https://pjmedia.com/spengler/trade-wars-the-empire-strikes-back/
Wars happen because the opposing sides have different views of the likely outcome. In the case of wars between Asians and the West, the West chronically underestimates the Asians. The Romanov Dynasty fell in large part because it lost its entire fleet in two catastrophic engagements with Japan’s Imperial Navy, at Port Arthur in 1904 and the Tsushima Strait in 1905. Britain would have lost the whole of its Asian Empire to Japan after the fall of Singapore in February 1942, except for the United States. Just before Singapore fell, Churchill told a journalist (as Andrew Roberts reports in his new Churchill book) that the Japanese were “the wops of Asia” and would fold like the Italians. Never before in the course of human events did such a smart man say anything so stupid.
So at the risk of spending the next month dodging rotten eggs and ripe tomatoes, I’ll say it: The way things stand, we’re going to get our heads handed to us, and President Trump’s chances of re-election will drop considerably. I’m a Trump supporter, and I want him to be re-elected, but I think he’s walking into a Chinese trap. Remember, Xi Jinping doesn’t have an election in 2020.
Today’s announcement of Chinese tariffs on $75 billion of U.S. goods and President Trump’s promise of retaliation may mark a turning point. China has taken the offensive. In fact, it did so August 6 when it allowed the RMB to depreciate to less than 7 RMB per U.S. dollar, as I explained in an Asia Times analysis at the time (below).
China appears to believe that it can win a trade war against the United States. Of course, no-one wins. Both sides lose. The question is how each side deals with the consequences of losing. For the past year, I’ve argued that the time is long past when the U.S. can inflict sufficient pain on China to impose our will. Since the 2008 crisis, China has been shifting its economy toward the home market and away from exports. Only 5% of its manufacturing now goes to the U.S., and most of that is on the low end of the value-added spectrum. When President Trump tweets that we don’t need China, by contrast, he appears unaware of the vast network of specialized manufacturers, skilled engineers and workers, and suppliers that produce the computers and consumer electronics we buy from China. You can’t wave a magic wand and replace twenty years’ worth of investment and training.
