The US-China ‘decoupling' would be a messy divorce
Even if the writing has been on the wall for years, breaking up is never easy.
China and the US don't often see eye to eye, but for decades, they have broadly agreed that it is better to be trade partners than trade enemies.
That alliance is now hanging by a thread. And the real-world collateral damage is already piling up.
The presidents of the world's two biggest economies don't appear ready to talk turkey. China indicated Wednesday that it would be open to negotiations only if talks are based on 'respect,' and greater 'consistency and reciprocity' from the Trump administration, a person familiar with the matter told my CNN colleagues. (I, for one, am not holding my breath.)
Without some kind of retrenchment, US-China trade is expected to fall by more than 80% — a magnitude 'tantamount to a decoupling,' said Ngozi Okonjo Iweala, the director general of the World Trade Organization, which issued a similarly grim report on global trade Wednesday. (The upshot: Pre-Trump tariffs, global trade was penciled in to grow 2.7% this year. Now, it's expected to shrink 0.2%.)
Here's how Trump's trade war is already rippling through the economy:
US retail sales climbed 1.4% in March — largely driven by cars and auto parts — as Americans try to get ahead of expected price increases.
Boeing, America's top exporter and a major employer, has reportedly been blocked from making deliveries to Chinese airlines.
Beijing recently placed export restrictions on seven types of rare earth minerals — vital components for everything from iPhones to electric vehicles that China has a near-monopoly on.
Nvidia, the US chipmaking leader, said it would take a $5.5 billion hit after Washington ordered the chipmaker to halt sales to China.
Chinese fast-fashion retailer Shein and online marketplace Temu will raise prices next week, according to Reuters.
US stocks tumbled on Wednesday — dragged down by Nvidia's China shut-out, the grim forecast from the WTO, and comments from Fed Chair Jerome Powell, who warned of a 'challenging scenario' in which tariffs lead to a triple whammy of weaker economic growth, higher unemployment and faster inflation, all at the same time.
'There isn't a modern experience for how to think about this,' Powell said at an event hosted by the Economic Club of Chicago on Wednesday.
You might think the 'Art of the Deal' president would be eager to hash out some kind of pact with China. But if Trump has taught the world anything, it's to expect the unexpected.
'There may be another game plan here,' Ed Yardeni, a veteran investor and president of Yardeni Research, told investor Louis Navellier on a podcast this week. 'It's conceivable that he's got no interest in doing a deal with China. It's conceivable that the US has come to the conclusion that China is a geopolitical threat… and what we're trying to do is ruin their economy.'
Some new reporting from Bloomberg is lending weight to that theory.
According to the news outlet, which cited unnamed sources, the Trump administration is 'preparing to pressure nations to curb trade with China.' One option on the table, Bloomberg said, is essentially a monetary sanction in which the US would ask other nations to impose tariffs on certain countries with close ties to China.
Whether a trade deal is the goal or not, 'it's not a pretty thing to watch,' Yardeni said. 'He is trying to use America's economic power to bully other countries… But it's going to be real hard to bully China.'
As many observers have noted, China may be in a stronger position to withstand a tit-for-tat trade war, in part because it maintains an authoritarian grip on every facet of its economy.
But perhaps more importantly, Beijing has learned from its first go-round with Trump in 2017. The country is already going beyond the tit-for-tat measures that characterized the earlier trade feud.
China's halt on Boeing deliveries and its restrictions on rare-earth exports show that the country 'has learned how to weaponize its imports in a new way,' Mary E. Lovely, a senior fellow at the Peterson Institute for International Economics, said in an interview.
'China still wants to look like a respectable stakeholder' to trading partners like Australia, the EU and Southeast Asia, where President Xi Jinping visited this week, Lovely notes. 'They want to say, 'The door is open. We're reasonable, we're just combating US aggression.' And they are doing it now with a much bigger set of tools.'
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Yahoo
14 minutes ago
- Yahoo
CartCon 2025: Tariffs, turbulence and the future of resilient retail
At second-annual CartCon conference in Napa Valley, CA, the tone was electric with anticipation but also laced with urgency. Billed as a summit for the company's expansive ecosystem of brands, vendors and strategists, the event served as both a product showcase and a pressure valve. Nowhere was that tension more visible than during one of the conference's hardest-hitting panels, a deep dive into the complexities of tariff policy and its ripple effects on global sourcing, consumer pricing and retail resilience. The panel consisted of three voices with rare insight into the collision of policy and commerce: Chris Smith, president of Summit Global Strategies; Tim Manning, former White House supply chain coordinator under President Joe Biden; and Nick Stachel, logistics strategy adviser at Izba Consulting. What followed was not a high-level overview, but a granular exploration of the legal, political and operational forces shaping how, and where, products are made, moved and sold. From globalization to geo-economics Smith opened the discussion by tracing the historical arc of U.S. trade policy. For decades following World War II, American trade strategy revolved around multilateralism. The U.S. saw global trade not just as an economic imperative but as a geopolitical tool, creating allies, raising standards of living and preventing conflict. But in 2016, that long-standing consensus fractured. The bipartisan abandonment of the Trans-Pacific Partnership signaled a sharp pivot. As Smith explained, the political center collapsed under the weight of the 'China Shock,' a term describing the decimation of American manufacturing towns due to offshoring. Smith described President Donald Trump's tariff policy as a psychological reset. Before Trump, U.S. tariffs averaged around 2%. Within months, they jumped to 18% in key categories. This wasn't just an economic strategy, it was anchoring. 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Originally designed as a tool for national security sanctions, IEEPA has been repurposed by the Trump administration to enact sweeping tariffs with little congressional oversight. Manning described the legal and logistical chaos for businesses from these tactics. In just six weeks, the Trump administration issued 17 executive orders using IEEPA authority, stripping trade policy of its usual predictability and process. For businesses, this has been catastrophic. Sourcing strategies built over years have unraveled in days. 'We're in a volatile environment,' Manning said. The cost of doing business now includes factoring in the potential for abrupt, unexplained swings in tariff exposure. Long-term investments have become high-risk bets, and in many cases, they're simply not being made. On-the-ground retail strategy Bringing the policy talk down to the warehouse floor, Stachel outlined how brands are actually coping with this new reality. In the short term, some are fast-tracking inventory from China before new tariffs hit, relying on expedited ocean freight and cross-docking at West Coast ports to minimize delays and avoid customs bottlenecks. Others are making subtler moves — like holding prices steady on high-visibility products – say, a gaming console – while raising prices on accessories and add-ons to recoup margin. Stachel noted that many brands have moved beyond the now-familiar 'China Plus One' strategy, opting instead for a 'China Plus Three' approach. They are spreading risk across Vietnam, India and Mexico, often working with global manufacturing giants like Foxconn that can seamlessly shift production across borders without retooling or retraining labor. In essence, brands are outsourcing flexibility itself. For those planning beyond the current election cycle, geographic diversification is no longer enough. 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The post CartCon 2025: Tariffs, turbulence and the future of resilient retail appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Boston Globe
15 minutes ago
- Boston Globe
‘It's a net positive for us.' For some US manufacturers, Trump tariffs pay off
AccuRounds is exactly the kind of high-end manufacturing company that's supposed to benefit from the Trump tariffs —and right now the plan seems to be working. After a sluggish 2024, AccuRounds workers are putting in overtime as they transform steel rods into hundreds of highly specialized industrial gadgets, and the company is looking to hire. Revenues were up by 20 percent in the first quarter of 2025 and Tamasi expects the same for the current quarter. Revenues last year came to about $20 million, he said. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up AccuRounds makes precisely machined pieces of metal that mostly go inside bigger machines, ranging from commercial aircraft to industrial robots to drug manufacturing systems. For instance, one component goes into a pump that excretes the glue used to assemble iPhones. 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American Military News
15 minutes ago
- American Military News
700 Marines deployed to Los Angeles amid major riots
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