This past Friday headlines blared, “Trade war costs China its stock market ranking”. If you’re shocked it’s probably only because stories covering what’s been happening to Chinese equities have been very, very tough to find. Wonder why?
Maybe because an overwhelming anti-Trump media are loathe to report our trade war with China has, according to Bloomberg, “taken their cumulative value down to $6.09 trillion”, dropping them below the Japanese market for the first time since 2014. We are valued at just over $31 trillion.
Here’s another nugget Americans might find very instructive. “China’s Shanghai Composite index is down over 17%, year to date, with domestic stocks taking a hit amid trade tensions with the U.S. Japan’s Nikkei 25 index is down about 1%. Stateside, the Dow Jones Industrial Average is up almost 15%.”
All the pearl clutchers out there must be asking themselves, while watching this ongoing, fiscal, commercial butting of heads, how it’s possible we’re hammering big bad China? The answer can be found by reviewing some basic math.
In 2017 China sent roughly 4x more goods to America than we exported to them, leading to a U.S. deficit of $375 billion. Which means a whole lot of dough was sitting in Chinese coffers. This inequity was something Candidate Trump relentlessly referenced throughout his campaign, and vowed to fix.
Most on the sidelines thought it was just talk, but negotiator Trump likely saw a terrific opportunity to apply some serious leverage. He’s willing to bet China would be more dependent on our cash than we’d be in need of their cheap goods.
Add to that, our president’s undying confidence, and faith in American greatness. He firmly believes that given a relatively fair playing field we’ll easily best any foe. And now tens of millions of Americans, joined by more every day, are sharing Trump’s optimism.
It’s the kind of swagger the Chinese haven’t seen since Reagan, and our president shrewdly uses it as an effective negotiation tool. Remember this? When asked about tangling with China, candidate Donald Trump was brutally mocked by scores of “experts”, for unequivocally claiming, “They need us more than we need them.”
Looks like, once again, much to the dismay of Trump haters, the president may be right, and the nation much better off because of it.