The regime of the convicted felon has decided to carve out exemptions from the reciprocal tariffs (the base percentage still applies) for smartphones and some consumer electronics. To put it another way, Trump blinked with China. While an escalating trade war ends up hurting regular people for both countries, the U.S. is the one who relies heavily on China (lot of our manufactured products and even the supply chain). Victor Gao (Center for China and Globalization) who previously served as the translator for former Chinese leader, Deng Xiaoping put it more bluntly.
Gao: “China is fully prepared to fight to the very end because the world is big enough that the United States is not the totality of the market in the world. So if the United States wants to go in that direction of completely shutting itself out of the China market, be my guest. We don’t care. China has been here for 5,000 years. Most of the time, there was no United States and we survived. And if the United States wants to bully China, we will deal with the situation without the United States, and we expect to survive for another 5,000 years.”
By contrast, the United States is only 248 years old and has never faced the history and level of internal and external strifes/warfare that much longer lived nations and societies (like China, European countries, Japan, Korea, etc) have faced. The current threat of the U.S. losing its 248 year old experiment in democracy is also challenging its citizens on how to save it as those who are now in charge of the country, are actively working to dismantle it (in servitude to Putin and the oligarchs who are looking to profit from it). While there will be reverbations through the global economy, once the rest of the world finds that it will be simpler to just decouple itself from the U.S. (depending on its actions under this regime), the biggest loser will be the U.S. (and it will not matter if an actual sane administration takes over in the future; the entirety of the U.S. system is broken beyond repair).
These reciprocal tariff exemptions are also temporary (will just be weaponized). In other words, this is also market manipulation part 2 where the “smart” money has already gone into companies that took a huge market capitalization hit last week (via market manipulation 1). Expect the shares of companies like Apple and Nvidia to bounce from this news for the exact trading opportunity mentioned before (this isn’t a long term play; it’s the incoming rally for those folks to unload those shares bought during the recent sell off).
I would just ignore every single analyst report posing questions like “is now the right time to buy these stocks?”, presenting this as “buy the dip”, or trying to present this as a long term buying opportunity without fully unpacking the reputational damage that has been unleashed by this entire process (where the U.S. is no longer being viewed as a reliable partner). The market still needs to retest the drops from this recent selloff. So any pump now, is going to result in a dump.
The U.S. will also need to reckon with the growing number of human rights violations (back in March, the country was added to the CIVICUS watchlist) where countries will begin restricting business with the U.S. Basically, the actual longer term impacts haven’t even begun to hit corporate America yet especially with the boycotts of American goods and businesses both domestically and more importantly overseas. I am expecting major brand damage especially if this regime takes any sort of territorial expansion action against Greenland or Canada.
