China Morning Missive

“China has no choice” ….. perhaps, but then again what does it mean to be a reliable partner.

When the trade conflict went hot with China (and the entire world frankly) in early April, I felt confident that the Trump team didn’t have any idea of what it was they were heading into. China had spent four years preparing for exactly what Trump was preparing to do. Lessons were learned from the 2018 trade conflict and preventative steps were taken.

Well, watching how event have played out over the past three months demonstrates that Team Trump was even far less prepared that I’d expected. There are no immediate points of pressure the US can apply on China, unlike virtually all other trading partners. The Europeans, Japan, S.Korea, you name it. All have, in some way, shape or form, dependencies on the US.

Rare earth minerals are the pain trade and the export controls out of China are now starting to pinch American manufactures. The only question, at least for myself, is what concessions Trump/Bessent will make for China to resume exports. I suspect we will have a clearer idea in two weeks, or perhaps less.

China isn’t the party left with no choice. It’s America that will need to move first.