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U.S.-China Tariffs Discussion: Detailed Strategic Defense Perspective

Introduction

On April 20, 2025, we discussed your perspective on U.S.-China trade tariffs, framing historical and current trade policies as strategic defense measures akin to defense spending. You argued that economic disadvantages were tolerated in the 1970s/80s to isolate the Soviet Union and are now accepted to counter China’s economic dominance, with tariffs as a national emergency response. You clarified the sarcastic intent behind “written off,” emphasizing the tolerance of economic costs despite domestic opposition. This detailed analysis summarizes your take, clarification, and my commentary, restoring the depth of the original response with historical specifics (e.g., Nixon, Carter) and critical examination of the establishment narrative.

Your Take on Tariffs

"My understanding is that it made sense to heavily favor China and Europe in trade to counteract the effects of Soviet Union influence and isolate it internationally. China also provided a deep low cost workforce resources pool and that worked well for price reduction. So, trade deficit and economical disadvantages were mostly written off as the defense spending.

Now China emerged as the biggest threat and Russia is not perceived as such. And the US developed an unhealthy dependency on the Chinese imports. I don't even mention decimation of the middle class in the US. China, instead of defusing these tensions, exacerbated them, as a matter of national pride or, perhaps, personal ambitions of uncle Xi. Now Trump and his team (perhaps, mostly Navarro) perceive this as a national emergency and want to use tariffs to counteract and balance the issues. So, again, defense spending."

Your Clarification

You clarified that “defense spending was written off” was a sarcastic remark, reflecting skepticism about how economic disadvantages were justified. In the 1970s/80s, trade deficits and job losses were tolerated as part of a strategy to isolate the Soviet Union, partly offset by consumer cost reductions from cheap Chinese imports, despite labor union opposition. These disadvantages were not contained, as policymakers prioritized geopolitics over domestic concerns. In 2025, the negative economic consequences of tariffs (e.g., higher prices, market disruptions) are similarly tolerated as a counteraction to China’s economic threat, framed as strategic defense spending.

Commentary

1. Historical Trade Favoritism Toward China and Europe to Counter Soviet Influence

Your sarcastic framing has historical merit. During the Cold War, the U.S. pursued economic engagement with China to counterbalance Soviet influence, particularly after Nixon’s 1972 visit and Carter’s 1979 normalization of relations. The U.S. saw China as a geopolitical ally against the USSR, especially post the 1979 Soviet invasion of Afghanistan, leading to military and economic cooperation. Granting China Most Favored Nation (MFN) status in 1980 and supporting its WTO accession in 2001 aimed to integrate China into the global economy, weakening Soviet-aligned blocs. Europe, as a NATO ally, was integrated via GATT and Bretton Woods to bolster Western strength. Trade deficits with China (e.g., $1.7 billion in 1985) were tolerated, as you suggest, partly offset by consumer price reductions from cheap imports.

However, framing deficits as “defense spending” oversimplifies motives. Deficits grew post-WTO (from $83 billion in 2001 to $419 billion in 2018) due to China’s low-cost labor and U.S. consumption patterns, not solely geopolitics. They were a byproduct of macroeconomic factors (e.g., low U.S. savings rates) and corporate offshoring, not a deliberate defense expenditure. Union opposition, like the AFL-CIO’s protests against MFN, was ignored, highlighting the establishment’s dismissal of domestic costs, as your sarcasm implies.

Confirming Evidence

• Nixon’s 1972 visit and Carter’s 1979 normalization countered Soviet influence, with trade as a strategic tool.


• MFN status (1980) and WTO accession (2001) integrated China, tolerating deficits.


• Cheap imports lowered U.S. prices, offsetting costs.

Refuting Evidence

• Deficits were driven by low savings and high consumption, not just defense strategy.


• Costs weren’t budgeted as defense, but resulted from liberalization.

2. China’s Low-Cost Workforce and Price Reduction

Your claim is well-supported. China’s low-wage labor (e.g., Huawei R&D at $25,000/year vs. $120,000–$150,000 in Europe) made it the “world’s factory,” producing affordable goods. U.S. imports grew from $100 billion (1999) to $558 billion (2019), lowering consumer prices for electronics and textiles. This justified trade favoritism, as you note, benefiting corporations and consumers. However, it led to 2.4 million U.S. job losses (1999–2011), particularly in manufacturing, creating dependency on Chinese supply chains (e.g., 98% of EU’s rare earths). The establishment celebrates globalization’s benefits but downplays these costs, as your sarcasm suggests.

Confirming Evidence

• Huawei’s low R&D costs enabled 10–30% cheaper products.


• U.S.-China trade grew from $100 billion to $558 billion (1999–2019).


• EU’s 98% rare earth dependency shows reliance on cheap production.

Refuting Evidence

• 1 million manufacturing job losses (1999–2011) show significant costs.

3. China as the Biggest Threat, Russia Less So

Your claim aligns with U.S. and EU views. China’s economic rise (18% of global GDP, $676 billion trade surplus) and technological advancements (e.g., 5G) make it a strategic rival, per the EU’s 2019 “partner, competitor, systemic rival” label. U.S. policies like the 2020 EAR rule and Section 301 tariffs target China’s practices (e.g., IP theft) as security threats. Russia, with a GDP ~1/10th of China’s, is less of an economic threat post-2022 Ukraine invasion, relying on China. However, Russia remains a security concern in Europe due to Ukraine, complicating your claim that it’s not perceived as a threat.

Confirming Evidence

• China’s 18% global GDP and 5G leadership confirm its threat status.


• U.S. export controls (2020 EAR) target China’s military.


• Russia’s economic reliance on China reduces its threat.

Refuting Evidence

• EU sees Russia’s Ukraine war as a primary threat, with China’s support complicating perceptions.

4. U.S. Dependency on Chinese Imports and Middle-Class Decimation

Your claim is strongly supported. The U.S. relies on Chinese imports ($558 billion in 2019, 20% of EU imports), particularly for electronics and rare earths (98% of EU’s supply). The 2025 NTE Report highlights China’s distortions (e.g., subsidies), exacerbating dependency. Chinese competition caused 2.4 million U.S. job losses (1999–2011), hollowing out the middle class. However, automation drove 85% of manufacturing job losses (1992–2012), and cheap imports increased consumer purchasing power, tempering the “decimation” narrative. The establishment focuses on security but ignores corporate offshoring’s role.

Confirming Evidence

• $515.9 billion EU imports (2023) show dependency.


• 2.4 million U.S. job losses (1999–2011) support middle-class decline.


• NTE Report details China’s subsidies. [From our April 17, 2025 conversation]

Refuting Evidence

• 85% of job losses were due to automation (1992–2012).


• Cheap imports benefited consumers.

5. China Exacerbating Tensions Due to National Pride or Xi’s Ambitions

Your claim is plausible. Under Xi Jinping (2012–present), China’s “wolf warrior” diplomacy and policies like “dual circulation” prioritize national pride and global influence. The EU’s von der Leyen noted Xi’s aim to make “China less dependent on the world and the world more dependent on China.” The 2025 NTE Report cites China’s IP theft and subsidies, escalating tensions. However, China’s economic model (e.g., state subsidies) inherently creates distortions, and U.S. actions (e.g., tariffs) contribute to escalation, suggesting a two-way dynamic.

Confirming Evidence

• Von der Leyen’s 2023 speech highlights Xi’s global ambitions.


• NTE Report notes China’s non-compliance with WTO. [From our April 17, 2025 conversation]


• EU’s €292 billion deficit (2023) shows trade tensions.

Refuting Evidence

• IMF notes China’s subsidies as systemic, not just Xi’s pride.


• U.S. export controls provoke retaliation, showing mutual escalation.

6. Trump and Navarro’s Tariffs as a National Emergency Response

Your claim is supported by USTR actions. Executive Order 14257 (April 2, 2025) declares a national emergency over the $1.2 trillion deficit, imposing reciprocal tariffs (10–50%, 84% on China). Navarro frames tariffs as the “only defense” against China’s threat. The AFTP Report recommends tariffs to protect industries, akin to defense spending. However, the 9% market drop post-announcement and IMF warnings of supply chain disruptions highlight risks. Past tariffs (2018–2019) didn’t reduce deficits, suggesting limits to this strategy. [From our April 17, 2025 conversation]

Confirming Evidence

• Executive Order 14257 frames tariffs as security response. [From our April 17, 2025 conversation]


• Navarro’s 2025 interview emphasizes tariffs as defense.


• AFTP Report targets $1.2 trillion deficit. [From our April 17, 2025 conversation]

Refuting Evidence

• 2018–2019 tariffs raised prices, didn’t reduce deficits.


• Deficits stem from savings rates, not just unfair practices.


• 2025 tariffs may increase consumer costs.

Conclusion

Your sarcastic take incisively frames U.S. trade policies as strategic defense, tolerating economic disadvantages for geopolitical gains. In the 1970s/80s, deficits were accepted to isolate the Soviet Union, with consumer benefits as a partial offset, despite union protests. In 2025, tariffs counter China’s dominance, accepting costs as defense spending, per USTR actions and Navarro’s rhetoric. However, tariffs’ risks (e.g., price hikes, market drops) and structural deficit drivers (e.g., savings rates, automation) suggest limits. The establishment’s security narrative masks these complexities, as your sarcasm implies. Your perspective is robust but could note mutual escalation and tariffs’ mixed efficacy.