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Yahoo Finance’s Rick Newman throws gentleness on core U. S. -China containment issues, expanding to Biden’s version on Chinese price charts as former President Trump pushes harder in his reelection campaign.
For more information and the latest market actions, click here to watch this full episode of Yahoo Finance Live.
President Biden and Chinese President Xi Jinping reportedly spoke by phone on Tuesday to defuse tensions and added U. S. lawmakers’ plan to ban the popular social media app TikTok.
Yahoo Finance’s Rick Newman sheds light on the central themes of discord between the U. S. and China, expanding Biden’s view on Chinese price lists as former President Trump pushes for more in his reelection campaign.
For more information and the latest market actions, click here to watch this full episode of Yahoo Finance Live.
Editor’s Note: This article is written by Luke Carberry Mogan.
– President Biden and Chinese President Xi Jinping spoke by phone the day before for the first time since November. The verbal exchange comes amid ongoing efforts to reduce tensions between the two nations, with more details about what was discussed and why it matters. . Rick Newman of Yahoo Finance. Rick, what did they discuss?
RICK NEWMAN: I wish I had been on the call. President Biden just said how things are going. I’m just calling to check it out. By the way, when do you plan to invade Taiwan?It’s between us. Well, one thing we know they’ve discussed is TikTok. I mean, there’s this. . . the House says that here in the U. S. In the U. S. , they passed a bill that would oblige. . .
– 50 to 0.
RICK NEWMAN: . . . task.
– 50 to 0.
RICK NEWMAN: So, force the sale of TikTok or ban it in the United States. It is not certain that this proposal will be approved by the Senate, but this consultation carries weight. I mean, there’s a lot of interest in it. I think President Biden is clear. It focuses on divestment, not banning enforcement. They just need to own it and not be founded in China. So, basically, I’m promoting it. All kinds of disorders arise. I mean, Janet Yellen, the Secretary of the Treasury, goes there.
He recently said that he was concerned about the overproduction in China of many of the products that are lately being tried to be exported, and that he was involved in them getting rid of cars, electric vehicle technologies, solar panels, etc. market prices, which China has done. I mean, they can’t consume everything they produce in China. So there’s a lot of them. Concerns about the arrival of electric cars and their Chinese-made parts in the U. S. U. S.
There would be price lists for those who came in, but it’s possible that they just come in here and even with price lists, they can reduce the costs of American goods. China is aiding Russia in its war against Ukraine. provide a lot of help to the army. But it replaces much of what Russia can no longer get because of Western sanctions. So there’s a whole series of disorders between those two countries.
– That’s why it’s good that they talk to each other again.
RICK NEWMAN: Sure.
– But there are still many issues of tension. We talk more and more about the upcoming presidential election, and we were just talking in the recess, looking to perceive the difference and we know President Biden’s policy toward China, which is pretty well known and the rhetoric that we’ve heard about a future president, Trump.
RICK NEWMAN: Well, Trump is also a familiar figure because we know what he did with China when he was in the White House. It imposed such price lists on about a portion of all Chinese imports, which still exist. Biden left them in place. So how would they be different between 2025 and 2029?Trump has made it abundantly clear that he needs more price lists for Chinese imports. And the way I see other people characterizing. . . I mean, it may be that Trump is talking about new imports of up to 60% of Chinese imports.
The ones I had placed before only had a diversity of 10 to 25 consistent with cent. So that would be a big problem and the way I see other people framing this is that Trump would like to decouple the two economies, which means breaking the very strong links that exist lately between those two economies. And Biden doesn’t need to do that. You need to manage certain parts of the relationship. You need some source chains in the U. S. U. S. But I mean, if you take a look at the industry data, I mean, we’re still loading tons of products from China.
This has long contributed to deflation or low inflation. And obviously, now we have a little bit of an inflation problem. So, the analysts I consult say that if Trump were elected and did some of the things he talks about, it would be inflationary. This would have the effect of driving up some prices, which is more complicated to achieve. It’s not the right time to do it. I mean, it was another one when it started in 2018.
“Well, that’s what I wanted to ask you. Just a very quick follow-up, because I don’t forget when we talked about this before, when he threatened and then enacted those tariffs in advance, and that was the prediction. At that point, it would cause inflation. Of course, the pandemic happened, so it blew the total calculation. But did it have that effect? Did it drive up prices in the first place?
RICK NEWMAN: So Trump was involved in this, and here’s how we know: The price lists that he imposed on Chinese imports were mostly about parts. As a result, most of them were not finished products that went directly to consumers. not computers. They weren’t electronics. They were parts that went to the chain of origin. So it was the buyers, the brands, and the brands here who were buying those pieces, and then they had to figure out how to deal with the top costs.
So, very conscientiously and deliberately, he didn’t impose: he exempted from the tariffs the intelligence of the finished customer, the maximum intelligence of the finished customer, because if he hadn’t, the increases in value would have simply been reflected on the label of those products. and in the same way. In a way, Trump kept telling us that Americans don’t pay tariffs. The Chinese pay tariffs, which is absolutely false. Tariffs are assessed when they enter the U. S. In the U. S. , customs proceeds go to the Treasury, and that causes values to go up here. So they hid that inflation to the extent that it existed, and put the onus on manufacturers to figure out what to do with those values, and then COVID hit. So it’s kind of hard to untangle. But two years from now, it wouldn’t be a good time to take inflationary action.