If trade talks with the U.S. were to flounder, China will turn away from the U.S. and continue building the world’s largest free trade zone, a zone that includes China, the Pacific Rim (Southeast Asia, Phillippines, Australia), Pakistan, the Middle East, Turkey, Russia, and Africa, encompassing over half of the world’s population. China has been investing trillions of dollars into building high speed train/highway/shipping trade routes with the countries mentioned above, to form this trading zone. China ships finished products to countries that feed it grain, meat, energy, and raw materials. The flow of money and products will go both ways. Trump has successfully isolated the U.S. from most of the world by rejecting the Transpacific Partnership (TPP), by imposing 25% and 10% tariffs on all countries that ship steel and aluminum to the U.S., and by imposing 25% tariffs on $50 billion of Chinese imports into the U.S. and soon 10% tariffs on an additional $200 billion of Chinese imports. The first stopped the U.S. from leading Pacific Rim countries in trade. The second resulted in retaliatory tariffs against U.S. products by allies in Asia and Europe, Canada, and Mexico. The third stopped U.S. soybeans and pork exports to China and will result in retaliatory tariffs on materials that U.S. companies ship to China to make U.S. products. United States is essentially forcing the consolidation of a Eurasian free trade zone by a building a wall of tariffs. This wall will be difficult to break down even if the U.S. decides to withdraw all its tariffs. That is because the other side will realize that tariffs against the U.S. help them. Trump’s tariff policy is based on the mistakened policy that America needs and should bring manufacturing jobs back. Trump and his supporters do not understand that those manufacturing jobs and activities must pay low wages and pollute America, if the U.S. is to compete successfully with overseas manufacturing. The U.S. now has virtually full employment without bringing any of the manufacturing jobs back. America has a great business model of managing supply chains to deliver cheap raw material and components to China, assembling the products there, and selling those products to the world for substantial profits. That is what makes America great. Apple is a good example of the business model that has made America great. By developing relationships and supply chains that allow the cheapest and best components to be shipped to China for assembly and selling the products to the world, Apple has become the most profitable company in the world. By destroying that model with tariffs, Trump is guaranteeing that the U.S. will have to pay American workers low wages to make products that can compete with manufacturers overseas. In this game, the U.S. will lose. Instead of making more money around the world, America has to descend to the level of its competitors and make much less money. Worse, Trump is destroying the trust and carefully developed network of dependency and efficiency that has made U.S. companies the most profitable companies in the world. This trust and network cannot be easily rebuilt. Even our closest allies, such as Canada, Mexico, Korea, and Japan, are making deals with Europe and China for free trade. The U.S. may not be able to rely on its traditional allies, such as Canada, Mexico, Korea, Japan, Britain, Israel, India, and Taiwan. Many of these allies are no longer willing to trust the U.S. as a trading partner after Trump’s churlish behavior in Canada, his criticism of NATO, his chumminess with Russia, and his irrational trade war with China. In summary, America needs China more than China needs America. Now that Trump is forcing China to levy tariffs on components shipped from the U.S. by American manufacturers to make their products, he is destroying the business model that has made the United States the most profitable nation in the world. $SPY, SPDR S&P 500 / H1 posted by user @wiseyou