One of the unique concepts of the Asian mind is the idea of “face.” It is a stew with reputation, honor, social standing, wealth, power, dignity, moral character, and integrity being the main ingredients.
One may give face, lose face, or save face and the Chinese have been focused on face for more than 5,000 years. The rest of the world is not so fixated on face.
Because, dear reader, we are dealing with the Chinese in regard to tariffs and non-tariff barriers to trade and face is a big deal with the Chinese.
The Chinese and the Americans — now having put the issue in the middle of the table and feeling the first impacts of the tariffs — desperately want to arrive at some compromise.
1. The Americans — meaning President Trump — are more than willing to enter into discussions and already have. The Trump admin is looking for a deal to address tariffs and Chinese practices such as access to Chinese courts to address civil business litigation, the safety of intellectual property owned by Americna companies, access to Chinese markets for American goods, and other specific, substantive Chinese bad trade practices.
2. The Chinese — desperate to maintain face and not to look powerless in the eyes of the world but dealing with a dicey economy themselves — want to export their many goods to the United States, the most powerful and robust economy in the world.
We are now seeing the impact of tariffs in American ports with a meaningful reduction in traffic.
Well — remember the face thing — the Chinese want to talk, but they want to make it look like the Americans are the ones who initiated the contact (the whole face thing). The Chinese have been publicly pugnacious — mostly for internal consumption — and have made bellicose statements that they can sustain a trade war for years.
Already a meaningful percentage of Chinese factories are empty and the US is projecting a 75%+ reduction in future Chinese imports. So, this is a big deal.
The Trump admin doesn’t care who initiated the contact and has been speaking with the Chinese continually — a fairly high level meeting happened last month in Switzerland though the Chinese pretend they are not in contact with the United States.
Secretary of the Treasury Scott Bessent enjoys the complete confidence of President Trump. He is doing a fantastic job — a steady, thoughtful hand in a sea of chaos.
This weekend, the US Treasury Secretary Scott Bessent and the US Trade Representative Jamieson Greer will meet wtih Chinese Vice Premier He Lifeng in Switzerland. This is as high a level of contact as can be effectuated between the US and China. So, yeah, in a month since Liberation Day, the Chinese are in play.
Seasoned Old Commie and President Xi pal, Chinese Vice Premiere He Lifeng.
While the US and China seem to be publicly scrapping — and they are — they have both quietly made exemptions to the US 145% and Chinese 125% tariffs. This is also a big deal, these quiet exemptions such as electronics like Apple phones.
What happens next is this meeting this weekend in Switzerland at the highest levels of the US and Chinese government — it doesn’t get any higher. There will be no reported progess other than “substantive” and “meaningful” adjectives thrown around after the meeting.
In the meantime, the Trump admin will begin to announce revised trade deals with countries like India and the United Kingdom and other similarly situated countries who are candidates for “friend-shoring” — moving Chinese based manufacturing to a friendly nation. These deals will begin to come quickly in the next month. They will have an impact on China as they see their manufacturing base moving to other countries.
The Trump admin will continue to re-shore (move manufacturing from China to the US) and friend shore (moving Chinese manufacturing to other friendly nations).
There will also be massive amounts of development in the US in critical industries like semiconductors and pharmaceuticals. Tariffs protecting the US steel industry will become permanent.
It is quite amazing to see the impact on trade since Liberation Day, 2 April 2025. This is the biggest disruption in global trade in history and it is long overdue. Only a killer like President Trump could pull off something like this.
Here it is, dear reader, the tariffs have had the desired impact — the Chinese have come in less than a month to the negotiating table to address changes. One must give Trump 2.0 great credit as it is the first real time since China was admitted to the World Trade Organization that China has done just that. It is a very good devel0pment.
It will take a long time for the US to get China to alter its non-tariff trade barriers which is the real beef here. Meanwhile, the US is serious about friend-shoring, re-shoring, and attracting new capital investment in the US.
I would say we are just about where Trump 2.0 wanted us to be.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.
