King Dollar: Keeping Passport Bros & SHEIN Queens in Check
A majority of Trump’s reasons for a trade war are correct. Do you know how we know this?
Everyone is submitting:
Mexico
Panama
Colombia
Venezuela
Canada
China will submit on Monday.
China’s significant reliance on U.S. consumers remains a pivotal factor in trade negotiations, with its competitive advantage primarily rooted in low pricing. In 2024, China’s merchandise trade surplus reached a record $992.2 billion, with approximately $326 billion attributed to trade with the United States. This underscores China’s continued dominance in global manufacturing and export markets.
The country continues to flood international markets with products ranging from steel and electronics to AI technologies. Despite its vast export capabilities, China faces challenges in branding and cultural cachet, which impacts its pricing power for finished goods.
Trade War Impact:
• Protecting American Jobs: Tariffs aim to counter decades of industrial decline caused by outsourcing. The U.S. is working to rebuild its manufacturing base by encouraging domestic investment.
• Strengthening National Security: Tariffs also address broader concerns, such as reducing dependence on adversaries like China for critical goods and pressuring Mexico to secure borders.
• Rebuilding Manufacturing: Policies are incentivizing companies to return production to the U.S., fostering job creation and infrastructure development.
• Ending the De Minimis Loophole: Retailers like Shein and Temu have exploited the “de minimis” exemption, which allows imports valued under $800 to bypass customs duties. In 2024, over one billion packages entered the U.S. under this loophole, raising concerns about counterfeit goods, unsafe products, and forced labor.
Globalists, referred to as “passport bros,” often advocate for outsourcing and global integration, while left-wing media frequently critiques these policies for political reasons. However, this discussion isn’t about exceptionalism, as not every individual or nation is exceptional.
When the United States chooses to be kind, as opposed to merely nice, the entire world will understand why the dollar is king.
Over the past several months it has become increasingly clear that the US dollar has been the best house in an otherwise bad neighborhood. I have been both a vocal proponent and a benefactor of this notion. There are several factors that support my stance on the USD.
First, is the status of the US dollar as the world’s reserve currency. This has held true through the best of times and the worst of times. Looking back at the 2008 recession, not only did the US dollar remain strong, it reached record highs through the tough times. Fast-forward to 2014 and the dollar rose significantly against all major currencies including the Euro, the British pound and the Yen. In 2014 the dollar even surpassed levels we saw in 2008 and has remained strong early in 2015.
There has been a distinct timeline of events that reinforced my initial justification for this position and allowed me to even amplify it. I began buying PowerShares DB US Dollar Bullish Fund ETF (UUP) towards the end of August 2014. Not long after that, the Euro began a decline coupled with rising U.S. bond yields. We continued to buy aggressively through September, and low and behold, the dollar continued to strengthen against other global currencies. “We have seen other nations choose to devalue their currencies to spur economic growth as global conditions deteriorate,” states Lennon Sweeting, Currency Payments Analyst at USForex, “it seems as though struggling economies view currency devaluation as a low hanging, quick fix.”
https://www.forbes.com/sites/peterpham/2015/09/30/trading-the-worlds-biggest-trend/