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US-China Trade is the Start of Global Chaos

President Trump and President Xi - Confrontation, China Plays the Long Game

While many news outlets are focusing on the emotional side of the trade war, the focus on numbers and facts, as the usually do, get left out of the mainstream media. This year in 2019, year to date, the US imports of Chinese goods has fallen by $53 billion US dollars, while exports to China are down $14.5 billion dollars. However, on a relative basis, or in terms of percentage of imports and exports, the US seems to have been damaged more than China. This is an interesting short-term observation as it is becoming clear that both sides are suffering losses. But the question is this, can these two economic behemoths find some common ground? The short-term answer will surely be YES, but the long-term answer is, NO this is the beginning of a protracted trade war that will turn the world into a pre-WII system of competing nations and regions.

And keep in mind that over the past 75 years, since the end of WWII, there have been fewer wars, while the global GDP increased 10 fold and global population tripled. In this time of peace and prosperity more people are living longer and healthier lives. This party is ending and it is clearly turning the world into a much more dangerous place. Some geopolitical scientists are pointing out that free access to food and energy will collapse as no country has the means to protect the post-American trade system – The Order.

In our view, we see the trade war as a war that will last at least for the next 25 years, as China adjusts to being a major power and the US and Europe, as well as Japan, South Korea and Vietnam, see China as a power that has enjoyed the benefits of the Bretton-Woods System, a system that is dated and being dismantled by its owner, the United States. It is important to note that the US global protection (global manager) of this post-WWII system that ensures that over 100 countries have food and energy security while being able to sell their manufactured goods freely is now being relegated to the dust-bin of history.

Saudi Arabia and Iran will not have free access to the world energy export markets unless they build fleets of ships that protect their oil exports. South Korea, China, Japan and Germany will not be able to protect their global food imports, and sell their products as they have under Bretton-Woods. This would explain why NATO countries are spending over $50 billion more than they did just 10 years ago for military hardware. Japan is building aircraft carriers, as is the United Kingdom with the Queen Elizabeth Class of carriers. Iran and Germany are spending more on military as is China.

The US is pulling out of world affairs and this forces every nation to question G20, G7, NATO and all other alliances, even the European Union. In 20 years, the Germans will care more about Germany and less about the EU. As Ian Bremmer stated in his 2012 book, GZero, Each Country for itself, we are moving to a world of more chaos, as the US packs up and walks away.

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