Dear Mr. President: How Much More "Winning" Can We Take?

US cotton producers will take a hit in the US-China tit-for-tat trade war. We call this "winning".

Reuters reports India Ships More Cotton to China as 25 Percent Tax Spoils U.S. Supply.

India's cotton shipments to China could grow five-fold to 5 million bales (850,000 tonnes) in the next crop year as exporters rack up orders amid a trade war that is forcing the world's top consumer to look for other sources of supply.

The United States, the world's biggest exporter of the fibre, has cornered the bulk of Chinese imports for at least a decade. But China's decision to impose a 25 percent import tax from July 6 on American farm commodities, including on cotton, in retaliation for tariffs enacted by the administration of U.S. President Donald Trump will allow India to grab a bigger share of the Chinese market.

"In the last few weeks we are getting good inquiries from China for the new season crop," said Arun Sekhsaria, managing director of D. D. Cotton, an exporter that earlier this month sold cotton to China for shipments in November and December.

"If the 25 percent duty stays there as announced, then India could export 5 million bales to China," he said.

"India will benefit not only because of the tariffs, but because emerging nations' currencies have generally lost value against the dollar in the last couple of months," said Gabriel Crivorot, an analyst at Societe Generale in New York.

Winning by Losing

  1. A Fed study shows "Tariffs Kill High-Paying American Manufacturing Jobs and Businesses".
  2. Auto job losses alone are likely to hit 45,000 as noted in Pandora's Box: Another Look at Steel Tariffs.
  3. On June 8, I noted Three US Tire-Chord Makers Threaten to Close Doors Due to Trump Tariffs.

To up the ante: Trump Now Threatens Tariffs on All Goods from China: $450 Billion.

Trump believes China will lose more. This we call "winning".

Mike "Mish" Shedlock

Comments (29)
No. 1-29
Onni4me
Onni4me

One question remains, how about companies opening new branches in India or similar location? Would a US ownership effect the trade between other countries and US owned companies outside the states? I am not familiar with all the regulations but firmly believe that there are routes around this nonsense that hopefully is short-lived.

Stuki
Stuki

Some of the 5 million bales that get exported, will certainly need to be replaced by increased imports of Cotton by Indian buyers.

Similarly, as prices for Chinese flat screens go up in the US, American buyers will source them from Vietnam and Singapore or whatever. Which don't have the production base to build them, so they need to import them from someone who does.....

Certainly works as a ploy to divert wealth from those who produce it, to pointless privileged middlemen, but then again what else is new in our progressive dystopias?

Wave Watcher
Wave Watcher

Spot on. Quite how anyone can, with a straight face, consider Trump as "right" wing is beyond me. He is a statist authoritarian who wants to hack away at government only to give himself more unchecked power to start trade wars, throw his weight around international relations, intervene in companies' internal matters, demand absolute bow-down devotion from anyone around him and roll-out the Bible-bashers to justify policy.

I remember a time when the Alex Joneses of this world decried Dubya and Obama for not following the Constitution and over-using Executive Orders. But we now see a record set on both: https://www.federalregister.gov/executive-orders

Yet the tribal loyalty from these "alt-righters" who falsely believe they are libertarian constitutional conservatives continues blindly. Tribal thinking has overwhelmed objectivity.

Because the fusion of the state and the corporate sector under a religiously-driven all-powerful leader is the Saudi & Iranian model. It is the monarchical or fascist model of government. It is theocracy, everything the Constitution is against.

Moreover, true conservatism is grounded in manners, respect, courtesy, decency, modesty and politeness. There is nothing conservative about hurling abuse at people from Twitter or dictator-style denunciations. It is everything a true conservative would not accept from their children. It should be even less acceptable from a President.

And the trade wars, as currently unfolding, are how America would look like if it was losing power and influence. The vacuum it is leaving on the world stage is going to be only too eagerly filled by China, India, Brazil, South Africa and even Russia.

A more spectacular act of geopolitical and economic self-slaughter is hard to imagine.

JonSellers
JonSellers
Wave Watcher
Wave Watcher said (edited): Spot on. Quite how anyone can, with a straight face, consider Trump as "right" wing is beyond me. He is a statist authoritarian who wants to hack away at government only to give himself more unchecked power to start trade wars, throw his weight around international relations, intervene in companies' internal matters, demand absolute bow-down devotion from anyone around him and roll-out the Bible-bashers to justify policy. I remember a time when the Alex Joneses of this world decried Dubya and Obama for not following the Constitution and over-using Executive Orders. But we now see a record set on both: https://www.federalregister.gov/executive-orders https://en.wikipedia.org/wiki/List_of_executive_actions_by_Donald_Trump Yet the tribal loyalty from these "alt-righters" who falsely believe they are libertarian constitutional conservatives continues blindly. Tribal thinking has overwhelmed objectivity. Because the fusion of the state and the corporate sector under a religiously-driven all-powerful leader is the Saudi & Iranian model. It is the monarchical or fascist model of government. It is theocracy, everything the Constitution is against. Moreover, true conservatism is grounded in manners, respect, courtesy, decency, modesty and politeness. There is nothing conservative about hurling abuse at people from Twitter or dictator-style denunciations. It is everything a true conservative would not accept from their children. It should be even less acceptable from a President. And the trade wars, as currently unfolding, are how America would look like if it was losing power and influence. The vacuum it is leaving on the world stage is going to be only too eagerly filled by China, India, Brazil, South Africa and even Russia. A more spectacular act of geopolitical and economic self-slaughter is hard to imagine.

Well said Wave Watcher

Sergei
Sergei

"Want a change - vote for Trump." Didn't you Mish say it? Then why are you complaining? It's only two good options left on the table: going of the cliff or run into the wall. Now you are guessing is the bucket of shit that we all are supposed to consume is half full or half empty. Enjoy the ride.

Wave Watcher
Wave Watcher

I think the lesson is: if you know what you want to change FROM, be just as clear about what you want to change TO.

"Change" on its own does not guarantee GOOD change or THE RIGHT change. And just because Trump was AGAINST Hillary, doesn't mean he would, of himself, be any good. He has proven equally terrible for entirely different reasons.

Change for the sake of change, without any further thought, is just an aimless gamble.

We need to get out of this rinse/repeat cycle of "vote for us because weare not them." Obama won because he was "not a Bush Republican." Trump won because he was "not part of the Bush/Clinton dynasty or Obama".

This logic gives no candidate any reason to raise standards. And the race to the gutter is exactly what has therefore happened.

As Mish himself elsewhere, "Apparently it's OK to be immoral if you are following other immoral leaders."

Until any party can find a positive narrative for their platform and policy agenda, rather than defining it negative terms by who or what it is not, Congress overall will continue with its single-digit approval ratings. Because neither side has any incentive to do any better than just "not be the other guy".

Irondoor
Irondoor

Bush 1&2 tried being nice guys. Where did that get them with the left? Trump has convinced the Deplorables that everybody (including the Chicoms) disrespects them and what they believe they stand for, so Trump is their way of fighting back. It’s tribal warfare.

Bardenio
Bardenio

The question about this little trade war should be, to what end? If in the end a few eggs have to get broken to get everyone to the trade talking table and nail a really good and fair / free trade agreement, then this is a good problem. If the end result is just protectionism then it's a failure. What gives me hope, Trump publicly has stated to the G7, let's remove all trade barriers and tarrifs. That would be a massive win.

KidHorn
KidHorn

The US and China will compromise. That's the desired goal. China will import more US products reducing the trade deficit. It will be a win win for Trump and China. The only losers will be the Trump haters.

Kinuachdrach
Kinuachdrach

Kidhorn is right about the desired goal. Certainly, it is unsustainable for the China (and Germany too) to run high trade surpluses for ever, and the best solution would be for them to drop their high tariff (and higher non-tariff) barriers to imports.

How does the side which has been losing in this two decade long trade war influence the current winning side to do the right thing? Threaten to retaliate against their high barriers, of course! This is all obvious to anyone who has ever been involved in a real world negotiation.

FlyOver_Country
FlyOver_Country

Bardenio stated ...’ What gives me hope, Trump publicly has stated to the G7, let's remove all trade barriers and tariffs. That would be a massive win.’...

That’s a beauty pageant equivalent of saying ‘lets remove all army’s and have world peace’….

Sorry. Just not going to happen, simple as.

Trade deals with china and for that matter, the rest of the developing world has gone like this. We (US) have capital and know-how, something you (China) don’t have. You have cheap labor, something we don’t have, lets make a deal.

My former employer has built two factories in China and now China is our biggest growth market.

This article gives some insight into how I see world trade. In the last 30 years, world trade has become so intertwined, it’s hard to use traditional trade concepts like ‘trade imbalance’.

douglascarey
douglascarey

Trump is wrong on trade wars, but you don't give him enough credit. Just wait until you see Q2 GDP. Trump is also busy fighting the culture wars for the good guys, which also does not get enough respect. The culture war is perhaps the most important war of our lifetimes.

Stuki
Stuki

Back before Trump had a chance to show his hand, Trump vs Hillary was the difference between playing Russian Roulette with 5 vs 6 bullets in the cylinder. A Trump win at least held out the promise of theoretical chance of being preferable to straight up nuclear annihilation.

RonJ
RonJ

Zero Hedge headline: China Quietly Approaches US To De-escalate Trade War

Winning is about ending what has been going on for years on end, now. Trump is working to that end. Keep you eye on the prize- the end result. Winning is the score at the end of the game, not the first inning.

JonSellers
JonSellers

Honestly, I don't think Trump supporters care how much money Apple makes manufacturing cell phones in China and selling them in Australia. Trump supporters care about having good middle-class manufacturing jobs in the USA. What they don't understand is those manufacturing jobs only paid well because they were heavily unionized. Something Trump supporters are also adamantly opposed to. That cognitive dissonance will eventually lead to deep disappointment and certainly placing the blame on libtards. But it should be an interesting show.

pi314
pi314

I expect after the flusters and threats, the outcome will be higher US exports and more balanced international trades. Will Mish eat his words then?

CautiousObserver
CautiousObserver

To get a particular outcome from a negotiation, all other possibilities must be made so awful that both sides are willing to choose the one particular outcome. The key to bringing this back from the brink is that the US and China need to leave at least one option open that both can live with.

Autocatakinetic
Autocatakinetic

The red states that this will hit fully deserve the pain for helping elect this imbecile in the first place.

Blacklisted
Blacklisted

What ever decline does occur will be more than offset by the influx of people and businesses that are fleeing liberal mecca's like CA, IL, NJ, etc. Trump on his worst day could never do as much damage as the establishment politicians (mostly democrats) have done to cities and states across this country. Why do you think "this imbecile" got elected, and all the establishment politicians have been losing power all across Europe? I think the old communist leaders in the USSR used to call your type, useful idiots.

flubber
flubber

It's quite naïve to think that all of these countries are bitching about the proposed trade tariffs because they 'wish to import' more U.S. goods. No, no...they want to export more to the U.S. I agree that trade is a 2-way street. Unfortunately for the U.S., three lanes have been inbound while we only have one outbound lane. Yes, it's 2-way alright, but the traffic flow is very uneven. No tariffs or barriers to trade would be the way to go, but that will never happen.

Realist
Realist

The US actually has higher tariffs than Europe, Japan, Korea, Australia, Canada. Eliminating all tariffs would be a win for everyone. But it is the US that would balk. Besides, Trump would renege on any trade agreements in a day or two. He has demonstrated that many times already.

Brian1
Brian1

The red states who voted for Trump are doing better than they have in decades. So are the blue states that went for Trump.

Tengen
Tengen

Whoa Nellie! That's quite a claim there. Would be very curious what you're basing that statement on.

Could hear a needle scratching a record as I read that!

Sechel
Sechel

even if the tariffs come down, it will be hard to win back the business

Brian1
Brian1

Historically low unemployment, lower taxes, the numbers when asked if satisfied with the direction of the country... Can you name a state that went for Trump that he'd lose if an election were held tomorrow? I don't know of any Trump voters that he's lost but I know a few Democrats so disgusted with the fake hysteria who plan on voting for him in the future out of protest. Not many but it only takes a few percent for him to win re-election in a landslide.

Tengen
Tengen

Unemployment numbers are bogus ,as discussed on here many times. The BLS is perhaps the most crooked of government indicators, and that's saying something. Trump himself claimed 42% unemployment a few months before he was elected.

The point is that we have many more trillions in debt than we did decades ago and the central bankers have run roughshod on us and the rest of the world. We also have a society where we absolutely despise each other. Lengthy periods of artificially low interest rates from the Fed have spurred a breathtaking amount of malinvestment and the debt has become so onerous that normalizing rates is no longer possible.

You can like Trump or dislike him, whatever. But if you think anybody's "saving" the US from its mathematical fate, you need to flush out your headgear.

Realist
Realist

Amazing. Even Americans realize that they despise each other. And Trump is making sure that the rest of the world despises Americans too. You can’t make this stuff up!