China’s Lost Cause: Why Its Tariff War Policies Are Bound to Fail

hi I'm Dong Sean Welcome to Digging into China where we explore China in depth to reveal unique perspectives The tariff conflict between President Trump and President Xiinping continues unabated At the present the United States has imposed a 125% reciprocal tariff on China with the White House clarifying that the total tariffs now reach 145% 125% for reciprocal measures and an additional 20% punitive tariff related to fentinel Frankly it's like even President Trump struggles to keep track of the tariffs he's levied on China His approach seems to shift daily and as both sides escalated their retriatory measures the spectacle feels increasingly juvenile to those observing In China Xi Jinping after two days of deliberation resolved to match the US imposing a 125% tariff on American goods Yet she is a leader deeply concerned with maintaining dignity and this tit fortat tariff exchange reminiscent of schoolyard quarrels has grown tiresome and undignified in his view Consequently she declared he's done engaging in this game with Trump impose whatever tariffs you wish He essentially said I won't respond further With tariffs already at 125% she believes trade between the US and the China is effectively decoupling rendering additional increase in meaningless charade She's stance here has merit The endless bickering between two global powers is not only tedious but unbecoming I myself find it difficult to watch At this juncture the tariff war has inflicted wounds on both nations with neither side gaining substantial benefits Trump's misstep was his overly aggressive tactics Had he targeted China more selectively from the outset the harm to the US economy might have been mitigated While he's now attempting to adjust his courses his unpredictable governance has rattled investors Markets remain pessimistic likely awaiting concrete tariff agreements between the US and its allies to eliminate uncertainty and restore stability In contrast there's no indication she intends to relent The US China trade saver has taken an almost absurd turn Trump repeatedly claims he's waiting for she's call positioning himself as the dominant party who expects the weaker side to initiate a negotiations He's holding firm to maintain that image She for his part isn't opposed to dialogue but refuses to make the first move He's vying for the stronger stance waiting for the US to reach out which would cost America as the one seeking talks a subtle but significant distinction in perception The current uh stalemate stems largely from the strikingly similar leadership styles of both men each insisting on emerging as the victor Since she shows no willingness to compromise and is prepared to forge ahead he must also brace for the repercussions Accordingly China has begun efforts to shore up its economy over the past few days Today let's examine China's plans to safeguard its economic stability and whether they align with our expectations The first priority is stabilizing capital markets and supporting the stock market to prevent the rapid depreciation of the UN China's stock exchange have introduced a daily net selling cap for for hedge funds and major retail investors set at 50 million yen with a stricter limits if markets decline further Already restrictions on free trading are evident in a share market Yet curiously the market has risen these past few days propped up by statebacked intervention what we call the national team These gains are largely superficial designed to project an image of markets unscathed by US tariffs Similarly efforts are underway to maintain the illusion of a robust UN exchange rate State-owned banks have been instructed to halt their own foreign exchange purchases and scrutinize clients currency transactions more closely effectively pausing non-essential forex activities to ease pressure on the UN The results are clear After breaching 7.4 the UN was swiftly pulled back to within 7.3 This demonstrates the People's Bank of China efforts to slow the UN's decline and avert market panic With the market steady the next the next task is to mitigate the tariff wars impact through both external and internal measures Abroad China seeks to cultivate more trade allies At home it aims to stimulate domestic demand a straightforward strategy In recent days she's diplomatic efforts have accelerated On April 11 he welcomed Spanish Prime Minister Sanchez to Beijing where he signed several trade agreements signaling an intent to deepen ties with Europe However US Treasury Secretary Bent promptly cautioned Spain against aligning with China to oppose the US warning of severe consequences I doubt Europe will side with China The pragmatic course for Europe is to avoid antagonizing either power ideally profiting from both relationships If that proves unfeasible Europe will strive to steer clear of crossing critical boundaries For instance the EU previously countered some US tariffs but only on $20 billion in trade a modest gesture to avoid a serious rift with Washington Yet as a global power Europe must project strength So public criticism of the US is obl obligatory At the same time Europe cannot se its trade reliance on China entirely Fully aligning with the US to confront China is untenable for Europe So it will continue balancing both sides to maximize its own interests This is precisely what I've criticized Trump's aggressive tariff strategy Even allies prioritize their own interests and a more measured approach to containing China's trade could have garnered broader cooperation Negotiating a plan first then announcing policies would have softened the blow to global markets Returning to sheep beyond engaging Europe he's embarking on a trip this week to Vietnam Malaysia and Cambodia His choice of destinations reveals a focus on Southeast Asia's role in the tariff conflict These countries are key hubs for China's trans shshipment trade and are currently negotiating tariffs with the US which will undoubtedly press them to impose duties on China to tighten the trade encirclements She's mission is to secure these trade partners loyalty Losing them will choke off China's trans shshipment channels leaving exporters without a lifeline The question is what incentives she can offer to retain their support Relying on outdated belt and road rhetoric won't surface won't surface Domestically expanding consumer demand is equally pressing I recently browsed the Xiao Hong Shu and noticed numerous exporters turning to live stream selling goods originally meant for foreign markets within China But this is a minor fix at best Domestic purchasing power simply can't absorb the vast export inventory Beijing is reportedly holding urgent meetings to deise new economic stimulus measures Have you observed an intriguing trend it appears she is increasingly delegating economic stabilization to private companies When the stock market faltered recently several listed firms suddenly began repurchasing their shares on Mass almost certainly at a communist party's behest Typically that's the role of a statebacked investors But if companies can be directed to use their profits to stabilize markets it spares the government's coffers Likewise with the trade war threatening to bankrupt the countless export factories and pile up inventory consider the US approach Unsold agricultural goods trigger immediate government subsidies She however is far more frugal Saved the factories yes provide subsidies certainly but she won't pay for it Companies will JD.com led the charge announcing a 200 billion UN initiative to purchase unsold export goods effectively shouldering she's burden with JD setting the president Will Alibaba and a pin door follow suit knowing she's priorities he'll favor large enterprise over small ones stayed on the firms over private ones Major exporters will receive bank loans or government contracts to stay afloat even if they hammer money annually They won't be permitted to collapse Smaller exporters however will be left to fail without aid From the party's perspective supporting numerous small firms is too costly with minimal returns better to concentrate the resources on preserving a few large players banking on their revival in a few years Even as the trade war pushes US China trade towards near total disconnection she remains unwilling to implement measures that would genuinely boost domestic demand such as enhancing welfare or distributing cash to citizens A point I believe we'll all we all recognize The only recent policy tied to public welfare is a proposal to include unemployed college graduates in the minimum living allowance program Meaning jobless grads can now qualify for benefits in coastal cities This amounts to roughly 1,000 monthly Not substantial but better than nothing The concern is that some universities desperate to inflate employment statistics may falsely may falsify job records potentially denying graduates even this modest support Such practices undoubtedly exist As Beijing scrambles to deise economic counter measures what options remain to stimulate growth likely familiar measures increasing subsidies or replacing outdated consumer goods perhaps raising the budget from 300 billion to 500 billion yen launching new campaigns like cars to the countryside or appliances to countryside or even organizing nationwide exports for export goods with local governments taking the lead On a fiscal front that's the approach monetarily targeted lending may resurface The central bank could introduce an export enterprise support lending program to bolster major exporters As for broader measures like a lowering reserve requirements or interest rates these hinges on the UN's depreciation pressure I suspect the bank will avoid comprehensive cuts for now possibly reducing reserves but hesitating on interest rates given the strain on the exchange rate In essence the USChina trade war has largely concluded in the realm of goods trade with both nations moving toward completed decoupling China retains a narrow channel through Hong Kong for zero tariff imports of certain high-end US equipment items it still needs from America But China's export trade is effectively crippled Over the next 90 days while the US negotiates trade agreements globally China has a brief opportunity to maximize trans shshipment trade Once those talks conclude China may face collective tariff sanctions from nations worldwide rendering trans shipment roots unviable Time is running short for sheep These pivotal 90 days will reveal whether she can secure additional trade partners I'm skeptical his efforts will yield significant results Instead I believe change may come from the US where Trump has delegated a tariff negotiations to Treasury Secretary Bent who takes a more temperate stance If the US relaxes its tariff demands on allies it could indirectly ease the pressure on sheep offering him a slight reprive Thank you so much for watching If you find this video helpful please like it or drop a comment below and hit the subscribe button right here It really helps YouTube suggest my video to others I'll be back with more content soon Until then be well