers will tell Britons that the nation can finally come together, saying: “We will mobilise the full breadth of our new freedoms – from encouraging technology and innovation, to signing new free trade deals around the world.

“As we maximise all the freedoms the British people voted to grasp, we must also work to heal divisions… and reunite our communities.”

Brexit Day will mark “the start of a new chapter in the history of our country, in which we come together and move forward united, unleashing the enormous potential of the British people”, the document said.

So what will this mean for Britain? I don’t claim to understand the British economy or be able to predict the future. However, a few things are obvious. The farther removed a government is from the people government, the less free the people are. Britain is regaining its national sovereignty and its economic freedom. I suspect there will be a rough patch for a bit, but I see the economy of Britain growing because of this move. One of the first things I believe will happen will be a trade deal with America that is designed to help both countries. Stay tuned.

Beginning To Level The Playing Field In Trade

CNBC reported yesterday that China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year.  The Chinese economy is slowing down, and lowering tariffs is seen as a way to bring back previous growth.

The article also notes:

 

  • Next year, China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, the finance ministry said on Monday.
  • That compared with 706 products that were taxed at temporary rates in 2019.

The article cites a few significant tariff cuts:

The finance ministry said the tariff rate for frozen pork will be cut to 8% from the most-favored-nation duty of 12%, as China copes to plug a huge supply gap after a severe pig disease decimated its hog herd.

…China will also lower temporary import tariffs for ferroniobium — used as an additive to high strength low alloy steel and stainless steel for oil and gas pipelines, cars and trucks — from 1% to zero in 2020 to support its high-tech development.

…The tariff rate for frozen avocado was cut to 7% from the most-favored-nation duty of 30%, the ministry said.

…Tariffs for some asthma and diabetes medications will be set at zero, the ministry said, while duties on some wood and paper products will be lowered too.

Import tariffs on multi-component semiconductors will be cut to zero.

China will also further lower most-favored-nation import tariffs on some information technology products from July 1, the ministry said.

China has long been an unfair trading partner–manipulating their currency, disregarding intellectual property, and generally behaving badly. Hopefully President Trump’s ‘trade war’ will bring some balance into our trade relationship with China.

 

Tariffs Work

No one likes trade wars, but we continue to see evidence that tariffs (combined with economic strength) work. Bloomberg posted an article on Thursday (updated Friday) about the recent trade agreement reached between the United States and China.The article notes that the tentative agreement was reached just as more tariffs were due to go into effect against China on December 15th. Because of the tentative agreement, the tariffs are postponed.

The article reports:

President Donald Trump signed off on a phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of U.S. tariffs on about $160 billion of consumer goods from the Asian nation, according to people familiar with the matter.

The deal presented to Trump by trade advisers Thursday included a promise by the Chinese to buy more U.S. agricultural goods, according to the people. Officials also discussed possible reductions of existing duties on Chinese products, they said. The terms have been agreed but the legal text has not yet been finalized, the people said. A White House spokesperson declined to comment.

While there was no official confirmation from the government in Beijing on Friday, an announcement is expected in Washington as early as today, according to people familiar with the Americans’ plans. One possible option is for U.S. Trade Representative Robert Lighthizer to sign the agreement with Chinese Ambassador Cui Tiankai, according to people briefed on the matter.

When the agreement was announced, global stocks soared to record highs.

The article concludes:

In addition to a significant increase in Chinese agricultural purchases in exchange for tariff relief, officials have also said a phase-one pact would include Chinese commitments to do more to stop intellectual-property theft and an agreement by both sides not to manipulate their currencies.

Put off for later discussions are knotty issues such as longstanding U.S. complaints over the vast web of subsidies ranging from cheap electricity to low-cost loans that China has used to build its industrial might.

Nothing is at yet cast in stone. Stay tuned.

Priorities, People

Breitbart posted an article today about the passing of the United States-Mexico-Canada (USMCA) trade agreement.

The article reports:

House Speaker Nancy Pelosi (D-CA) said during a press conference Thursday that she remains skeptical about the House passing the United States-Mexico-Canada (USMCA) trade agreement this year, as Congress’s lower chamber continues to focus on the impeachment inquiry into President Donald Trump.

Speaker Pelosi cast doubt during the presser that Congress has enough time to pass the USMCA in 2019.

“I’m not even sure if we came to an agreement today that it would be enough time to finish [this year], but just depends on how much agreement we come to,” Pelosi said.

Last week, she said that a deal on USMCA was “imminent.”

“I’m eager to get this done,” the California Democrat said.

The USMCA’s delayed passage through the House arises as Pelosi and House Intelligence Committee chairman Adam Schiff (D-CA) have launched an impeachment inquiry into President Trump.

Speaker Pelosi and House Ways and Means chairman Richard Neal (D-MA) will meet with U.S. Trade Rep. Robert Lighthizer to discuss the Democrats’ remaining concerns surrounding the USMCA.

The article notes:

Pelosi’s comments follow the bipartisan House Problem Solvers Caucus’s call for the speaker to hold a “timely vote” on the USMCA. The caucus represents 48 House Republicans and Democrats.

I am one of many people who believe that this delay is political–the trade agreement is a good thing for American workers, and Democrats are reluctant to give President Trump any sort of victory. It is a shame that the Democrats have chosen to put politics over the welfare of American workers.

 

Don’t Look For This Name On The Witness List

Yesterday The New York Post posted an article about Ukrainian Foreign Minister Vadym Prystaiko.

The article reports:

Badly undermining Democrats’ impeachment narrative, Ukrainian Foreign Minister Vadym Prystaiko told the press in Kiev on Thursday, “I have never seen a direct relationship between investigations and security assistance.”

That is, between the investigations President Trump wanted into 1) Ukrainian interference in the 2016 campaign and 2) Joe and Hunter Biden and the Ukrainian firm Burisma, on the one hand, and US aid that Trump put on hold this summer, on the other.

He specified that he didn’t hear that message from Trump’s top envoy, Ambassador to the EU Gordon Sondland, who “did not tell us, and did not tell me exactly, about the relation between the assistance and the investigations.”

In summary: “Yes, investigations were mentioned, you know, in a presidential conversation. But there was no clear connection between these events.”

Ukrainian President Volodymyr Zelensky has also made it plain he never felt undue pressure to investigate the Bidens. And he never did, yet the aid went through anyway.

If you were paying close attention to the circus in Washington, you probably noticed that the charges against President Trump have suddenly changed from quid pro quo to bribery. That is the result of focus groups engaged by the Democrats that showed that the concept of bribery carried more impact that the idea of quid pro quo. When bribery doesn’t resonate the way they want it to, they will move on to something else. Meanwhile we have trade deals that need to be approved and infrastructure that is crumbling. Hopefully, the voters will replace the ‘resistance’ leaders in the House of Representatives in the next election.

Success Often Breeds Success

When President Trump campaigned for President, he said he wanted to redo America’s trade deals and bring manufacturing back to America. He has renegotiated the trade deals. Congress has yet to approve the deal with Mexico and Canada, but a lot of manufacturing has returned to America. The Washington Times posted an article today about public opinion of President Trump’s trade policies.

The article reports:

“Bipartisan consensus has emerged that foreign trade is good,” wrote Gallup senior analyst Lydia Saad. “Americans’ broad view of trade is the most positive it has been in more than a quarter-century.

…“Both Republicans and Democrats have become more positive about trade over this period of improving economic conditions,” she noted. “However, support for trade among both groups jumped sharply after Trump took office in 2017.”

The 2019 poll numbers now reveal:

• 70% of Americans say trade with other nations has a positive effect on “innovation and development of new products.”

• 67% say international trade has a positive effect on U.S. economic growth.

• 63% say trade has a positive effect on American businesses,

• 58% say trade has a positive effect of the quality of products.

• 51% say trade has a positive effect on jobs for U.S. workers.

I wonder if the positive results of President Trump’s policies will be reflected in the 2020 election.

 

 

 

Something Good Happened In The House Of Representatives

One America News is reporting today that yesterday the House of Representatives unanimously passed the Hong Kong Human Rights and Democracy Act to prevent a crackdown on the special status of the city-state.

The article reports:

The bill requires annual reviews by the State Department of whether the city is autonomous enough to justify its special trade status with the U.S. China moved to restrict Hong Kong’s judicial independence earlier this year, sparking mass protests in the city.

…The Senate is now expected to pass similar legislation that could get signed by President Trump later this month.

Evidently some members of Congress are beginning to follow the Trump policy of using economics and trade as a weapon instead of war. That is good news.

 

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.