Speaker 1: And they made commitment after commitment out commitment to engage
in fair trade practices, to give American companies intellectual property
rights in China, and of course to lift to not
impose all of these non monetary barriers to entry to
the Chinese market. And the question is is in the
last twenty years have American companies being able to penetrate
the Chinese market? And I think the answer is a
resounding no.
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Speaker 3: And welcome. You are listening to and watching the Financial
Survival Network. I'm your host, Carrie Lutz. Well, we're talking
about tarrists. We're talking about trade deals with China. Is
there a deal? Is it imaginary? Is it all fluff?
Are there two deals? Is there the public deal and
then the real deal? Well, noted attorney and scholar Spencer
Morrison author with us now to discuss Spencer great having
you on the show. So is there a deal or
is there a deal to make a deal, or is
there really a deal that took place that we don't
know anything about.
Speaker 1: Hey, Carry, it's my pleasure to be on the program.
I think it's an interesting question that you post. Is
that the tariffs have been paused, of course in bulk for.
Speaker 4: Ninety days, except for on certain goods I think.
Speaker 1: Steele and automobiles for example, the tariffs are still on
the table, and allegedly this is to give more time
to negotiate. Now, I'm not particularly optimistic that negotiating with
China is really going to get us anywhere. China join
the Worldwide Organization in two thousand and one, and they
made commitment after commitment out commitment to engage in fair
trade practices, to give American companies intellectual property rights in China,
and of course to lift to not impose all of
these non monetary barriers to entry to the Chinese market.
And the question is is in the last twenty years
have American companies being able to penetrate the Chinese market?
And I think the answer is a resounding no. So
China agreed to lift all of these barriers in two
thousand and one they didn't. So I'm a skeptical that
we're going to make any headway here in the next
ninety days. I mean, they've had twenty four years to
do it, they haven't done it. In another ninety days
is probably not going to make that big a difference.
Speaker 3: There is a difference now, though, and that is this
situation in China is pretty dire. Basically, you got factories
closing down by the thousands, unemployment rampant. It kind of
reminds me of the pictures I'm watching coming out of there,
the real ones, not the fake shill accounts. But it
reminds me of the of the crash in the US
and the you know, twenty nine crash, where like all
these guys just leave a factory en mass and it's
empty and that's the end of it. And that's what's
happening there. So one thing about Trump is we know
he's a master of leverage, and you know he knows
that this could be the exact right point where he
applies maximum leverage to get maximum results.
Speaker 4: Right, Yeah, I agree with that.
Speaker 1: I mean, Chinese economy is uniquely vulnerable to these sort
of shocks to trade because they have a very dedicated
they have a very bifurcated economy, so a significant portion
of their manufacturing industry is geared only towards exports. It's
very different than an economy like America or even frankly,
most development economies in Europe, where most businesses have some
exposure exports and significant domestic exposure.
Speaker 4: In China, it's very different.
Speaker 1: Most of their businesses, up to ninety five percent of
their businesses do not deal with other countries. They just
service the Chinese market. But that five to ten percent
ish of Chinese companies, they're ninety ninety five percent export oriented.
So China is uniquely positioned to suffer from these sort
of trade shocks.
Speaker 4: And of course America's got all the leverage, just like
you said.
Speaker 1: And the reason for that is because we're the country
that's running the trade deficit, right and we export to them,
you know, about a third of what we buy from them,
so we have you know, every dollar of these tariffs
and trade that's shifting around hits them three times as
hard as it hits us.
Speaker 2: Hey.
Speaker 3: And and let's also a big real is that what
we export to China they really need. What we import.
Like if you don't get another iPhone charging cable, USBC
cable or a charger, your life will still go on.
Outside of rareth meta metals, which really aren't rare at all.
They're just we've just had a policy of not mining them.
There's plenty of them all over the place. It's such
a misnamed commodity because they're not rare, but they do
come from the earth, you.
Speaker 4: Know, Yeah, that's actually very true.
Speaker 1: They're rare because we didn't want to mind them because
of the environmental and sometimes human consequences of doing so.
But you know, we've scaled up the production pretty significantly
in the last twenty years, and of course there's lots
of other places we can get the same material. And
to your point, China is exporting, you know, it's the
exporting manufactured goods. That's stuff that we can build here.
America's exports to China are overwhelmingly shifting towards raw materials,
which of course an economy can't function.
Speaker 4: Without raw materials.
Speaker 1: They can build its own polypocket toys and you know,
shean skirts.
Speaker 4: Or whatever we're getting from China these days.
Speaker 3: Hey, and you know, like tabu is like dead dead
in the water here. Hey, your book, though, resure how
tariffs will bring our jobs home. And you know, there's
a whole thing about tara They go back to Smoot
Hawley in the thirties that that was the final nail
in the coffin of the Great Depression. But this is
a completely different case here. I mean, I'm a free
trader by nature, all right, I'm a libertarian. I believe
in free trade, except when it's weaponized against us and
used to basically drive us into the ground and send
us into a decline and pretty much enable them to
achieve the world hegemony. That's what's happening here. This is
weaponized free trade. It's not good for us, but it's
really not good for the Chinese either. The Chinese people
for the most part. Yeah, there it's been a lot
of progress. They got iPhones or androids or Chinese knockoffs,
whatever it is. But still the vast majority of China,
and I've been there a couple of times, live in
unimaginable poverty that few people in this country could really
comprehend the scale of it.
Speaker 1: Yeah, And to your point, I think it's really important
to remember that. I think we're all on the same
side in terms of being free market guys. We want
to functioning free market and we want functioning international free trade.
But what we have right now and what we've had
for the last fifty years, is anything but free trade.
There is no free trade with a country like China.
China is it's run by the CCP, and the Chinese
government supports and subsidizes all of these industries in order
to change the trade volumes and the types of goods
that are being traded in a way that asymmetrically benefits
China's domestic policies and whatever it is that they want
to do. So, for example, one of the things that
China has been doing is they say, look, we want
to industrialize, we want to have a cut of the
high tech industry.
Speaker 4: So what do they do.
Speaker 1: They subsidize the cost of raw materials, They subsidize the
cost of power, They give referential land use policies to
Chinese companies. They force American companies to do joint ventures
with Chinese companies, and part of those joint ventures is
the American company has to give all the technology to
the Chinese company. So they're engaged in massive intellectual property theft.
Speaker 4: Let's call it what it is, it's theft.
Speaker 1: Right, So China's trading with China is not free. We're
paying for it with their technology and ultimately, and I've
been talking to small businesses, you know, local manufacturers all
throughout the country and they're telling me how am I
supposed to compete with China when the price of Chinese
goods is subsidized by the government to the point where
they're driving me out of business?
Speaker 4: Right, this is you know what Peter Navarro talks about
all the time. It's dumping.
Speaker 1: China's selling below cost goods to kill American businesses and
once they take over that market, they jack up the
price anyways.
Speaker 3: And you know, we had this impression that Chinese could
do no wrong. Obviously it was like Japan, same thing.
But what we're seeing like, I don't know about you,
but I would not fly on the Comac Seed nine
to one nine jet. It looks like an airbus, kind
of a cross between an airbus and a Boeing, But
every test they don't bother doing like private testing like
Boeing an airbus where they test the hell out of
the thing and find every flaw. They do real time
passenger testing. You know, the passengers are part of the
product development, and I would not go on that thing
and look, Spencer, Everything in the place is collapsing tofu
dreg construction, you know, buildings, just a bridge, a major
bridge in Beijing. It was twenty five years old and
it just collapsed the other day, and that's emblematic. So
this is what they're exporting to the world, is tofu dreg.
And perhaps Trump will get the better of them. He
couldn't be in a better position to do it now
because their economy is definitely on the skids debt crisis.
You know, they might have the largest horde of gold
in the world, but in the end that's not going
to save them.
Speaker 1: Well, I think it goes back to the age old
maxim you get what you pay for it, don't you
You get what you pay for it. If you're getting
cheap Chinese goods, they're going to be cheaply made as well, right,
And I think that's something that people don't understand. I
did some research into this in the book actually, So
in the book, we look at the cost of appliances,
household appliances.
Speaker 4: And everybody thinks they're getting a good deal on.
Speaker 1: These household appliances. Because we're getting the parts from China,
the parts are cheaper. They can take the sticker price
of the product down right.
Speaker 4: The problem.
Speaker 1: The problem is is that these machines are all failing
way earlier than they used to be. Failing manufacturers are
not sticking behind, you know, big ticket warranties. They're not
even willing to give you a ten year warranty on
most products because they know it's going to fail before that.
Speaker 4: One in five refrigerators fail within four years.
Speaker 1: So when they say it's cheap goods, what they actually
mean is it's cheaply made and you're going to buy
it two or three times in the same lifespan of
a product that was made thirty or forty years ago.
So is it cheaper, No, it's not. It's more expensive
because you're buying it two or three times.
Speaker 4: And I think that's what consumers really need to understand.
The sticker price is not the cost of the good.
Speaker 1: The price is the price, but it's not the cost.
The cost is if I'm using this product for fifty
years and I got to buy it three or four times,
that's the cost of the product.
Speaker 3: That's it. Pennywise, and pound foolish, as my mother used
to say, and wise lady, yeah you know, and like
you said, you get what you pay for. And well,
it's going to be interesting to see what happens. I
don't think Trump is one to give up an advantage
and negotiating advantage that he actually has. Maybe there's things
we don't know about. Maybe the agreement's already been reached.
One thing I would like to mention Spencer and again,
a book is highly recommended. It's called Resure, How Trists
will bring our jobs home and revive the America and dream.
You know, all these countries that Trump has called upon
to negotiate agreements. All you hear in the media is
these agreements take years in years to negotiate. Look happened
with the UK right away. With AI, basically, all you
do is you train an AI and international law in
tariffs and shipping, and then you feed in the agreement
and you say the existing one, you say, how are
we getting screwed? And then it gives you a list
and then you say what agreements should we have to
not get screwed? Done in five minutes. What people don't
understand is diplomacy is a grift. It's just another grift.
You negotiate these agreements, the incentive is drag it out
as long as you can. So you get to go
stay in five star resorts and you know you're drinking
a Chateau Lafitte Rothschild by the case eighty two by mission,
and you know you travel around from five store Hotel
Michelin star dining only, and that's the way these diplomats
have gone. But I think those days are over. There
is no way that the UK Agreement could have been
negotiated without Aire.
Speaker 4: You're killing me here.
Speaker 1: I'm a lawyer.
Speaker 4: Yeah, you're you're exposing that. You're exposing us here. No,
it's it's definitely true.
Speaker 1: These agreements and principle do not take long to negotiate
because I think everybody understands ultimately what the problems they
want to address are and the problems they're usually you know,
one to five things that really need to be tackled,
and the rest sort of falls into place.
Speaker 4: And of course you're right, there's there's great.
Speaker 1: I mean, I use legal I software in my own practice.
Of course, there's great software out there that can help
you know, parse these deals and review them and I mean, ultimately,
what we really want is we don't want complicated trade deals.
We want simple trade deals. I mean this goes back to, like,
you know, the tax code. The tax code is a
huge tome.
Speaker 4: Why is a tax code of home.
Speaker 1: Let's just say it's ten percent of you know, your
income and call it a day. You can do it
on the It's a one sheet of paper.
Speaker 4: That's what it should be. And that's the way these
trade deals should be as well.
Speaker 1: If we want more fair trade, how hard is it
to say, you know that the terrorists will be level
or whatever whatever it is that we're going to do.
What makes what makes it complicated and what makes it
makes it dangerous is the devil's hide in the details.
Speaker 4: Right.
Speaker 1: So the reason these trade agreements are so long is
because people are, you know, protecting special interests. They're getting
goodies for one industry over the other. And really, when
they say we've signed a free trade agreement, what they're
actually saying is I've given all of my crooked buddies perks.
And the people who are really going to hurt.
Speaker 4: Are the American people, the American consumer.
Speaker 3: Yeah, well, I think that day is coming to an end.
I think there's a lot more deals being made as
we speak. It's a lot of deals and you only
got always many qualified people who you can trust in
commerce and in state, right because they're purging out the
other ones who are untrust trustworthy, like Usaid, you know,
just totally going against the country's interests. And uh, you know,
it's going to be an interesting time here. But I'm,
as someone once said, nauseously optimistic.
Speaker 4: I like that.
Speaker 1: I like that Nat is optimistic. I'm a you know what,
I'm optimistic as well. I think the administration is moving
on the right issues and it's doing it's making.
Speaker 4: Headway in a way that hasn't been made in at.
Speaker 1: Least fifty years. And you've got to give credit where
credit is due. Nobody's even addressed or acknowledged these problems.
The current administration has acknowledged the problems and they're taking
some steps to resolving them.
Speaker 4: So, you know, kudos to them, and let's keep the
momentum going.
Speaker 3: It's totally been rugswept for fifty years. And so we're
going to bring China in and they're going to act
like human beings, and you know they're going to stop
forcibly harvesting organs and sending people off to re education
camps because they're going to be making so much money.
Everything's going to be great. And that premise appears to
have failed. And at least somebody is willing to bury
it now because we know what they're about, and you know,
if they want to trade, I think there's a block
that's forming against them, not the least of which was
for the virus, where it occurred and where it was created.
Forget about the fact that we the United States, helped
underwrite it. That's a story for another day. But the
end of the discussion is it happened there. So Spencer,
just tell us where do we find you? How do
we get your book?
Speaker 1: Yes, Sarah, you can find me on x and on substack.
The handles are both at Real SB Morrison. The book's
available right now on Amazon and it's also directly available
from the publisher at kalamopress dot com. You know, we
sold out of the first print edition. We're coming out
with a second edition here, so we're really happy. Thanks
a lot. Yeah, we're really happy, but it's going to
be more of a collector. We got a paperback coming out.
You know, the book is you got to read the book.
Speaker 4: The book. The book is great.
Speaker 1: It's a practical it's a practical guide on how to
reindustrialize America, and it gives everybody the tools they need
to understand what's going on and understand how we have
to fix it.
Speaker 3: Oh, I got it right here in front of me
on Amazon. I assume it's on Amazon and wherever fine
books used to be sold. And I just released a
book myself called The World according to Martin Armstrong and
the links in the show notes, and it can be bought.
A fascinating story about a fascinating person who's made literally
dozens of economic calls that have all come true or
mostly Crash of eighty seven, unpegging of the Swiss franc
crash of the of the pound, and so many more,
two thousand and eight crash, just call after call, World
according Tomorrow Normstrong, links in the show notes. Spencer, appreciate
you coming on the show. We'll talk to you again.
Speaker 4: Thanks a lot, my friend. It's a pleasure.
Speaker 2: Thanks for listening. To carry Letz's Financial Survival Network your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival network now more than
ever