It was only days ago that Gordon G. Chang predicted that China would reach a trade agreement with the United States. And now, just as he predicted, China is in violation of that agreement. What does that mean for the world's second-largest economy?
00:00:09.060Joining me now is old China hand, Gordon G. Chang.
00:00:13.940Gordon Chang has lived and worked in Shanghai and Hong Kong for almost two decades.
00:00:18.940He is a columnist, has written for Newsweek, The Hill, The New York Times, The Wall Street Journal, National Review, Barron's, and elsewhere.
00:00:28.880His most recent book, Plan Red, China's Project to Destroy America, now available on Amazon.
00:00:36.160It's must reading. I highly recommend you.
00:00:39.200Gordon, welcome back into the Stone Zone.
00:00:41.660It was right here on this show only days ago that you predicted that China would reach a tariff agreement with the United States.
00:00:51.000But you also predicted that they would violate that agreement.
00:00:54.540And now, just as you predicted, that is exactly what has happened.
00:00:59.480President Donald Trump on True Social said two weeks ago, China was in grave economic danger.
00:01:06.100The very high tariffs I set made it virtually impossible for China to trade into the United States marketplace, which is by far number one in the world.
00:01:15.740We went, in effect, cold turkey with China, and it was devastating for them.0.99
00:01:20.780Many factories closed, and there was, to put it mildly, civil unrest.
00:01:25.380I saw what was happening. I didn't like it for them, nor for us.
00:01:29.400I made a fast deal with China in order to save them from what I thought was going to be a very bad situation, and I did not want to see that happen.
00:01:38.460Because of this deal, everything quickly stabilized, and China got back to business as usual.
00:01:44.440Everybody was happy. That was the good news.
00:01:47.320The bad news, however, is that China, perhaps surprising, not surprising to some, that would include Gordon Chang, has totally violated its agreement with us, so much for being Mr. Nice Guy.
00:02:00.420Well, Gordon Chang, I have to hand it to you. You called all this just days ago.
00:02:07.500So it didn't take very much in the way of powers of prediction.
00:02:10.400What we saw, especially after the May 12th agreement was announced, was that China did not adhere to its main promise, which was to remove non-tariff barriers that it had put in place after April 2nd, Liberation Day.
00:02:27.680This was a very easy thing for Beijing to do.
00:02:31.160Specifically, this was the export ban on rare earths to the United States.
00:02:36.240It's important to us. I don't know why China didn't do it, but clearly we're now at a point which was easy to see, and that is Beijing is in violation of the agreement, and the United States needs to do something about it.
00:02:50.160Yeah, I think you're right. You would think that the Chinese would actually have some sense of relief that we are not launching a nuclear attack on Iran, since they depend on their Iranian puppet states for so much of their oil.0.85
00:03:05.160What are the ways that China is violating the current agreement?
00:03:09.700Yeah, the most important one is the failure to remove the export ban on rare earths.
00:03:16.900This was specifically referred to when the May 12th agreement said all of the measures that China had put in place after April 2nd, and that certainly included the rare earth ban, which was actually discussed in Geneva between the American and the Chinese negotiators.
00:03:35.840So it was something that China knew that we expected them to do right away.
00:03:40.620You know, the thing about this May 12th agreement was, as President Trump intimated in that posting, this was a very favorable agreement for China.
00:03:49.600So it's in China's interest to make sure that it goes forward and that we adhere to it.0.96
00:03:54.700And so it really is, you know, a very short-sighted decision on the part of the Chinese to try to test President Trump by not adhering and complying with the agreement.0.57
00:04:07.820Yeah, and those who have tested Donald Trump in the past have found out that he has ice water in his veins when it comes to negotiating, particularly when he's negotiating on behalf of the American public.
00:04:18.740What do you think happens next in this Chinese-American tariff minuet?
00:04:26.800President Trump is going to impose some cost, and I think he's going to do it pretty soon.
00:04:31.800He's made a marker for himself with the posting a few hours ago, which means that it will happen.
00:04:49.380Of course, some federal court has already attempted to tell him that he doesn't have the authority to do any of this.
00:04:55.340This was one of the most incredible things I've seen in a 50-year career in American politics,
00:05:00.620where a federal judge in Florida says that Donald Trump has the authority set by Congress to negotiate tariffs for reasons beyond just revenue,
00:05:12.060the drugs pouring into our country, the trade imbalance.
00:05:18.920Trump declared an economic emergency in order to give himself this executive power as required by the Constitution.
00:05:26.100And then suddenly, out of nowhere, this incredibly obscure international court of trade,
00:05:31.560which is located in Manhattan, of all places, rules the president doesn't have this authority.
00:05:37.620Trump's lawyers appealed within hours, and a federal appeals court stayed the international trade court's decision
00:05:48.380so the president could get back to negotiating better trade deals for the American people.
00:05:53.020We haven't seen a final ruling on that, but we presume, much like the earlier federal court rulings that said that he didn't have the authority
00:06:02.660to deport violent, illegal immigrant criminals from the United States,0.85
00:06:09.100it will end up before the U.S. Supreme Court, I imagine.
00:06:12.400And my guess is that the International Trade Court, which threw out a hundred years of precedent,
00:06:19.500allowed every other president to set tariffs unencumbered, will be overturned.
00:06:25.520In the meantime, I think I want to focus on the part of the president's statement, Gordon,
00:06:31.580when he spoke of civil unrest unfolding in China.
00:06:35.180The Chinese have an extraordinarily brutal regime.
00:07:17.940What it says is that China's people are extremely unhappy, and whenever they get the opportunity, they will take to the streets as they have been.1.00
00:07:29.560Also, we have had hints that there are depositor protests in the eastern part of the country, big cities like Shanghai and Beijing.
00:07:39.880And that really is an indication that the banks are being squeezed.
00:07:44.100Now, I'm sure that these are the smaller financial institutions, because the big ones are flush with cash.
00:07:50.800But it shows that the problems in the economy are now radiating into the banking system.
00:07:56.720And that's a really bad sign for Beijing.
00:07:59.520If you're looking to create, grow, and sustain your wealth, download and subscribe to the Payne Points of Wealth podcast at BeBullish.com.
00:12:56.260Two other things, though, are entirely possible and maybe even probable.
00:13:00.600Taiwan has a lot of little islands that are just off the Chinese mainland, some of them as close as three miles.
00:13:08.400Xi Jinping needing a quick victory could take one of those little ones,
00:13:12.140because that would be a fairly simple military exercise.
00:13:14.660The other thing that could happen is Xi has been engaged in very provocative activity on his periphery against South Korea, Japan, Taiwan, Philippines, Australia.
00:13:28.240One of those confrontations could go wrong.
00:13:30.540That could spiral down into a major conflict, and Taiwan could get involved that way.
00:13:39.580Donald Trump prefers commerce over chaos, but you can see him moving aggressively to try to isolate the Chinese.
00:13:48.840How successful do you think he can be at that?
00:13:51.900He can be extremely successful because, as Trump mentioned in his posting, everybody needs the U.S. market.
00:13:58.740U.S. consumers account for something like 38, 39 percent of global consumer spending.
00:14:04.240That's an enormous percentage, and all of these countries need the United States.
00:14:10.740So President Trump can use that leverage.
00:14:14.100He's got to negotiate with some skill.
00:14:18.940It's been a little bit chaotic up to now, but I'm sure that President Trump will be able to use the power of our market to accomplish what's good for Americans.
00:14:28.420I, again, if you're just tuning in, we're talking to Gordon Chang.
00:14:34.240Gordon, I want to thank you for joining us in Stone Zone today.
00:14:37.140You can follow Gordon at Gordon G. Chang in X.
00:14:42.200He also is the author of a terrific new book, Plan Red, China's Project to Destroy America, which you can find in Amazon.
00:14:49.840If you want to know what's going to happen in China and in Chinese-American relations, follow Gordon Chang on X.
00:14:57.460His analysis is excellent, and we're always glad to have him here in the Stone Zone.
00:15:06.560Coming up, Dan Bongino, the deputy FBI director, says he's found an entire room of documents, most of them pertaining or many of them pertaining to the so-called Russian collusion hoax, and they're going to be releasing those documents.
00:15:24.960We'll be talking about it here in the Stone Zone when we come back.
00:15:27.820So whatever you do, stick with us if you want to hear the latest on the Russian collusion hoax and whether those who perpetrated it on America will ever face justice.