MAURO GIA SAMONTEIT is now evident that Trump’s trade war against China has been all bluff after all.Within just days of his declaration of a blacklist against China cybertech giant Huawei, US President Trump backtracked on the move, announcing the recall of the blacklist order for 90 days. I am not very conversant with information technology and so, I consulted a friend knowledgeable on the matter in order to understand the Trump trade turnaround.To begin with, my friend threw back on the overall trade war Trump had embarked on against China going into the last quarter of 2018. He imposed tariffs on US imports from China, those rates going on a selective basis, ranging from 10 percent on products amounting to $200 billion and 25 percent on goods valued at $50 billion. The intent was obvious: cripple the Chinese economy. For with tariff rates at that killing level, which American entrepreneur would still import Chinese goods?At a glance, that view seems accurate.But businessmen that they are, US entrepreneurs dependent on Chinese goods, whether in manufacture or distribution, ordered bulk upon bulk of the needed Chinese products in a frenzy to beat the imposition of the Trump tariff increase. The result was that the US manufacturing and distribution sectors went business-as-usual even with the high Trump tariffs in place.No nationalistic backingOne thing is immediately apparent in the development. Trump’s trade war against China elicits no nationalist fervor from the US populace. Unlike the Chinese to whose intense nationalism Apple attributes its loss to ZTE, China’s second biggest cybertech giant, in the trade of cybermobiles and other digital gadgets.Particularly in nation-to-nation clashes, people’s backing must be endemic in a president’s declaration of policy. For this reason, the Greater East Asia Co-Prosperity Sphere had all the support of the Japanese nation in World War 2, with the Japanese to the last man willing to go on suicide missions to pursue the national cause. Hitler’s signal cry to the Germans which imbued them with intense nationalism was: “Superiority of the Aryan race.” And Stalin’s successful resistance to the invasion by Germany was anchored on the cry: “Defense of the Fatherland.”Quite in contrast, Trump’s trumpeting the slogan “America to the Americans” wouldn’t seem to sound a hoot. Even business entrepreneurs like him sought to get one over him by importing Chinese goods in big bulk to beat his declaration of tariff increases. Thus has the US market had a substantial feel of Chinese goods even under the severe conditions of the Trump tariff wars. Released to the market at a time when the Trump tariffs had already been a place, these earlier imported goods were traded as though they had been imported from China under the high tariff conditions, that is, at higher prices. In the ultimate sense, it is American consumers, not China, who suffer from the Trump trade war.Just how Trump’s trade war actually hurt US businesses rather than China’s may be deduced from this article by Thomas Franck sourced from the net, “Quantifying just how much the trade war could hurt Apple,” which reads in part:“The uptick in trade hostilities between Washington and Beijing could threaten Apple’s bottom line in 2019 if the soured relationship impacts demand for iPhones in China,” Credit Suisse warned clients.“For every 5 percent drop in Greater China sales, Apple’s earnings per share should fall about 15 cents, according to analyst Matthew Cabral.“While Apple’s products largely fall outside the scope of current US tariffs on Chinese goods, we are more concerned with potential ‘second derivative’ impacts on local demand and implications of a further escalation from here,” Cabral wrote in a note to clients. “We are not adjusting our estimates at this time, but see downside risk from a further escalation in trade tensions.”Apple produces popular mobile brands iPhone and iPad. These gadgets are manufactured through Foxcom in China, admittedly Apple’s target for marketing its mobile products. But with Trump escalating the trade war tension, there no longer appears to be an opening for Apple to trade its mobile wares in the vast Chinese market — at least not in the immediate sense.One account reports that Apple’s stocks fell 6.9 percent on the second week of May. That was five days after Trump tweeted: “For 10 months, China has been paying tariffs to the USA of 25 percent on $50 billion of high tech, and 10 percent on $200 billion of other goods. These payments are partially responsible for our great economic results. The 10 percent will go up on Friday. $325 billion…”So, we have here an occasion where a major victim of a US economic slump presents an entirely different scenario of the downside from that pictured by the guy responsible for it. It is not Trump’s “great economic results” that sent Apple’s stocks rallying at the end of the first quarter of the year. According to the same account, it was Cook’s announcement of heavy reliance on China that prompted investors to pump in more investments into the company.Huawei: the endgameThe recent turnaround by Trump on the Huawei blacklist appears now to have been presaged by Trump’s announced veritable ceasefire in the tariff war. The leaders of the two main protagonists both in geopolitics and in world economic hegemony are reportedly set to meet next month to negotiate the issue.So it was normal for Trump to have executed testing jabs by which to size up the fighting capacity of his opponent. The founders of Huawei now admit that they have long anticipated this move by the US in the race to cybertech supremacy. They say they had been sure long ago that sooner or later, the US would ban sales to China of US cyberchips, and so early on they developed their own technology no longer dependent upon those US chips.According to my friend, the US discovered to its dismay that Huawei had grown to such an extent that US digital giants like Apple can no longer engage in the cyberindustry sans Huawei technology. My friend estimates that there won’t be any more digital in decades to come other than Huawei’s.Stated otherwise, this means no digital gadget manufacturer in the world will henceforth be able to produce those items without having to use Huawei technology in them.“Does it mean that Huawei has cornered the cyber technology for all eternity?” I ask.“At least for the next generation,” my friend says.Seeing how awesomely rapid has been the advancement in the cyber tech race, one may equate “that next generation” to eons, indeed.
