With 60-100% Trump tariffs incoming, China is completely stuffed.
Then again, it was already completely stuffed so does it matter?
The answer hangs on the response.
China does not have much leverage over US trade:
I doubt it will do countervailing tariffs. More likely, it will devalue CNY and target specific American trade for bans like agriculture to upset the Trump base.
As well as undertake a concerted campaign to bribe the President.
So, US trade is bound to fall. Even more so given Trump will ensure cheating via other countries like Mexico is stopped.
As the PBoC is forced to cut faster and the CNY is let go against everybody, a flood of cheap Chinese goods will wash over the world.
This will help offset the GDP blow in lost trade volumes, even if it means a loss of income.
I have often argued that Beijing will never make the concerted push towards domestic demand and a greater consumption share of the economy.
It requires the CCP to let go of both money and power as the economy is decentralised. This is not in its makeup.
If it does not launch major reforms to promote consumption now—a welfare safety net, privatisations, faster wage growth—it never will.
I fear it will not but hope I am wrong.
Because if it does not, ultimately, Beijing may turn to martial stimulus to distract from falling living standards.
Do not go long Taiwan.
