In other words, stagflation.
If China invaded Taiwan, the world, including China, won’t get any semiconductors from Taiwan.
Most of the machines and software have remote kill switches. ASML can just turn off the machines and software providers can turn off licenses. TSMC also got a lot of supplies like wafers from other countries like Japan. Without those materials TSMC can’t make anything.
It’s guaranteed mutual destruction, like nuclear bombs.
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I think China needs the US more than the US needs China.
Big problem with Trump’s approach is that he is fighting the whole world, not just China. If he’s not such a low IQ buffoon he can work with our allies to isolate China. But now US is the isolated one.
It doesn’t matter who needs who more. Trade war hurts China more but China has much higher endurance for pain. Xi shut down China during Covid and he’s still in power. Meanwhile in the US stagflation is almost guaranteed and Trump and GOP is staring at electoral wipeout in 18 months. Trump won last year because of inflation. Now he’s making it worse. Won’t end well.
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Wrecking a perfectly fine economy out of stupidity has huge consequences.
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Chinese factories will be buying some of these bankrupt brands. No more American middlemen. Top to bottom Chinese vertical integration.
What is the cost of transportation and shipping for onshoring? Do other costs remain for onshoring? Can the energy grid handle the increase in energy needs due to onshoring?
Global economy is a huge, interconnected network. It won’t be just importers from China who got hurt. Exporters to China are also getting wiped out, because 1) their material and component cost went up 145% overnight, and 2) their price can’t compete in China because China retaliated with its own tariffs.
Container volume between China and US has dropped 60% already. With no containers coming in, where will truckers get their business? Many of these are MAGAs who voted for Trump. Tons of working class people work in warehouses and logistics. No goods coming in. Why should companies keep these people?
Retail will get hurt. Marketing companies will get hurt. Even tech companies like Google and Facebook will get hurt. Even though Facebook is banned in China, it accounts for 11% of its revenue last year because Chinese companies put ads there. That portion is almost 20B. Same for Google and Amazon.
All this hurt will spread like a cancer through reduced business investment and personal consumption. The whole economy gets wrecked because of stupidity from the top.
In short, Global Recession which could develop into Global Depression and might even result in WW3.
WW3 is very possible. And we have 4 more years of Trump to go. You can count on him to eff things up.
Very freaking scary.
The current world order like the UN, NATO, America-centric trade, USD-based global financial system, etc were set up right after America won WW2. That means they were set up when America was at the absolute height of its power. They were designed by Americans for the benefits of the American Empire. And Trump just foolishly threw them away because his has an IQ of <80.
Now the global order is being ripped out. The next global order won’t be as beneficial to the US. These morons never bothered to think things through.
I bet Xi is very excited. He can’t believe history just gave him a huge opening.
The right likes to complain Europe and Japan were getting a free ride out of American defense. But it was initially set up this way to allow US complete control over there military. Japan’s constitution, written up by Americans, explicitly limits the Japanese to only do defense operations near shore.
Now that Trump has turned America away from our allies it’s free for all. Every country is busy arming up. Nobody needs to listen to American order anymore.
That’s how policy is made in Trump White House. There’s no plan. No 4D chess. Just random chaos.
No signed deal yet.
