The US finally realises imposing sanctions and tariffs on China won't work

Summary

The transcript discusses the challenges and complexities of U.S. foreign policy, especially under the Trump administration. It covers topics such as the use of tariffs and sanctions on countries like China and Mexico, the trade imbalance, and the U.S.'s declining manufacturing capabilities. The video also explores the issues of U.S. energy policy, the drug trade, and the pushback against dollar dominance in global trade. Ultimately, it suggests that the U.S. needs to adopt a more cooperative approach, offering goods that the world values while addressing internal issues like drug consumption and economic competitiveness.

Takeaways

• 😀 The US foreign and economic policy often operates like a carrot and stick approach, using sanctions and tariffs to pressure other nations into compliance with US demands.
• 😀 Trump's tariff policies are largely seen as a means to address trade imbalances, particularly with countries like China and the EU, but their effectiveness is highly debatable.
• 😀 The idea of using tariffs to push China to buy more US goods and reduce the trade deficit is unrealistic, as it ignores the fact that China already produces high-quality goods for domestic consumption.
• 😀 Reindustrializing the US economy to be competitive again would require significant investments and efforts, but this faces substantial challenges, including labor costs and infrastructure.
• 😀 The US's inability to produce competitively priced goods at the same level as China means the tariff strategy is unlikely to work in the long run, leading to a potentially stagnant domestic market.
• 😀 Many countries are moving away from reliance on the US dollar for trade due to the US's use of economic sanctions, which has led to a loss of trust in the dollar as a global reserve currency.
• 😀 The US faces a major challenge in retaining its status as a global economic leader, as it currently lacks a reliable, competitive manufacturing base to meet global demand.
• 😀 Europe's economic position is increasingly precarious as they face high energy costs due to reliance on US-provided energy, and may consider seeking more reliable and cost-effective suppliers like Russia.
• 😀 The growing mistrust between the US and its trading partners is a result of the US's weaponization of economic tools like tariffs and sanctions, leading to a loss of international goodwill.
• 😀 The US has a significant drug problem, which is compounded by its attempts to impose tariffs on China and Mexico over the drug trade. However, as long as there is demand for illicit drugs, these efforts are unlikely to succeed.
• 😀 To restore its global standing, the US needs to focus on becoming a trustworthy partner, improve its manufacturing capabilities, and move away from financialization, which has been a major driver of its economic troubles.

Q & A

What is the primary focus of the discussion in the video?

The discussion primarily focuses on US foreign and economic policies, particularly the Trump Administration's tariff strategies, trade deficits with countries like China and Mexico, and the broader impact of these policies on global trade.

What is the problem with the US's approach to tariffs as discussed in the video?

The video highlights that tariffs, particularly those imposed by the Trump Administration, have not been effective in addressing trade imbalances. The approach is seen as short-term and detrimental, as it leads to retaliation and finds ways around the tariffs, rather than resolving the underlying issues.

What does Scott Bassent, the US Treasury Secretary, say about tariffs?

Scott Bassent suggests that tariffs have diminishing returns over time. He argues that while tariffs might initially seem effective, they eventually lead to circumvention and are not sustainable in the long term. He also mentions that 40-50% of tariff costs are recovered through currency appreciation.

Why does the US's effort to balance trade deficits with China face challenges?

The US's effort to balance the trade deficit with China faces challenges because China is increasingly producing high-quality goods for its domestic market, which does not align with US exports. Additionally, China's domestic consumers do not demand US-made goods, and the US cannot produce competitively priced goods to export to China.

What is the argument against the US's attempt to pressure China to reduce its exports to the US?

The argument is that pressuring China to reduce its exports to the US is unrealistic because China can easily substitute US imports with domestic production. Furthermore, the US lacks the industrial capacity to produce competitive goods at the same price point, making this approach ineffective in addressing the trade deficit.

How does the video critique the US’s reliance on the dollar for sanctions?

The video critiques the US's reliance on its control of the dollar to impose sanctions, suggesting that over time, this approach is undermining the US’s global influence. As more countries move away from using the dollar, the effectiveness of US sanctions diminishes, which could eventually lead to a loss of economic leverage.

What does the video suggest about the US's relationship with Mexico and tariffs on trade?

The video suggests that imposing tariffs on Mexico, particularly under the Trump Administration’s policies, could hurt US companies that have operations in Mexico, like GM and Ford. These companies have been operating in Mexico for decades, and higher tariffs would raise costs for US consumers while harming these companies’ profitability.

How does the video relate US energy policy to its global trade relations?

The video highlights how the US's energy policy, particularly its push for European countries to buy US energy, could backfire. If European nations are forced to buy expensive US energy instead of cheaper Russian energy, it could harm the US-EU relationship. The US risks becoming a less attractive trade partner due to its inability to offer competitive energy pricing.

What analogy does the video draw between US drug policy and international trade sanctions?

The video draws an analogy between the US's approach to drug policy and its use of sanctions. It suggests that just as prohibition failed to stop people from consuming alcohol by driving it underground, US tariffs and sanctions may fail to address the root causes of trade imbalances or the drug trade, as the underlying demand (for goods or narcotics) remains unchanged.

What is the main criticism of the US's current manufacturing capabilities?

The main criticism is that the US has lost much of its industrial base, and its manufacturing sector is not competitive globally. The US struggles to produce goods that are priced competitively or of the same quality as those from countries like China. The video suggests that this lack of manufacturing capability makes it difficult for the US to offer products that the world wants.