Stephanie Smith, Council on Foreign Relations answered.
Donald is such a strange character.
On Saturday at G20 he announced US companies would be allowed to sell goods to Huawei. On Tuesday he sends email to Commerce Department to reiterate there is no change in policy.
So basically he wants the election support of US companies and workers suffering under his trade war. And he needed something to announce from the meeting with Xi, under which is threatened to throw another crazy tantrum if Xi didn’t meet him to give him a photo opportunity at G20. But really, Donald has no idea what he is doing. If he keeps up the tariffs and doesn’t repair some bridges, China completely cuts US out of its entire technology stack and ecosystem. If he allows US companies to trade with China again, he faces a backlash from his support base, that are convinced that all their problems are because Chinese people are working too hard.
I think why this issue is such a central issue globally, is because is strikes to the heart of globalization. Take for instance microchips. The microchips that US produces at Intel, Qualcom, etc are not so high tech that they cannot be produced in China. It is just because they have been around for so long, that it doesn’t make sense for China to build all the factories to make them, when there is already scale production in USA. These are commoditized products. It strikes to the heart of globalization, specialization and trade.
Once China is forced to make even its own chips to replace all these little commodity products of Intel and Qualcom, the US companies are in a world of pain. Investors are too short-term minded to think or care, but it basically has doomed the US companies, it is practically impossible for them to compete cost/profit wise with Chinese manufacturers.
Donald is such a strange character.
On Saturday at G20 he announced US companies would be allowed to sell goods to Huawei. On Tuesday he sends email to Commerce Department to reiterate there is no change in policy.
So basically he wants the election support of US companies and workers suffering under his trade war. And he needed something to announce from the meeting with Xi, under which is threatened to throw another crazy tantrum if Xi didn’t meet him to give him a photo opportunity at G20. But really, Donald has no idea what he is doing. If he keeps up the tariffs and doesn’t repair some bridges, China completely cuts US out of its entire technology stack and ecosystem. If he allows US companies to trade with China again, he faces a backlash from his support base, that are convinced that all their problems are because Chinese people are working too hard.
I think why this issue is such a central issue globally, is because is strikes to the heart of globalization. Take for instance microchips. The microchips that US produces at Intel, Qualcom, etc are not so high tech that they cannot be produced in China. It is just because they have been around for so long, that it doesn’t make sense for China to build all the factories to make them, when there is already scale production in USA. These are commoditized products. It strikes to the heart of globalization, specialization and trade.
Once China is forced to make even its own chips to replace all these little commodity products of Intel and Qualcom, the US companies are in a world of pain. Investors are too short-term minded to think or care, but it basically has doomed the US companies, it is practically impossible for them to compete cost/profit wise with Chinese manufacturers.
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