Addressing affordability is straightforward if politically difficult. Remove all the work visa - H1B along with spouses, OPT and the host of other programs disadvantaging working Americans. Removing 10-50M non citizens and allowing Americans to earn will address the issues quickly.
Good analysis. I think China is right though about the idiocy of EU/UK/Canada. They have proven they will ride the bomb down on net zero, immigration and repression so why not trade. They will just ramp up the repression to deal with any unrest. We will definitely need enforcement to stop China from laundering imports through them.
The PIIE chart is extremely positive for the USA. It provides a reasonable hope that China's exports to the US will gradually 'hollow out' as the countries which may start as transshipping will start to replace their Chinese imports. This avoids a sudden shocks if products all became unavailable until an entirely new production chain developed.
This is exactly how China slowly weaned its imports down with the China 2025 plan since announced in 2015. China knows how this works. Be interesting to see if they can find a way out.
It is reasonable to focus on reducing our dependance on China (specifically) today, but we must also keep a longer view. Simply substituting Mexico/Vietnam/anywhere else for China does nothing to restore US industrial capacity or reduce our net trade imbalances. Yes, we should not rely on China and it is good to diversify, but the end goal must be a much higher degree of self sufficiency- not to control our own vital supply chains in steel/tech/defense, but also to reduce our gigantic debt burden. The only way to fund such steep trade imbalances is to borrow from abroad. I don't see how this current path is sustainable, regardless of who the counterparty is.
Chinese net exports (and American net imports) have not budged. Maybe we are importing from other countries now, but those countries are turning around and important from China so the net result is the same. Dollars eventually flow to China with an intermediate stop. We should be focusing on reducing our overall net imports regardless of the exporter or this will continue.
Sure. What we are doing now is better than doing nothing, but bilateral tariffs are not the solution as a lot of our dollars spent on imports are still leaking through. Now the PlayStation 5 is made in Vietnam instead of China, but the Vietnamese factory owner is taking that money and buying a BYD car. The BYD guy turns around and buys USD assets which fuels our current account deficit and drives our demand for imports. Solution is either tariffs across the board or a tax on foreign capital investment in USD assets.
I am trying to be illustrative. I don't think it is a secret that Chinese net exports are at all time highs. The issue is the overall trade imbalance, not specifically the trade imbalance with China. Would you agree with that?
The author covered that aspect in his analysis. Yes, Chinese exports are at an all-time high, but the cost of China of subsidizing their exports is very damaging to the country’s economy.
FYI, the Bloomberg article is not available without a subscription so I can’t comment on it.
Any rational attempt to confront a rival who dwarfs us in scale would enlist the support of fellow western democracies to confront them. Together, our scale exceeds China's, a critical factor in major power conflicts historically.
Instead, we tariff Canada, not Russia. We decimate our farm economy with tariffs, then send farmers welfare checks funded by tariffs to compensate-food stamps for those growing our food... We tariff bananas, tomatoes and other foods, then reverse course when the political heat gets too hot. We spend more time lecturing our friends over our juvenile culture wars than gathering them together to confront our real foe-China. It's all absurd, driven by an aging, angry, incoherent imbecile who sees tariffs as just another source of personal grift.
Is it any wonder that Don's polling on the economy is akin to Joepa's?
This is absurd. The Trump administration has sanctioned Russia at three times the rate of his predecessors while tariffs on Canada are essentially tariffs on the EU and every other non-compliant nation who hasn’t the stomach to stand up to any real flow disruptions. In short, the West will never win a trade war with China, so long as the US is feeling all of the pain. It’s really no different than the Ukraine situation; NATO nations are more than happy to maintain the quagmire, so long as the US does the heavy lifting. The very minute the US says we’ve had enough, suddenly NATO nations pretend that we’re “no longer friends”. I say it’s high time to shift the weight to Canada, the EU and every other hole in the wall until they heel to the same pressures the US has faced for the last four decades. We’ll see how durable their forms of social services are! We’ll see how durable their industries are in the face of cheap Chinese trinkets! Any minute now, other Western nations will be realizing just how dependent they were on a sleeping US economy - and I’m here for it.
I’m sure this all makes sense in your deluded information bubbles, but to any two-celled thinker, this take is more absurd than the previous. Vlad is a war criminal according to whom? What about NATO encroachment on Russian borders is Vlad supposed to love? What about losing access to the Black Sea should Russia be thrilled about? And why wouldn’t we welcome Vlad to any sort of sitdown, if we’re trying to negotiate a peace agreement? Has isolation ever worked? Even once? Why wouldn’t the president side with Vlad, if the president can see what we all see? Again, what is Russia supposed to love about threats to their sovereignty? Remember, Crimea was invaded during the Obama administration; Donbas during the Biden administration! Again, is Trump not supposed to acknowledge the folly in NATO and his predecessors? Election lie? Is that any different that HRC’s election lie? Insurrection? My simple parrot, there was no insurrection and none was alleged to have taken place by any serious law-person. Hell, even Jack Smith couldn’t indict on anything other than “obstructing a ceremonial event”. Btw…you do realize that the official electoral vote wasn’t even held on J6? It was actually J7, right? Expose by the WSJ? Really? Where are the charges? Where’s the emolument violations? Haven’t we heard this partisan nonsense before? Why don’t you list the so called corruption and we’ll have a real and earnest discussion on the merits, cool? The president never blamed minorities for anything and he’s not fitting any historical pattern. You see, patterns are only what your worldview makes of them. Trump also fits patterns of economic success, beneficial trade relationships and putting his country over that of others; a real Ted Roosevelt type of character; but again you’re too delusional to see the real patterns rather than that of some tyrant like Hitler. I too have traveled the world, and have worked for European companies for the last thirty years; I understand how they’ve taken advantage of American prosperity, wealth and our military. Sorry Karl, but your nonsense isn’t going to work with me.
I’ll admit, you folks with Nazi derangement are odd, indeed - including Vance, but at least he can admit when he’s spent too much time in his bubbles. Sure, as it turns out, Trump was absolutely wrong about his first cabinet, but deep staters have done it to the best of them, the worst of which was Obama; they sure railroaded that guy. Newsome? Laughable! I give Omar better odds over Newsome. And sure, what’s new about Antifa beating on cops and commandeering public spaces? Hell, they kicked off an entire summer of doing just that, leading to the most costly civil unrest in our history; some billions and damages and 25 lost souls. Made J6’ers seem like the choir boys that they were. Additionally, it doesn’t take a Vlad apologist to see what is at the tip of your nose. But since when do imperialists have a modicum of introspection? Again, you’ll never answer the questions I’ve posed in this context because you’re all too aware that Vlad should just shut up and allow NATO forces to threaten his own sovereignty. And do we really want to talk about invasions, innocent lives lost? Vlad can’t hold a candle to what you people did in the Mideast over a known lie - literally millions dead, with zero act of war and zero accountability - and no real justification for any of it.
Dons crypto? What of it? Are Trump family enterprises supposed to cease, simply because their father is the leader of the free world? Why wouldn’t they invest their money in this manner considering how the system of political debanking threatened their livelihoods? Again, show me the law that’s been broken! Show me the emoluments cases! I digress; you won’t do it, because you can’t do it. You’ve been told to be outraged and like the obedient simpleton you are, you parrot abject nonsense and ignorance. Onto the subject of Eugene Carroll, you do realize she invited him into that dressing room? You do realize it was under the guise of modeling lingerie? Well, I too wouldn’t admit to Mr. Carroll being my type. But as Trump has made so clear, most women treated Trump this way some thirty years ago, when he was a private citizen. More critically though, I’d imagine you can appreciate Tara Read’s sexual assault by one Joe Biden, and the seven staffers who shared similar stories, all while he was in the office of public servitude, right? What about what Ashely Biden had to say about her own father sexualizing her in shared showers, at an advanced age? Do this make an impression on you, or are we still chasing hearsay stories from a time when we were all wearing penny loafers?
82? He’ll be the most spry 82 person you’ll ever encounter and that’s no hyperbole, whatsoever. Enjoy!😉
Wondering why the administration should care that nations are too dumb to see what is in their own best interests? If we bully them, maybe they will grow a brain (appoint real economists).
A good article and I like what Oren Cass has been putting out there. Yet we need to go even more foundational then simply trying to get people against China. The reality is that as long as we keep disconnecting trade from mutual defense and rule of law, we will still find ourselves in a "tragedy of the commons".
Ignoring the corruption in Mexico that make its cheaper to produce there instead of investing in innovation back in the US or Canada means rewarding corruption rather than innovation. Ignoring how Canada has been an ally who helps us fight the pirates and chase the terrorists attacking the global supply chains feed those Mexican factories rewards irresponsible behavior that leaves us facing more threats without the resources to deal with them.
What Trump is doing is a start, but things won't really start to improve until a lot more economists and pundits start to see that anything can be turned into a "tragedy of the commons", not just welfare or free housing.
State-sponsored mercantilism has its limitations, and it's not necessary to stop growth entirely in order to place leverage on those limitations.
What's missing from this conversation about what is primarily a means of moving monetary velocity downward on the domestic distribution curve, is the role of antitrust enforcement.
There is a delicate balance between encouraging efficiencies dependent on economy of scale, and influencing monetary velocity more favorable to long-term growth. Consolidation affects monetary inflation, adversely for those at the tail-end of the distribution curve. This is agnostic insofar as economic systems are concerned; the effect is a constant.
The OPs observations regarding temporal constraints, are poignant; it's a question of timelines. It remains to be seen if the attempts to sabotage the US trade rebalancing and reindustrialization initiative, result in a friction-induced incrementalism that minimizes the effect of austerity, or completes the pre-existing cycle and precipitates another systemic collapse.
Your republican party I would join! Spot on here, thank you. Wish this type of article had been going 10-15 years ago, Oh well, better late than sorry huh?
The University = The "New Religion" (religion of nihilism)
Mr. Phillips, thank you for such a concise and informative article. I can bring your evidence and analysis directly into the classroom, so much appreciated.
Exceptionally insightful analysis. All countries are waking to the trade threat China poses. Indeoendent actions are aligning beautifully.
Addressing affordability is straightforward if politically difficult. Remove all the work visa - H1B along with spouses, OPT and the host of other programs disadvantaging working Americans. Removing 10-50M non citizens and allowing Americans to earn will address the issues quickly.
Good analysis. I think China is right though about the idiocy of EU/UK/Canada. They have proven they will ride the bomb down on net zero, immigration and repression so why not trade. They will just ramp up the repression to deal with any unrest. We will definitely need enforcement to stop China from laundering imports through them.
The PIIE chart is extremely positive for the USA. It provides a reasonable hope that China's exports to the US will gradually 'hollow out' as the countries which may start as transshipping will start to replace their Chinese imports. This avoids a sudden shocks if products all became unavailable until an entirely new production chain developed.
This is exactly how China slowly weaned its imports down with the China 2025 plan since announced in 2015. China knows how this works. Be interesting to see if they can find a way out.
It is reasonable to focus on reducing our dependance on China (specifically) today, but we must also keep a longer view. Simply substituting Mexico/Vietnam/anywhere else for China does nothing to restore US industrial capacity or reduce our net trade imbalances. Yes, we should not rely on China and it is good to diversify, but the end goal must be a much higher degree of self sufficiency- not to control our own vital supply chains in steel/tech/defense, but also to reduce our gigantic debt burden. The only way to fund such steep trade imbalances is to borrow from abroad. I don't see how this current path is sustainable, regardless of who the counterparty is.
Chinese net exports (and American net imports) have not budged. Maybe we are importing from other countries now, but those countries are turning around and important from China so the net result is the same. Dollars eventually flow to China with an intermediate stop. We should be focusing on reducing our overall net imports regardless of the exporter or this will continue.
Your analysis avoid the fact that the size of the pie is increasing, and in percentage terms, China is losing
Sure. What we are doing now is better than doing nothing, but bilateral tariffs are not the solution as a lot of our dollars spent on imports are still leaking through. Now the PlayStation 5 is made in Vietnam instead of China, but the Vietnamese factory owner is taking that money and buying a BYD car. The BYD guy turns around and buys USD assets which fuels our current account deficit and drives our demand for imports. Solution is either tariffs across the board or a tax on foreign capital investment in USD assets.
You’re making a lot of assumptions, such as what kind of car are the guy will buy… Got any facts to back them up?
I am trying to be illustrative. I don't think it is a secret that Chinese net exports are at all time highs. The issue is the overall trade imbalance, not specifically the trade imbalance with China. Would you agree with that?
This was the cover of Bloomberg just this week:
https://www.bloomberg.com/news/articles/2025-12-08/china-exports-return-to-growth-as-trade-surplus-tops-1-trillion
The author covered that aspect in his analysis. Yes, Chinese exports are at an all-time high, but the cost of China of subsidizing their exports is very damaging to the country’s economy.
FYI, the Bloomberg article is not available without a subscription so I can’t comment on it.
Any rational attempt to confront a rival who dwarfs us in scale would enlist the support of fellow western democracies to confront them. Together, our scale exceeds China's, a critical factor in major power conflicts historically.
Instead, we tariff Canada, not Russia. We decimate our farm economy with tariffs, then send farmers welfare checks funded by tariffs to compensate-food stamps for those growing our food... We tariff bananas, tomatoes and other foods, then reverse course when the political heat gets too hot. We spend more time lecturing our friends over our juvenile culture wars than gathering them together to confront our real foe-China. It's all absurd, driven by an aging, angry, incoherent imbecile who sees tariffs as just another source of personal grift.
Is it any wonder that Don's polling on the economy is akin to Joepa's?
This is absurd. The Trump administration has sanctioned Russia at three times the rate of his predecessors while tariffs on Canada are essentially tariffs on the EU and every other non-compliant nation who hasn’t the stomach to stand up to any real flow disruptions. In short, the West will never win a trade war with China, so long as the US is feeling all of the pain. It’s really no different than the Ukraine situation; NATO nations are more than happy to maintain the quagmire, so long as the US does the heavy lifting. The very minute the US says we’ve had enough, suddenly NATO nations pretend that we’re “no longer friends”. I say it’s high time to shift the weight to Canada, the EU and every other hole in the wall until they heel to the same pressures the US has faced for the last four decades. We’ll see how durable their forms of social services are! We’ll see how durable their industries are in the face of cheap Chinese trinkets! Any minute now, other Western nations will be realizing just how dependent they were on a sleeping US economy - and I’m here for it.
I’m sure this all makes sense in your deluded information bubbles, but to any two-celled thinker, this take is more absurd than the previous. Vlad is a war criminal according to whom? What about NATO encroachment on Russian borders is Vlad supposed to love? What about losing access to the Black Sea should Russia be thrilled about? And why wouldn’t we welcome Vlad to any sort of sitdown, if we’re trying to negotiate a peace agreement? Has isolation ever worked? Even once? Why wouldn’t the president side with Vlad, if the president can see what we all see? Again, what is Russia supposed to love about threats to their sovereignty? Remember, Crimea was invaded during the Obama administration; Donbas during the Biden administration! Again, is Trump not supposed to acknowledge the folly in NATO and his predecessors? Election lie? Is that any different that HRC’s election lie? Insurrection? My simple parrot, there was no insurrection and none was alleged to have taken place by any serious law-person. Hell, even Jack Smith couldn’t indict on anything other than “obstructing a ceremonial event”. Btw…you do realize that the official electoral vote wasn’t even held on J6? It was actually J7, right? Expose by the WSJ? Really? Where are the charges? Where’s the emolument violations? Haven’t we heard this partisan nonsense before? Why don’t you list the so called corruption and we’ll have a real and earnest discussion on the merits, cool? The president never blamed minorities for anything and he’s not fitting any historical pattern. You see, patterns are only what your worldview makes of them. Trump also fits patterns of economic success, beneficial trade relationships and putting his country over that of others; a real Ted Roosevelt type of character; but again you’re too delusional to see the real patterns rather than that of some tyrant like Hitler. I too have traveled the world, and have worked for European companies for the last thirty years; I understand how they’ve taken advantage of American prosperity, wealth and our military. Sorry Karl, but your nonsense isn’t going to work with me.
I’ll admit, you folks with Nazi derangement are odd, indeed - including Vance, but at least he can admit when he’s spent too much time in his bubbles. Sure, as it turns out, Trump was absolutely wrong about his first cabinet, but deep staters have done it to the best of them, the worst of which was Obama; they sure railroaded that guy. Newsome? Laughable! I give Omar better odds over Newsome. And sure, what’s new about Antifa beating on cops and commandeering public spaces? Hell, they kicked off an entire summer of doing just that, leading to the most costly civil unrest in our history; some billions and damages and 25 lost souls. Made J6’ers seem like the choir boys that they were. Additionally, it doesn’t take a Vlad apologist to see what is at the tip of your nose. But since when do imperialists have a modicum of introspection? Again, you’ll never answer the questions I’ve posed in this context because you’re all too aware that Vlad should just shut up and allow NATO forces to threaten his own sovereignty. And do we really want to talk about invasions, innocent lives lost? Vlad can’t hold a candle to what you people did in the Mideast over a known lie - literally millions dead, with zero act of war and zero accountability - and no real justification for any of it.
Dons crypto? What of it? Are Trump family enterprises supposed to cease, simply because their father is the leader of the free world? Why wouldn’t they invest their money in this manner considering how the system of political debanking threatened their livelihoods? Again, show me the law that’s been broken! Show me the emoluments cases! I digress; you won’t do it, because you can’t do it. You’ve been told to be outraged and like the obedient simpleton you are, you parrot abject nonsense and ignorance. Onto the subject of Eugene Carroll, you do realize she invited him into that dressing room? You do realize it was under the guise of modeling lingerie? Well, I too wouldn’t admit to Mr. Carroll being my type. But as Trump has made so clear, most women treated Trump this way some thirty years ago, when he was a private citizen. More critically though, I’d imagine you can appreciate Tara Read’s sexual assault by one Joe Biden, and the seven staffers who shared similar stories, all while he was in the office of public servitude, right? What about what Ashely Biden had to say about her own father sexualizing her in shared showers, at an advanced age? Do this make an impression on you, or are we still chasing hearsay stories from a time when we were all wearing penny loafers?
82? He’ll be the most spry 82 person you’ll ever encounter and that’s no hyperbole, whatsoever. Enjoy!😉
Incredible analysis. I hope the Trump admin is able to stay the course and decouple the world from China for good.
This was an excellent read. We can only hope Europe follows America's lead in blocking Chinese export dumps
Wondering why the administration should care that nations are too dumb to see what is in their own best interests? If we bully them, maybe they will grow a brain (appoint real economists).
The gap between China tariff level and rest of world is 19 percent not twenty nine
A good article and I like what Oren Cass has been putting out there. Yet we need to go even more foundational then simply trying to get people against China. The reality is that as long as we keep disconnecting trade from mutual defense and rule of law, we will still find ourselves in a "tragedy of the commons".
Ignoring the corruption in Mexico that make its cheaper to produce there instead of investing in innovation back in the US or Canada means rewarding corruption rather than innovation. Ignoring how Canada has been an ally who helps us fight the pirates and chase the terrorists attacking the global supply chains feed those Mexican factories rewards irresponsible behavior that leaves us facing more threats without the resources to deal with them.
What Trump is doing is a start, but things won't really start to improve until a lot more economists and pundits start to see that anything can be turned into a "tragedy of the commons", not just welfare or free housing.
Excellent points made in the article.
State-sponsored mercantilism has its limitations, and it's not necessary to stop growth entirely in order to place leverage on those limitations.
What's missing from this conversation about what is primarily a means of moving monetary velocity downward on the domestic distribution curve, is the role of antitrust enforcement.
There is a delicate balance between encouraging efficiencies dependent on economy of scale, and influencing monetary velocity more favorable to long-term growth. Consolidation affects monetary inflation, adversely for those at the tail-end of the distribution curve. This is agnostic insofar as economic systems are concerned; the effect is a constant.
The OPs observations regarding temporal constraints, are poignant; it's a question of timelines. It remains to be seen if the attempts to sabotage the US trade rebalancing and reindustrialization initiative, result in a friction-induced incrementalism that minimizes the effect of austerity, or completes the pre-existing cycle and precipitates another systemic collapse.
Good, credible analysis. Conclusions: It seems China is a paper dragon. Communism with Chinese characteristics will fall apart.
Leave my tooth out of this MAGA!
Your republican party I would join! Spot on here, thank you. Wish this type of article had been going 10-15 years ago, Oh well, better late than sorry huh?
The University = The "New Religion" (religion of nihilism)
Mr. Phillips, thank you for such a concise and informative article. I can bring your evidence and analysis directly into the classroom, so much appreciated.