Checkmate. How China may respond to the U.S. import tariffs.

If you jump to the end, you’ll see what can soon happen… a disaster for the U.S.!

So now, China is being punished so that U.S. importers must pay 135% tariff.s or import duties when their shipments arrive in the US! Naturally, the U.S. companies are worried since consumer prices will be going up in the United States… way up! That’s inflation for U.S consumers caused by President Trump. The idea is to force the manufacturing back to the United States. Unfortunately, that will take years and President Trump will be long retired.

Naturally, the Democrats will blamed for any disaster. Politics as usual.

Just reported is that President Trump has suddenly made “carve outs” under U.S. customs section 8517.13.00.00 and possibly others. Carve outs are tariff (import tax) exemptions for certain well known companies and lines of products under this import ID number. That includes Apple with its iPhone product line, and other electronics such as computers.

These electronics are the LARGEST exports to the United States, so will be exempt! Soi much for tariffs if you have friends in the White House.

In the iPhone instance, about 80% of their total production is made in China and much of these products are destined for the US. iPhones are expensive since Apple makes about a 50% profit margin, So Apple has dodged the price doubling disaster, that would force the U.S. public to start buying Android phones that have a much small markup and produced in many other countries, thus avoiding the ridiculous, punishing “tariffs.”

Would you buy an iPhone that costs between $2,000-3000? I don’t think so.

So what China may do, other than invade Taiwan to seize their chip making businesses and block all of its exports to the U.S.?

As the Chinese government have taken a firm, non-boot licking position, they may institute an EXPORT TARIFF! That means, in Apple’s instance, charge them 135% tax on their phone and computer EXPORTS. So before Apple manufacturers can ship their products ANYWHERE (to avoid cross-shipping) the Chinese government would be paid 135% of the wholesale price of the iPhones. They could use that money to subsidize the other manufacturers penalized for having the nerve to manufacture products in China.

To restate, the effective carve out will be blocked/neutralized, and Apple and other computer companies will scream. If they implement an EXPORT TARIFF, China will receive income from any U.S. IMPORT tariff exemptions based on shipments from China to the U.S. or any country that can cross-ship these phones and other products.

Game over for President Trump, since U.S. government bonds are being forced to offer higher interest rates to find buyers due to the economic turbulence. And since our national debt is well over THIRTY FIVE TRILLION DOLLARS, the increased payments to just pay the interest in investors could bankrupt the US!

We shall see. May we live in interesting times.