Former Commerce Secretary Gary Locke appeared on MSNBC on Saturday to give Americans bad news: President Donald Trump’s trade war with China is going to hurt Americans far more than it will hurt China.
Earlier this week, Trump slapped China with a $50 billion tariff on goods imported to the United States.
China responded with a retaliatory tariff of the same amount, which drew a temper tantrum from Trump, who went on to threaten China with a $100 billion tariff. But China is prepared to retaliate in kind if Trump follows through and has vowed to retaliate to the end rather than bow down to Trump.
Among the goods slapped with a tariff by China is American soybeans, which just so happen to be produced in rural states that voted heavily for Trump and the GOP.
China’s tariffs will also force American manufacturers to spend more to produce goods for a demanding American public, which will raise prices.
Trump believes a trade war is “easy to win,” but Locke, who also served as U.S. Ambassador to China, explained that American is going to suffer more than China will. Locke said:
“Obviously China is going to retaliate. China cannot be viewed as backing down or being weak. They have gained much stature both internally and internationally. And so, they’re going to hit back hard. Unfortunately, in a trade war, both sides will lose, consumers and workers, and I think it’s going to be especially hard on American consumers and American companies.”
Locke pointed out that China makes many products that Americans buy, such as microwaves and shoes. But while Americans can’t go without those things, China can definitely go without American agricultural products such as soybeans because they can buy them elsewhere.
“China will be able to respond immediately. The reality is that China really is able to get back at American companies. They don’t have to buy American products. If they levy tariffs on airplanes or soybeans, they can buy airplanes from Aerobus or they can buy soybeans from Brazil. Whereas, with respect to American consumers, so much of what we buy is only made in China.”
Brazil currently has a surplus of soybeans, which means they will be all too happy to have China as a new customer. That leaves American farmers in the lurch and American consumers will be paying more at the store. And it that will be a double-whammy on farmers since Mexico is currently buying more corn for Brazil rather than buy from the United States because of Trump’s threat to withdraw from NAFTA. Locke said:
“American consumers will simply have to eat the cost, pay more out of their pocket, which means less money for vacations, retirement, buying an automobile, or saving for the college education.
The tariffs ‘won’t really hurt the Chinese economy … because they will be able to find substitutes at a reasonable price.'”
There “aren’t that many substitutes” for goods made in China that Americans buy.
Here’s the video via YouTube.
So, Americans are staring down the barrel of an economic cannon that is about to blow up in their faces.
China has the clout to weather this storm, whereas the United States does not, especially since China owns a good portion of our national debt and could easily call in the IOU at any time.
It’s an economic nuclear option that we don’t have, nor can we afford.
The 2018 Election in November is right around the corner and Republicans are going to start panicking even more now that Trump is hell-bent on tanking the economy to serve his over-sized ego.
The Dow Jones dropped 500 pointed alone on Friday after Trump threatened China with more tariffs.
Time and time again, Trump has proved that he knows nothing about economics, and Americans are going to pay a high price for that ignorance.
Featured Image: YouTube screenshot.