LARRY KUDLOW: China going rogue is gonna hurt them a whole lot more than us

The long and short of the battles between the US and China is that trade barriers have not been removed, and no new trade opportunities have emerged. China has gone rogue by imposing export controls on rare earths and other commodities to the entire world. Of course, the United States must respond. Scott Besant is right: China is a command-and-control economy, and our allies will not be directed or controlled.

Rare earth deals were concluded at various meetings in London, Geneva and Madrid, but China broke these deals. Just like they broke the Phase 1 deal of the trade agreement that was signed in January 2020. They broke the law. Maybe the Commerce Department is going rogue. Maybe something has gone rogue. who knows. But China’s rogue behavior will hurt them more than it hurts us. Their economy is in recession, and we are the great consumer force they so desperately need.

Now, China is certainly losing friends if they have any at all. Australia is angry with China. Japan. European Union. Of course, Mr. Trump will impose massive tariffs on November 1, unless China backs down. The United States must respond.

I still think it’s possible that China is having a temper tantrum because it was brutally defeated in the Middle East by President Trump’s historic peace deal and the destruction of China-backed Iran. Another defeat may be on the horizon as Trump focuses on ending the war between Russia and Ukraine. China is backing the wrong horse there too.

Meanwhile, the US Senate wants to impose 500% tariffs on China for purchasing Russian oil. 100% he will be fine. Once again, China is backing the wrong horse. Incidentally, with the imposition of a 50% tariff, India stopped buying Russian oil.

The corruption of Chinese trade is bigger than rare earths. They and their allies in the BRIC group have been buying huge amounts of gold over the past ten years or more, while reducing their holdings of US Treasury bonds in dollars by about 50%. What are they doing? Well, they are working overtime to reduce the US dollar’s global reserve currency status.

So, here’s President Trump’s response to that: “I like the dollar. I’m very strong on the dollar. And anyone who wants to be in the dollar, they have an advantage over people who don’t. But for the most part, we keep it that way. Like the BRICS. I’ve told anyone who wants to be in the BRICS – that’s fine. But we’re going to put tariffs on your nation. Everyone has pulled out. They’ve all pulled out of the BRICS. The BRICS was an attack on the dollar.”

Pure and simple. Mr. Trump is right. The BRICS countries and China are attacking the dollar. More rogue behavior.

So the wisest course now is to hold an APEC meeting in South Korea between Mr. Xi and Mr. Trump. Perhaps then we can return to lowering trade barriers and promoting prosperity. But if China insists on playing the role of petulant spoiled child as it continues to lose ground in global politics and influence, so be it. Count on Donald Trump not to side with China’s bad behavior. They’re going after the wrong guy.