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US vs The World

The Bureau of Labor Statistics (BLS) announced the addition of 223k jobs in May, bringing the unemployment rate down to 3.8 percent. Labor markets are tighter than they have been since the Managed Depression started in 2000, and there is upward pressure on wages. What could possibly screw it all up?

How about a global trade war pitting the US against every other nation on the planet?

Where are all those containers going?

We have discussed at length how destructive trade wars are and how they make no sense at all. Like any other war, there are never any true winners, just those who have lost less. The odds that America will wind up being the one who loses the least as we take on the rest of the world are approximately 24% – our total share of global GDP.

It’s a really dumb bet all around.

The longer term political ramifications are equally grim, especially as China makes huge advances in its influence. As a nation, they are intelligently run in many ways, save the oppressive politics which is the only thing actually holding them back at the moment. There is a lot more room for them to grow and they know it.

The VW plant in Chattanooga, TN

Why would the US start this now? There is no good reason. As it stands, we have a trade war developing with Canada, Mexico, and the EU. Trump apparently wants to eliminate German cars from American roads.

Meanwhile, China wants whatever German technology it can gain through partnerships. Guess what Germany is going to do?

That is the problem with conducting a trade war from the position the US is in.  On the one hand, we have the largest economy in the world and therefor the most to lose from a collapse in global trade.  On the other hand, we aren’t big enough to really throw our weight around anymore and other nations, long sick of us throwing our weight around, are beginning to see this.

Ideas usually come to those who are busy working, actually.

None of this to say that there aren’t legitimate ways that the US could be tougher on various trade issues. China still has essentially no good enforcement of trademark, copyright, and patent protection normally associated with a genuinely developed nation. Our tariffs are generally lower than any of our trading partners, and that does not have to be the case any longer.

Measures like that would be reasonable. They would also spook the stock market, but that can’t be helped.

What’s being done now is simply the stupidest possible thing in economic, diplomatic, and social relations with the rest of the world. It’s the US vs The World, and you can reasonably bet that the world will win.

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