China’s Turn? Elbowing Out the U S in Trump’s Trade Chaos

hi I'm Don Shan Welcome to Digging into China where we explore China in depth to reveal unique perspectives Trump's tariff hammer has come down hard on the entire world and the tax rate formula he's cooked up isn't about fair play or matching rates It's all about the trade deficits The tariffs he's slapping on countries are so over the top way beyond what anyone in the market expected that it sent US stocks into a free fall Here's the thing Trump's economic advisers didn't push him toward this wild approach They suggested something more like a slow simmer maybe a 2% hike here and there to avoid rattling the financial markets too much But Trump clearly didn't bite on that idea Sure from an economic standpoint you'd want to keep things steady not shake them up like this But I'd wager Trump's got his eye on the political game He's in a rush to balance the US budget and scrap together more cash so he can roll out his tax cuts hand out the Doge refund checks to folks and keep his grip on the 2026 midterms This is a massive roll of the dice though We won't know who wins or loses until 2026 rolls around For now the trade shock Trump's unleashed is already hitting economies worldwide even messing with sovereign credit ratings including America's own believe it or not Take export heavy countries for example With these tariffs slamming them two things are bound to happen One their economies tank and the GDP takes a dive Two their credit ratings could get slashed Just look at April 3rd Fitch dropped China's rating from A+ to A pointing to worries about the public debt spiking fast weak demand at home rising tariffs deflation and the need to jack up deficits all chipping away at the country's credit But here's a kicker Back in August 2023 Fitch also knocked down the US rating because of its own crazy high debt pot So while it look like a trade war between the US and China is really a race to see who can tackle their debt mess first And since Trump dropped his tariff bomb the Chinese UN's been on a little roller coaster slipping to 7.35 before bouncing back sharp to under 7.3 That's Beijing stepping in no doubt So why not let the UN slide word from Wall Street Journal reporters digging around in Beijing says China's top brass see Trump's tariff swing as a rare shot to push the yen onto the world stage hoping it'll elbow out the dollar They are keeping it strong to take over as the big global currency It's not just the higher ups thinking this way Regular folks are on board too Some even dream of a bunch of countries teaming up under China's lead to build a new trade club leaving the US out in the cold So in this episode let's chew over whether China can grab this chance to step up as the new boss of world trade Trump's tariff storm is basically tearing apart the old global trade setup to build something new His idea is simple You can trade with America make some cash off us but you've got to play by our rules like setting up shops on US soil It's got a real bossy vibe to it No question Anytime someone smashes up the way things are they are going to catch heat from all sides Countries are reacting in four big ways right now First you've got the hard push back like China's doing Second some are gearing up to hit back like the EU and the Canada Third others are trying to talk their way into a pass like a Japan And fourth a few aren't fighting at all Vietnam's even cutting tariffs on the US to cozy up So it look like China might pull the EU and Canada into an anti-US crew dumping US bonds together ditching the dollar and maybe switching to the UN Now let's not get ahead of ourselves wondering if China can run the show in this new crew Let's stick to the money facts To pull off what the US did with the dollar China would have to flip from being a trade surplus champ to running deficits But with the EU and Canada it's still racking up surplus Sure skipping the dollars doable Russia and China are already at it But that's just a bothering and the bothering got a ceiling Trade hits a wall fast Picture this John catches 10 fish a day and David snag four phasants They trade five fish to for two phasants Both happy John step it up to 20 fish but David is stuck at four phasants They are still swapping five fish for two unless John runs up to say 15 fish for three And David likes the deal Otherwise they are capped at David's four phasants That's world trade without the US as the big spender Without America's buying up everything a new trade groups going to struggle to grow For China standing still isn't an option Exports have to keep climbing every year Why if they shrink GDP drops And if GDP drops the debt bomb goes off The UN's been printed like a crazy for years loading the economy with debt like a giant mortgage on the whole country If income dips the debt still there staring you down So if China want to lead world trades it's a god a puzzle to solve It needs to push the rent out there become the top buyer but also keep pumping out exports to hold its surplus Can that work maybe on paper first they'd have to throw open the capital gates Let the UN flow free to the world So the world's happy to invest in China houses stocks bonds you name it Second they need to print more UN to bankroll stuff overseas like belt and road projects or loans to other countries But those countries have to want the UN If they take it just to swap for dollar and that swap stops they'll ditch it Then there is a third piece The UN got to move between other countries like Iran selling oil to North Korea and North Korea saying Yan only But if it can't turn into dollars even buddies might say no thanks The UN only buys so much mostly Chinese stuff What if they want American computers phones games chips everybody's chasing dollars because America's got the goods people want trade partners sweat for dollars and yeah they buy bonds but they also want American stuff Google searches YouTube ads and video chips Apple phones and rathon weapons fizer drugs Hollywood flick hesink dollars aren't just random paper the trade deficits not for kicks people grab dollars because America's got something to trade back goods or service Otherwise what's the point what's China got stuff others can make too If China had F35s or Patriot missiles to sell they wouldn't need to hustle the UN People would line up for it So China can take America's spot Open the capital accounts the UN would tank Money would run Invest overseas with UN only so far depends on dollar swaps Get it flowing between other countries Tough sale It's buying powers too narrow Can't touch America's high-end gear Trump's trade shakeups a huge bet And I'm not sold it'll pay off It's like hitting a thousand bad guys and still take 800 punches yourself America can slug it out with China one on one But a trade war with everybody is about who lasts longer Whoever standing wins Trump's banking on surplus countries crying uncle go first from the tariff pain they will lose more he figures and come baggging but it might not go that way the Chinese can tough it out like nobody else tariffs could crush their factories tank the economy dropped currency even leave people hungry they still might not blink Americans though prices go up stocks get stuck beef goes from every day to every 3 days they might kick Trump out Endurance isn't the same everywhere Unless Trump scores a quick win dragging this out screws him for the midterms China's not budging The real questions whether other countries cut deals with the US and buy into the new trade rules If they stall play it slow fight for a year Trump's tariff hammers might just clang and miss His big supports is the rust belt workers lives already rough for them Stocks falling or price jumping doesn't change much They are all in for Trump bringing factories back Unions are swinging his way now America's old globalization and free trade gigs like a China's real estate mess It's about who's winning and who's left out In China the folks who got rich flipping houses want prices skyhigh forever But tons of people can't keep up with those prices They will never own a place Do they want prices up or down they don't care how much real estate's tangled up the economy They are the ones looked out A crash helps them and you can't really blame them China's land cash grabs shortsighted burning the future for a debt mountain Same deal in America China's regular folks hate the real estate game Like the rust belt workers hate globalization They are the ones it kicked aside They want to ditch it Go back to the 80s when a factory job meant a big house and a good life America's globalization and China's land grab both piled up huge debts America's credit rating took a hit too just like a China's That's the big fight Now some swear by the idea that a trade deficit is fine because it balances out with the cash flowing back into the US markets But that only works if it's a perfect system No bubbles no crazy inflation America pushes dollars out and inflation with it That's the dollar's secret sauce Keeps the it keeps it printing without blowing up But these dollars are debt other countries US bonds are IUS from Uncle Sam More dollar stuff out there bigger the debt gets Print too much like now with the government drowning in it and the world will ditch dollars fast They flood back home and boom inflation goes wild Dollars doesn't aren't freebies and a giant trader deficit not a shrug off Bottom line dollar power needs America's debt to stretch forever Credit always good Crack debt and the dollars rush back lighting an inflation fire America's got to cut the debt now or even without Trump's tariffs All those extra dollars will come home anyway and trust the faith sparking the same mess You can say Trump's way is wrong too wild too risky Maybe smashing his own foot with the rock he's lifting Fair enough But he's at least trying to balance the books keeping America from drowning deeper in debt If the Democrats keep running things it's tax hikes all around pinging the debt higher Either way folks feel it Tariffs now or taxes later Tariffs might bring tax cuts and the checks eventually Taxes and more debt That's just a dead end road Thank you so much for watching If you find this video helpful please like it drop a comment below and hit the subscribe button right here It really helps YouTube suggest my videos to others I'll be back with more content soon Until then be