We all were screaming that Trump was going to start a trade war and how that was going to be bad for everyone. Even the most cynical of us didn't think he'd lose.
> Even the most cynical of us didn't think he'd lose.
Excuse me? As a sentence it's a fine sentence. It's not anchored in reality. Paul Krugman amongst others has been constantly reminding his subscriber list (448,000) that this is a trade war which only has losers. There is no factual basis to the assertion either only the most cynical of us, or didn't think.
> Even the most cynical of us didn't think he'd lose.
Perhaps a few within the US bubble thought that.
From the outside the asymmetry was pretty clear, the bulk of global manufacturing takes place within China, the bulk of mining and processing of technological vital inputs was under a Chinese umbrella, and the time to rebuild manufacturing and supply pipelines was on the order of a decade plus.
The US is a customer in a world full of customers and potential trade partners, China has found other customers, trade partners have been forced to develop trade outside of former US trade agreements.
It would have taken a long term careful plan to bring back manufacturing, trade dominance and critical supply chains to the US, doable but not exactly Trump's forte.
America needed to innovate its way out of the problem, maybe also focused on creating supply chains and alliances that weren’t purely based on cheapest prices. But they never bothered, they still aren’t bothering. It’s like our leadership thinks the world will just give us free stuff because we are somehow exceptional.
how can we not be exceptional when all we hear from the day we are born till we are six feet under is that we are exceptional. god bless america and all that…
30 years ago I might be surprised by us losing a trade war, I am not surprised whatsoever now. On paper the US still has high manufacturing production, but it is high production in a limited number of products and industries that
Uhm, a lot of us knew America didn’t have very good cards in this fight, definitely not the great cards Trump thought we had. It’s clear to me now that China will be the next world power now that Trump has disassembled the only real advantages we had (high tech innovator, attractor of world talent, world trust).
I simply believe he'd be too stupid to execute any sort of Manchurian candidate plot. Letting him follow his capricious, ruinous whims is more advantageous for adversaries anyway.
We knew about these dependencies since around 2014, definitely it was known during Trump 1, that America still hasn’t bothered getting its own rare earth refining up (the elements themselves aren’t that rare) is just bizarre, but private enterprise has continuously scoffed at doing it given the cheap prices the Chinese offered us.
Yes. There was a rare earth glut in 2015, when the China price went way down. Mountain Pass CA mine shut down. Molycorp went bankrupt. MP Minerals now owns that mine, and claims to have ore to magnet capability, although not at full capacity. They've been sending ore to China for refining. Now that has to stop.
There are four steps:
- Mining.
- Beneficiation - raw dirt goes in, most of the uninteresting dirt is removed, low grade ore comes out.
Mostly a mechanical process. Done at the mining site. Biggest problem is getting rid of the waste. Mountain Pass pipes it to Nevada. Really.
- Separation - low-grade ore goes in, and the various elements are separated out.
Usually separate from the mine site. Currently China has over 80% of the capacity for this step.
US capability in this area is weak. MP Minerals has a pilot plant. So does a startup, Ucore.[1]
They claim to be scaling up. Total investment in Ucore seems to be about $55 million, which is small for the importance of this business.
- Smelting and magnet making - MP Minerals has a modest plant in an industrial park in Texas.
The US military demand for rare earths probably isn't that high compared to consumer demand.
Nobody wants to overspend, because the last two times rare earth producers overspent, the price crashed and many players went bust. The problem with this industry is price volatility vs large fixed capital expenditures.
Now pricing, subsidies, and export controls are so political that volatility is worse.
Define lose. China is in far more pain, and they are doing the world a favor in sending the signals on what needs to be done elsewhere to reduce the risk of over reliance on a mercantilist state.
