Biden Launches A Full-Blown Economic War On China, It Will Backfire

Authored by Mike Shedlock via MishTalk.com,

The US thinks it can block microchip technology from China. It won’t and blowbacks are everywhere…

Turning the Screws 

Financial Times: How the US chip export controls have turned the screws on China

The Conversation: Clampdown on chip exports is the most consequential US move against China yet

The Atlantic: Why Biden’s Block on Chips to China Is a Big Deal

How Companies Are Dealing with US Restrictions on Chip Exports to China

Please consider How Companies Are Dealing with US Restrictions on Chip Exports to China

The U.S. Commerce Department announced a series of new trade restrictions earlier this month that banned the export of some computer processing chips to China.

The restrictions affect not only U.S. businesses selling to China, but also any company whose products contain American chip technology. The U.S. government action has many companies considering how to move forward under the new rules.

Numerous American technology companies doing major business with China are facing possible severe damage to their profits. Other companies that manufacture technology products in China are having to withdraw U.S. employees because the ban also bars “U.S. persons” from supporting technology covered by the ban.

James Lewis is a senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies in Washington D.C. He told VOA the new restrictions seem to be “reshaping the market.”

“The Koreans, the Taiwanese and some American companies are really nervous about it,” Lewis said. “I mean, everyone’s asking, ‘What can I still sell to China?’ And in some cases, the answer is ‘nothing,'” he added.

In Britain’s Financial Times newspaper, U.S. national editor and columnist Edward Luce wrote that “Joe Biden this month launched a full-blown economic war on China.”

So far, chip companies have reacted carefully to the ban. While recognizing the government’s concerns, they have noted they were not given a chance to discuss the policy with U.S. officials before it was announced.

Call Them the Biden-Trump Tariffs Now

The Wall Street Journal comments Call Them the Biden-Trump Tariffs Now

President Biden has rolled back some of Donald Trump’s destructive tariffs, but not enough, and they’re still doing economic harm. New analyses of Mr. Trump’s Section 232 steel and aluminum tariffs show how consumers and manufacturers are still paying for the border taxes that benefit only a few companies.

A study by Harbor Aluminum for the Beer Institute finds that the 10% tariff on imported aluminum cost U.S. beverage manufacturers $1.7 billion from March 2018 through August 2022. About 93% of the $1.7 billion has been pocketed by domestic aluminum producers and smelters in the U.S. and Canada. Only $120 million has gone to the U.S. government.

While Biden relaxed some tariffs on China, the chip export ban is a sharp escalation in an economic war with China. 

According to the Financial Times, China accounts for 33 per cent of sales at Applied Materials, 27 per cent at Intel and 31 per cent at Lam Research.

President Biden unequivocally blocked China’s access to high-end computer chips but how long can that last?

Blowbacks Everywhere

It does not matter at all whether Putin sells energy for dollars, euros, or yen.

What matters is where reserves are held.

Currencies are usually fungible. But the US has weaponized reserves. China concerned too.

This will backfire on the US IMO https://t.co/vHfeY0cl1x

— Mike “Mish” Shedlock (@MishGEA) October 28, 2022

Blowbacks everywhere. Biden escalated Trump’s China policy to include chips.

It’s nuts to believe we can prevent China from getting technology. They will get stronger eventually from this

WSJ has interesting article on prisoner swap blowbacks-Free Link:https://t.co/AOD7ezAh4u

— Mike “Mish” Shedlock (@MishGEA) October 28, 2022

Inside the Secret Prisoner Swap That Splintered the U.S. and China

Detention of a Chinese executive to stand trial in the U.S. provoked a standoff between global rivals and opened an acrimonious new era. 

The US arrest of Meng Wanzhou, chief financial officer of China’s Huawei Technologies Co. was based on an irrelevant 6-year old power-point. She was arrested in Canada in 2018.

That’s quite the story. Bolton did this on his own accord and got Canada tangled up in it too. 

It’s a long but interesting read. Here is a free link: Inside the Secret Prisoner Swap That Splintered the U.S. and China

Inflationary Headwinds

De-globalization and decarbonization are both very inflationary. 

Both parties seem OK with the former. Decarbonization by the US and EU Left greatly adds to the mess. 

No Man’s Land 

Weaponizing currency reserves and diplomats on top of this is madness. But that’s where we are.

For further discussion, please see What Does China Do With a Dollar That’s No Longer Risk Free? Buy Gold?

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