Fatal Mistake: U.S. Panics Over BRUTAL China Stalemate As Trump SHATTERS G7 Economies

0:00 So, we are not done yet. It's still not done yet. Trump just threw a big spanner again. And just when you think that the disaster is done, he's back again with his campaign of shock and all. Now, a month ago, the focus was on China. The need to break Beijing was top of mind. A week ago, it was breaks. The desire to punish countries trading with Russia. And just a few days ago, it was punishing South Korea and other Asian countries like Japan. basically a shakeddown for money. And now Trump is out to punish everyone. The shakeddown has gone global and it's all about finding more excuses to squeeze exporters and US consumers. Now look at the new bombshell Trump just dropped.

0:46 Let's focus on the disaster hitting US allies and friends who are now the economic victims. The US is going to set a 20% tariff on Taiwan, which is their main semiconductor supplier. And how is that even a smart move? Trump's thinking is too high level for me. Meanwhile, Switzerland will get clobbered with a 39% tariff. But a big shock is the Canadians getting punished, absolutely hammered with a 35% tariff. And do you know how crazy this is? Even the additional tariff on China is just 30%. Maybe being a strong adversary gets you more respect and fear from the US. In addition to this, Trump is going to impose 19% tariffs on Thailand and

1:32 Cambodia. So, Southeast Asia is not going to escape the madness. The king of the world is out for everyone. So, what's the agenda here? It's something that we have said on repeat since April. Trump's strategy is how bullies act. They shock you. They make big, outrageous demands and hope you fall. Then he drags you to the negotiating table. He tells you to give him your lunch money to reduce his punishments. And because there's no cohesion, especially amongst the G7, they are still trapped in their Western Alliance fantasy. Trump is getting his way to quite an extent. And just look at the past trade deals from Indonesia and Europe to South Korea and Japan. The mechanism is the same. Hit you with a 20

2:19 to 50% tariff thread make you buckle and then force you to subsidize the US economy. Now this could be buying expensive US LNG, buying a fleet of Boeing planes or squeezing your country of capital for investments. And either way you look at it, he's turning US markets into pay-to-play into a very weird kind of economy. And this will backfire badly. But for now, he's on cloud9. But I want us to focus on G7 and US allies getting clobbered. Now, their rates are far higher than the 10% baseline despite already subsidizing the US economy. And let's start with Canada because a 35% tariff can absolutely do a number to the economy. The dependence is tremendous and there's only so much you

3:05 can diversify in just 4 months. In 2023, Canada exported around 560 billion worth of staff to the US, half a trillion, and that's 78% of total exports and contributes to around a quarter of the country's entire GDP. There's also another problem. A 35% tariff can eat into the margins of many industries, especially those around raw materials, consumer goods, and even car parts. Not forgetting the steel and aluminum tariffs. Canadian industries, they are in a very bad position. It will take years to find new customers in a sustainable way. And that's probably why Trump is doing a show hand at a poker table now. So, you can understand why the Canadians, they're just so pissed

3:51 off. Trump is willing to raise prices on Canadian products because it will be US consumers who will pay the price. And boy is Lut having a field day with this. He is shaming the Canadians. He's taking the mockery to a whole new level. >> Uh two countries on the whole world retaliated against the United States of America tariffs. China, which we all know, >> and Canada. So, you know what? I just don't see the president stepping off the gas. Now, Mark Carney came down, had a really nice lunch with the president when he first got elected. You know, if he makes that call, and if he starts turning on the charm, and if he takes off his retaliation, let's, you know, and stops the silliness, maybe the president will let it down a bit. But

4:37 right now, 35% that letter he sent is surely in the cart. >> So, tell me guys, how can you take the trade war seriously today? It's like a video game now. The amount of whiplash of all these twists and turns is literally insane. The G7 is buckling, but this disaster is going to hammer down on the US as well. Trump, he threw a boomerang and a swing back is going to really hurt. And if you're in the States, your standard of living is going to go down very soon. So these exports are now subject to a 39% tariff, but they are big medicine exporters to the US and they sold at least 10 billion worth of pharmaceuticals to the US. America just doesn't make enough of their own medicine, so prices across the board will go higher. People will either

5:23 need to pay more or just cut down on their supply. Either situation is bad. Now remember that Besson and Trump, they're desperate for money. The tax bill is going to cost an incredible 3.4 4 trillion and that means they need to milk an additional $340 billion a year and their weapon of choice is tariffs. Now, US consumer spending is already reeling. In Q1 and Q2, the average growth is less than 1%. Now, compare that to the last 3 years. That was when inflation was going up. This means Trump's tariffs are doing a bigger number on American consumers themselves than 2022 to 2024. So sit back and imagine how bad things could get in next quarter or so. All US imports from the

6:10 world, especially from Canada, will cost a ton more. Local suppliers will be forced to jack prices higher, so everyone gets clobbered. And this is where things get sad and very bizarre for the G7. Now, Trump probably wants countries like Canada to pump money into the US economy. And as we said, it's the same old playbook. But think about this a little deeper. Aren't the G7 already subsidizing the US economy? Who do you think is buying all those Treasury bonds that breaks it dumping? Just take a look. As China sells off their holdings, G7 countries are busy buying like no tomorrow. The UK now holds more US debt at Beijing. Canada, in particular, has been buying non-stop since 2021. In

6:55 other words, they are subsidizing Trump's trade war against themselves. There's no other way to put it. Other G7 allies like France and Germany are also buying more. So in a sense they have created their own economic crisis. Trump is not going to let up until he reaches his fantasy scenario. And what is that? Reassuring major industries from countries that have the highest trade surplus. It's no coincidence and we can double confirm it with the tariff rates. Remember the underlying thought process in Washington. If the US has a trade deficit with you, it means your industries are screwing US markets. And to balance the scales, well, we have to clobber you harder. Now, Trump has split

7:41 the world into three. If the US has a trade surplus with you, the punishment rate is 10%. So, no, you don't get to escape. If there's a modest trade deficit, the rate will be 15%. But if the deficit is big, the tariff rate will be much bigger like the 39% rate on Switzerland. And this is crazy because it will foster a lot of resentment from countries and it defines the very essence of trade. So to escape brutal terrorists, you are forced to buy more than what you sell to the US. Now, Trump really thinks that he checkmated the world. But there's another option he really hasn't considered yet, and that's the world simply not dealing with the United States as a whole. Both imports

8:26 from the US and exports to the US will fall as a result. And when that happens, who do you think will benefit the most from this? It will be bricks. Now, the big difference between the US and BRICS is population size. And it's simple to understand. bricks will eventually get richer and the middle class will grow. Today it's around 50% of the world. So consumption and export power will both grow exponentially from here. And as the trade war continues, countries will be forced to buy and sell more with breaks. So we'll see countries like India, China, and Indonesia become bigger exporters and importers. It's going to happen. But Trump just accelerated the timetable. So maybe it would have taken 5 or 10 years to overtake the US. Now

9:13 it's probably just two to three years. Things are now very compressed. So while that's true, we need to confront the big fish. And that is the US China trade deal. There's a lot of details that's being obscured. Most likely Besson is trying to badger and corner Beijing. But the Chinese, they aren't giving way. They know where the leverage lies. Just listen to Besson. He's totally unsure and looks like he's on the edge of a nervous breakdown. >> The Chinese are tough negotiators. We're tough, too. It was led by the vice premier, my counterpart, uh, Julie Fun, uh, who I have great respect for. Uh, you know, he is both a statesman, a tough negotiator, and, you know, very senior in the leadership. uh we uh

10:01 pushed back on them quite a bit and uh made our positions known. Uh I believe that we have the makings of a deal. >> And if there's one economy more pivotal than Canada, Mexico or the EU is China. Now this trade deal alone will either let the US somewhat survive or bury it completely. The cards are with China and they're not showing their hand. They are letting Scott Besson sweat while the White House is still trying to paint a really rosy picture. But is it really? According to Levit, the current trade program we have with China will decrease the US trade deficit by $5 billion this year. Now, firstly, this number is a joke. In 2024, the US trade deficit with China was nearly $300 billion. So, we

10:48 are talking about a 2 to 3% decrease at best. And that's the best case scenario. This obscures the truth about the situation. It means total trade will drop. Yes, the US will import less from China. Chinese goods coming in have already dropped by a fifth. But it also means China will be buying less from the US as well. So the deficit isn't going to shrink by much. She is trying to spin the numbers, but we can easily see past the smoke and mirrors. So I hope you can see the deflection happening in the language being used. is not that Caroline is lying, just that she's obscuring the truth. And if we look into the future, it's very very likely that the tariff rate will stay at 30% or so. The majority of analysts believe the

11:34 tariffs will stay at this level. In the next 6 months, probably still at 30%. The final level might improve to 20%. Now, if things go wrong, we might revert back to crazy town of 60%. But either way, we really shouldn't expect the tariff rate to go well below 30. The US and China tariff can never hit 10 or 15%, because if it does, it will be very insulting to everyone, especially the G7. Now, just think of it. If China runs a $300 billion trade surplus with the US and only needs to endure a 15 or even 20% tariff, what's the point? we get punished being an ally or even as a neutral country. So you can see how Trump has sandwiched the US in a very

12:20 untenable position. He has boxed himself into a position where he can neither retreat or advance. The problem the US faces is how convoluted they are making the entire tariff war. It's like pouring 20 different types of drinks into the punch bowl and trying to get a consistent taste. Now take the trans shshipment penalties for example. And to be frank, we all know it's directed against China. There will be a 40% additional penalty on goods bypassing US tariffs. So if Beijing sends goods to Australia or Penguin Island and they get reshipped to the US, the country will get punished. The country might have to pay 10% plus the 40% penalty, so 50% in total. Now, I have no idea why Trump keeps adding all these convoluted

13:06 schemes. It's like some DND dungeon master. It makes trade with the US absolutely exhausting. You need to refer to a thousandpage booklet to even ship stuff to the US. It's just tiring. Trying to export to the US will be like pulling teeth. Well, it is what it is, right? Welcome to this brave new world. There isn't any complexity or deep thinking needed anymore. It's all about which side of the bait Trump wakes up on. But as always, let me know what you think. Can the G7 survive Trump's tariff nightmare? and what kind of US China deal will be worked out? Let me know in the comments below. Stay safe. Be sure to smash the like button and subscribe as we navigate through these crazy times.