Trump Threatens China With a Big Fine: So What? All Mouth, No Action?

Mish

Trump is bashing China once again. This time, Trump proposes a big "fine" over an alleged theft of intellectual property

Trump threatens to "fine" China, something he cannot even do. I believe he means retaliate with tariffs in his ongoing dispute with China over trade imbalances.

Reuters reports Trump Considers Big 'Fine' Over China Intellectual Property Theft.

In an interview with Reuters, Trump and his economic adviser Gary Cohn said China had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there.

We have a very big intellectual property potential fine going, which is going to come out soon,” Trump said in the interview.

Trump said he would be announcing some kind of action against China over trade and said he would discuss the issue during his State of the Union address on Jan. 30.

Asked about the potential for a trade war depending on potential U.S. action over steel, aluminum and solar panels, Trump said he hoped a trade war would not ensue.

I don’t think so, I hope not. But if there is, there is,” he said.

The president also said he and Chinese President Xi Jinping had not discussed China’s plans with regard to purchases of U.S. Treasury bonds.

We never talked about it. They have to do what they do,” he said.

One Line Rings True

There is one line in the story that makes sense: "They have to do what they do.”

As long as China runs trade surpluses with the US, it will accumulate treasuries or other US assets. Since the US will not let China buy Boeing or other US companies it buys treasuries.

China also uses accumulated treasures as a mechanism to stop capital flight (China sometimes sells treasuries to prop up the Renminbi).

All Mouth, No Action, So Far

So far, Trump has been all mouth, no action. That applies to both China and Mexico.

Nonetheless, the possibility of a major trade war is very real. No one will win a trade war.

Global risks from equity bubbles, junk bond bubbles, trade wars, currency wars, and central bank tightenings are very high and rising.

I suspect it all blows at once. When? I don't know.

Related Articles

  1. Clueless Bloomberg Headline: China Weighs Halting US Bond Purchases
  2. China Posts Largest-Ever Annual Trade Surplus with US: What's it Mean?
  3. Disputing Trump’s NAFTA “Catastrophe” with Pictures: What’s the True Source of Trade Imbalances?

Mike "Mish" Shedlock

Comments (16)
No. 1-16
Mike Mish Shedlock
Mike Mish Shedlock

Editor

The correct thing to do is embrace free trade whether any other country does or not

lol
lol

does any country take trump seriously?lol,he's done a complete 180 on every single campaign promise and faster than any other candidate on record,fastest lame duck president on record,2nd most disrespected (behind barack)prez on record,none that is where CINC wants to be after 1 year

ElPoquitoGrande
ElPoquitoGrande

Alligator mouth on a canary body.

Carl_R
Carl_R

"It is a tale told by an idiot, full of sound and fury, signifying nothing". The more I witness the this presidency, I think Trump's job is to provide a distraction while the government goes about it's business. Lots of stupid things get said, but that actual things done are not too bad.

stillCJ
stillCJ

Editor

Wow lots of nevertrumpers that never commented here before have suddenly shown up, and as usual, some such as lol make complete fools of themselves making completely untrue statements.

truthseeker
truthseeker

Mish as usual you criticize, condemn but never offer any ideas solutions to deal with our 1billion a day trade deficit with China.

Greggg
Greggg

According to the Shanghai-based news portal Jiemian, which cited an unidentified person from a futures company, trading is expected to start Jan. 18. Multiple rounds of testing have been carried out and all listing requirements met. http://www.thedailyeconomist.com/2018/01/all-eyes-may-be-fixed-on-jan-18-as-day.html

klausmkl
klausmkl

More drama for the masses. Anyone with working grey matter understands China needs the USA and vice versa.

RonJ
RonJ

"The correct thing to do is embrace free trade whether any other country does or not" Cycles do not work that way, however.

KidHorn
KidHorn

This is similar to threatening to sue. The hope is the threat is enough to precipitate change. If China is smart, they'll conceded some small thing so Trump can claim victory.

Stuki
Stuki

@Truthseeker:
In free societies hence markets, trade imbalances are simultaneously entirely irrelevant, and at the same time fully self-correcting. The only meaningful “ideas solutions” is simply to embrace freedom, period.

Ambrose_Bierce
Ambrose_Bierce

I don't believe the official statistics about ODI, but that may have the effect of cooling down US RE markets where buyers just hit the ask, or jump the bid. It may be that China's capital controls are selective, like US government regulation, there is always a work around. The sycophants check the CRE figures in Manhattan this month and decide that China's capital controls are working. The Trump people are more than happy to repeat the lie. It makes their job easier. After thirty years of trade deals with China America is a gulag, with no Constitution, no jobs, and no representation. Congress will continue to restrict what China can buy, remember when W Bush tried to sell the port authority to the UAE? Yes and his border fence was going to cost a trillion. Got sovereignty?

truthseeker
truthseeker

As long as the dollar was backed by gold we wouldn’t be facing this problem. China has maybe 2 trillion dollars, Japan maybe 1, Europe and the Middle East I don’t know. We will not let China buy strategic assets such as major oil companies or large technology companies. We are loosing US hegemony in the world no longer able to provide leadership for freedom. No Mish I don’t mean we should use our military to b the world’s policeman for nation building. As a result of these deficits, we r beginning to see countries form trade agreements without the dollar. IMO this is just the beginning of a movement away from the dollar which will have profound effects on our standard of living in the years to come.

truthseeker
truthseeker

Stuki Mish do I get any points here at all?

Ambrose_Bierce
Ambrose_Bierce

Trumps intellectual property is bankrupt

truthseeker
truthseeker

Mish thank you for removing some of my sillier comments I make from time to time!


Global Economics

FEATURED
COMMUNITY