With President Trump’s finger apparently poised to launch another $200 billion in tariffs on goods made in China, the Chinese are floating the idea that they could impose restrictions on the export of parts and components that American companies need to make things in the United States and elsewhere in the world. That would cripple many American manufacturers.
That could be only the beginning. China could ramp up inspections at its ports of materials coming from the United States. Environmental enforcement specialists could suddenly start showing up at plants that Americans operate either independently or as parts of joint ventures with Chinese entities and demand expensive ecofriendly solutions.
Workers might mysteriously stop showing up. Parts and components from Chinese entities that General Motors or Boeing needs could start showing defects or be late in arriving at just-in-time assembly lines. Tax inspectors could demand financial information and make it difficult for U.S. companies to repatriate profits back to the United States.
In effect, American companies are hostages in this situation. Trump could be exposing them to far greater damage that he and his advisers have dreamed. We have, in effect, joined our two economies together at the hip. If Trump persists with this $200 billion round of tariffs, look for shock waves to start hitting major U.S. companies listed on American stock exchanges. This way lies insanity.
