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CONLEY COMMENTARY (WSAU) – Here’s something that China knows: America is still the indispensable nation. That is, the American consumer is indispensable.
China is the world’s leading manufacturer. During his first term, Donald Trump imposed steep tariffs on Chinese imports. The policy was so right – to penalize China for dumping cheap goods into the U.S. market while limiting access to American products in their country – that Joe Biden left the Trump tariffs in place for all four years of his term. Trump, in his second term, will likely raise tariffs on China by another 10-percent.
China knows that when its goods can no longer be sold at competitive prices in the United States, there’s no other country that buy at the same volume. If Chinese electric vehicles become too expensive in the U.S, the surplus production can’t be sold in Australia, Russia and Africa. Their economies are too small – they don’t consume at the same level that Americans do.
Europe is a special case. Right now China is building a railroad from their industrial centers, across Asia Minor and parts of northern Africa, into eastern Germany. China dreams of boxcar after boxcar of their electronic goods rolling into the European Union. What’s wrong with that vision? EU citizens pay some of the highest taxes in the world – even they don’t consume things at the level we Americans do. A proud citizen of France or Belgium may like the idea of an EV, but their families tend to have only one car. They ride bicycles and take the tram the rest of the time. There’s no market for China’s 75-inch televisions in the EU; would-be buyers live in tiny homes and such a large TV is considered gaudy. Even Europe’s teenagers don’t pine for a new phone each year. They keep their iPhones, on average, three times as long as American teens do.
China knows what Donald Trump knows. They are the store, we are the customers. If the customer stops buying, China’s entire economy is in trouble.
Chris Conley
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