Chinese Banks in the US Are Laundering Drug Money

Do you think tariffs are a viable strategy? Yeah, when used strategically, yeah, I do. Because I've heard the counter-criticism from a lot of experts that say, oh, tariffs are terrible, they're gonna make everything more expensive for Americans. I mean, I think they probably will make things more expensive. Right, I mean, that's what you said. But is it the same as, like, just adding a sales tax? Or are there secondary and tertiary impacts that mitigate the more expensive? Well, basically, what you're saying is, things might be a little more expensive, but if it undermines the Chinese Communist Party that's trying to destroy us, it's worth it. My question to you, Tom, is, what are the benefits of those tariffs, knowing that they may cause prices to go up here? Do the benefits outweigh? Yeah, well, again, we do have to recognize that it's going to have some negative impacts that will raise prices on a lot of stuff. There is danger that we could, you know, revitalize inflation if they're overly used. And I'm totally against across-the-board tariffs for a lot of reasons. But with China, you know, targeted high tariffs on stuff that they subsidize to death, and they have overcapacity, and they're trying to kill our industries, I'm for as much as we need to do on that. So you wouldn't be in favor of just, like, a blanket 10% tariff on everything from China? No, I wouldn't. But, like, we have a tariff on electric vehicles from China, right? Right. Which is why you don't see Chinese electric vehicles in the U.S. Like you do in, well, like, Australia. Europe is fighting that pretty hard right now. I'm in favor of it. I mean, their subsidized overcapacity in electric vehicles is monumental. I mean, a couple of years ago, they had over 100 separate companies making electric vehicles, and almost every one of them was heavily subsidized. So it's an industrial policy not only to build for their own market, but to capture the global market. And that seems like a pretty clear case to me. Well, speaking of subsidies, one of the things that have come out recently is that China is subsidizing fentanyl manufacturing in the U.S. One of the things President-elect Trump has talked about is putting tariffs on Chinese goods in retaliation for fentanyl. Do you think tariffs effectively work like that, as a punishment for something other than the direct thing? I think I would. We could try that, but, I mean, to implement that is pretty hard because the way the Chinese are getting it in is in small packages. That's why there's a debate over the de minimis exemption for stuff coming in that's worth less than whatever, $800. That's a hot topic, partly because of the fentanyl trade. So given that you got Xi'an and Taimou sending just mammoth amounts of stuff in small packages, it's just hard. There are other things that we can do. And the China Select Committee, under Mike Gallagher, issued a report not only on the continuing supply from China, but the Chinese efforts that have been pretty effective to work with the Mexican cartels and stuff is coming across our southern border that originates in China as chemicals, and it's apparently not all that hard to make fentanyl once you get the base chemicals. So we've got to deal with Mexico as well. But China has also captured the money laundering side of the drug business. It's not only fentanyl, it's heroin, increasingly marijuana, meth, all that stuff. So some of my colleagues and I at Hudson have urged that we go after the banks that are complicit in money laundering. And it's Mexican banks, it's Chinese banks. Unfortunately, it's some banks operating in the United States as well. Hong Kong Shanghai Bank, for instance. So we have argued that, especially the Chinese banks, they're deathly afraid of getting cut off from the global financial system through the swift system of money clearing. They're trying to set up their own separate money clearing operation, but they haven't been very successful so far. So we think you go after individuals where you can, especially in Mexico. But if you go after the banks, that's elevating the issue. And we think we ought to do that and see if the Chinese get the message. I think they will, because that's more existential for their economy. So you would essentially sanction the banks? Yeah. And that's indirect. Industrial and commercial Bank of China can't operate in the United States, and we're not going to give them access to the swift system. I mean, it'd be a pretty major step, but we may be at the point where we need to do it. How long has the US government known about Chinese state-owned banks being involved in money laundering for Fentanyl? There was a Hong Kong Shanghai Bank, I may get the year wrong, but it was about 2011, was sanctioned for money laundering of one sort or another, but mostly for drug trade. The Spanish and Italian authorities have also sanctioned some Chinese banks as much as 10 years ago. So we've known about this for a while. It's hard to get at the individuals involved, and the Chinese are very clever about how they do it, but we've known about it for a while. Well, look, if we've known about it since 2011, at least, it seems like this is long enough. This spans three administrations. It seems like something ought to have already been done on these banks, instead of like, you've got Bank of China set up in midtown Manhattan, right? Why are these things still happening now? Well, it's for the same reason, I think, that we're not pressing them on CO2 emissions and other ecological disasters that they're perpetrating on themselves and the world. They, at several points, Xi has said, okay, we're going to take care of this. We're going to shut down these fentanyl providers. And the beauty of the China Select Committee on the Chinese Communist Party, in the last six months, went deeper into it after Xi had promised for about the third time to take care of it, and they found all this stuff online. Some of the research we've done at Hudson, we've found we could buy the stuff, the precursors, so they haven't shut it down. They say they do, but then it's like the movie Chinatown, you don't know what's going on, right? Forget it. Yeah, I think that report from the Select Committee also found that blatantly, there's export, like, they are... They're 100% behind it. They're reducing export tariffs for the precursor chemicals. Like, there are specific codes you can put into this website that you can access, even from the U.S., that are for these chemicals, and then you can get your export taxes taken off if you are exporting these chemicals to the U.S. or Mexico or wherever. So that's kind of like the Chinese government is explicitly subsidizing the export of these precursors. I think what this gets to, and this kind of ties to Matt's question, the problem is, like, as I mentioned earlier, none of this is by accident. Nothing the Chinese Communist Party is doing is just an accident. They are deliberately taking these steps, and it seems like the failure of the U.S., the West, the global South, is for these countries to not realize that the Chinese Communist Party is their enemy, that they are actively working against the interests of the rest of the world. And until that realization is made, then you'll never take steps to actually defend yourself.