How might China respond? One possibility is soybeans. The country imported $12.4 billion of American soybeans last year to feed its pigs. China relies on these imports to keep feed prices low, which in turn keeps low the politically-sensitive price of pork. The meat is China’s staple protein, and a sizable component in household budgets.
.. But China is arguably now in a better position to handle disruption from American soy. Food price inflation has been running negative for over a year thanks to agricultural reforms, rebounding pork supply and a worldwide grain glut. The strengthening Chinese yuan is also weighing on the price of imported foodstuffs.
.. U.S. farmers’ leverage with China, meanwhile, is exceptionally weak. Farm debt is high and incomes are falling.
Global soybean prices remain mired at barely half their 2012 peak. And Brazil, America’s main competitor for the Chinese soy market, is growing another bumper crop.
Kim Jong-un and the Art of Tyranny
You do not subjugate a people by taking everything from them. You subjugate them by giving them something they know you can take away. Desperate people aren’t always obedient. Dependent people usually are.
.. You need a 50-year solution to your strategic dilemmas, not just another set of piecemeal concessions from Seoul or Washington. That requires changing the game in East Asia by nudging America out. Whoever is helping you make such astonishing progress in your missile and nuclear programs clearly wants to use you to change the game, too.
.. Drive every wedge you can between Washington and Seoul. Some you get for free: Who else but Donald Trump would think to start a trade war with Seoul in the midst of a nuclear crisis with Pyongyang?
.. Or what if somebody found a Stuxnet-type solution to cripple your only operational refinery or blow up the pipeline through which you import crude from China?
.. Your retaliatory options are few. You can’t simply level Seoul with artillery: that would mean full-scale war and your prompt destruction. When you get down to it, you’re making up in gumption what you lack in nearly every other resource.
Steve Bannon, Unrepentant
“In Kim, Trump has met his match,” I wrote. “The risk of two arrogant fools blundering into a nuclear exchange is more serious than at any time since October 1962.” Maybe Bannon wanted to scream at me?
.. “We’re at economic war with China,” he added. “It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and it’s gonna be them if we go down this path. On Korea, they’re just tapping us along. It’s just a sideshow.”
.. Given that China is not likely to do much more on North Korea, and that the logic of mutually assured destruction was its own source of restraint, Bannon saw no reason not to proceed with tough trade sanctions against China.
.. Contrary to Trump’s threat of fire and fury, Bannon said: “There’s no military solution [to North Korea’s nuclear threats], forget it. Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.”
.. “To me,” Bannon said, “the economic war with China is everything. And we have to be maniacally focused on that. If we continue to lose it, we‘re five years away, I think, ten years at the most, of hitting an inflection point from which we’ll never be able to recover.”
Bannon’s plan of attack includes: a complaint under Section 301 of the 1974 Trade Act against Chinese coercion of technology transfers from American corporations doing business there, and follow-up complaints against steel and aluminum dumping. “We’re going to run the tables on these guys. We’ve come to the conclusion that they’re in an economic war and they’re crushing us.”
.. “I’m changing out people at East Asian Defense; I’m getting hawks in. I’m getting Susan Thornton [acting head of East Asian and Pacific Affairs] out at State.”
But can Bannon really win that fight internally?
“That’s a fight I fight every day here,” he said.
.. He dismissed the far right as irrelevant and sidestepped his own role in cultivating it: “Ethno-nationalism—it’s losers. It’s a fringe element. I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more.”
.. I came away from the conversation with a sense both of his savvy and his recklessness. The waters around him are rising, but he is going about his business of infighting, and attempting to cultivate improbable outside allies, to promote his China strategy.
Trump’s poll numbers are bad. Here’s when the bottom will drop out.
While views of the economy closely correlate with partisanship, this means, all things being equal, that Trump’s overall approval rating should drop four or five points for each 10-point drop in views of his economic performance. Because Trump supporters are largely unconcerned with his personal antics, economic woes — not the Russia scandal or zany tweets — are what would doom Trump in public opinion.
.. The problem for Trump is many of his populist promises are starting to look fraudulent.
- Remember that Carrier plant in Indiana that Trump claimed to have saved? It’s reportedly beginning to lay off 600 people.
- The Boeing plant in South Carolina that Trump visited in February to showcase his fight for manufacturing jobs? Layoffs there, too.
- Trump denounced plans by Ford to move production of the Focus from Michigan to Mexico. Now Ford is moving the work to China instead.
manufacturing employment hit a record low last month of 8.47 percent of overall employment. It has long been trending that way and is forecast to continue. Manufacturing wages rose less than the overall private sector... This isn’t primarily because taxes are forcing production overseas. It’s productivity: Manufacturers can produce twice as much in the United States as they did a few decades ago with a third fewer workers... Likewise, coal mining jobs aren’t leaving the country because of regulations, as Trump tells his supporters; the jobs have been lost to market forces in the form of cheap oil and gas... The Congressional Budget Office, led by a Republican appointee, forecast last week that the economy would grow at just a 1.9 percent clip under Trump’s proposed budget, far less than the 3 percent the White House claims.. The CBO also said the Trump budget would leave a $720 billion deficit in a decade, contrary to Trump claims.So what happens if — and when — Trump’s core backers discover that they’ve been had:
- They’re losing health-care coverage and other benefits,
- while manufacturing jobs aren’t coming back and
- a Trump-ignited trade war is hurting U.S. exports?