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Rotting Cherries, Spoiled Pork, Car Inspections and Angry Politicians

ZTE is back from the dead after Trump reversed sanctions. It's easy to explain why, but politicians are angry.

All of a sudden Trump is concerned about Chinese jobs.

Political Backlash

“Shocked. I think it shocked a lot of people in the president’s own cabinet,” said Senate Democratic Leader Chuck Schumer, speaking to reporters.

“Maybe he’ll back off - let’s hope. He’s done that before too,” said Schumer, who said getting tough on China was one of the few areas where he agrees with Trump.

Republican Senator Marco Rubio cited concerns about Beijing using telecom companies like ZTE , China’s second-largest maker of telecommunications equipment, for espionage.

“I hope this isn’t the beginning of backing down to China,” Rubio said on Twitter, saying Chinese competition had “ruined” many U.S. companies.

“We are crazy to allow them to operate in U.S. without tighter restrictions,” Rubio said.

What Happened?

Ford cars and California fruits are among the goods piling up at Chinese ports, the result of increased inspections that business groups say is China’s way of reminding the U.S. how important its market is to American exporters.

Navel oranges, lemons and cherries from California, along with American apples, have been sitting at Chinese wharves for longer than normal as Chinese inspectors spend more time inspecting the fruits for pests and decays, U.S. trade groups said.

Ford Motor Co. vehicles are likewise being subjected to unusually rigorous checks at the port, people familiar with the matter said. Chinese customs officials want to inspect individual components inside the vehicles’ emissions system, which would basically require the car to be disassembled—an impractical step.

Pork is also coming under more frequent inspections, U.S. officials say.

Deal including Qualcomm in the Works

After Mr. Trump’s tweet on Sunday, U.S. investment firm Rangeley Capital noticed an almost instantaneous change in Chinese regulators’ attitude about the proposed merger between Qualcomm and NXP Semiconductors. Chinese regulators previously had held up approval of the deal in response to growing trade tensions, including the U.S. action against ZTE.

Complicating matters, the U.S. side is bitterly divided between Mr. Mnuchin and others in the administration. U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro want a tougher U.S. line against China and deep changes in Chinese practices, including the elimination of subsidies that help Chinese companies compete internationally. Forcing those changes could require the U.S. to go through with threats and levy tariffs on as much as $150 billion of Chinese imports, moves that would disrupt the relationship and could sink markets.

Rotting cherries, Spoiled Pork, Ford Car Inspections

Apparently, trade war advocates and politicians on both sides of the aisle would rather see rotting cherries, spoiled pork, and Ford car disassemblies than undo the tariffs.

I propose the common sense position was to not get into this stupid predicament in the first place.

Mike "Mish" Shedlock

Meanwhile their North Korean junkyard dog has been instructed 'not to bark'...

Not to worry, tax payer will bail out the farmers and auto manufacturers.

Conflict is inevitably messy, and there is always collateral damage. Simple solution would be for China to embrace free trade doctrine and reduce its tariffs and non-tariff barriers. But if the Chinese will not renounce mercantilism, they have to live with the very obvious situation that China is a lot more dependent on US markets than the US is on Chinese markets.

As long as our side is not governed by bureaucrats who are unable to understand the contest, China has more to lose than we do. If a blocking a load of cherries is all it takes for the Chinese to continue their mercantilist policies which have brought an aggregate $4.6 Trillion trade deficit between the US and China, then we're too weak to survive. A real trade contest forces exchanges to balance, either with free floating currency, or bureaucratic negotiations. We all favor the former, but the Chinese are not going to let that happen without a fight
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