April 21

In reading press accounts and columns while sitting in the US, I did not appreciate China’s efforts to control the future. Implicit in lots of articles is that the US is “the leader of the free world” and dominant in international affairs. The analysis of “trump tariffs” is starting to raise questions, although probably not for most Americans. Our experience on this cruise provides some insight.

In visiting Darwin, Australia, we learned that China has a long term lease on the port. When we arrived in Sri Lanka, we saw similar arrangements. Then, in just about all of our African stops, we learned that China was a major player in the ports we visited as well as related infrastructure. As we sit in Cabo Verde, we are told of China’s infrastructure investments as well as their construction of a university….and free Mandarin lessons. In checking Dr. Google, I read that China has investments in 129 ports around the world, many in Africa. These investments are part of their “Belt and Road Plan,” embodied in a formal 2015-2025 document. Expenditures of $900 billion per year are designed to create a “New Silk Road” and promote cooperation through infrastructure investments and enhancing trade routes. China’s plan is to move Asia, Africa, and Europe closer together and build mutual understanding and trust. They invest in/contribute to 150 countries and organizations. Additionally, when we visited Latin America, we learned that they are the continent’s number 1 trading partner. There are now plans to continue/complete the initiative by 2049. Pretty impressive; they seem to be everywhere.

Now, let’s look at the US. We have essentially eliminated our foreign aid program as we “Make America Great Again.” We have antagonized virtually every trading partner with a sophomoric tariff program. And, we are questioning the value of NATO, withdrawing from international Climate Change organizations, and threatening to take control of Panama, Gaza, Canada and Greenland. We are signaling to the world that we have a new set of values:

   -no more diversity and equity programs;

   -anti-immigration;

   -kidnap people off the streets;

   -send “undesirables” to foreign prisons without due process;

   -go after law firms that have represented opposing views;

   -cut funding for universities when they express contrary views;

   -and, little things like erasing information on Jackie Robinson’s war record, restoring Mel Gibson’s gun rights, talking of pardoning Pete Rose, advocating the death penalty for Hunter Biden, insisting that a whole list of words like DEI and climate change can no longer be used in federal documents.

Thomas Friedman, who argues that the future belongs to whoever succeeds in addressing technology (AI), globalization, and climate change will win in the future, says that he has never been so afraid about our country’s future. Secretary of the Treasury, Bessent says China is playing with a “pair of 2’s” Maybe, if deuces are wild.

Trump continues to tout his successes; mostly assertions rather than results. Remember, “We’ll build a wall and Mexico will pay for it,”..”I’ll solve Ukraine on Day 1,””tariffs are a huge money maker that foreigners will pay for.” “We’re in a meritocracy and I hire the best people.” The rest of the world sees this; I don’t think most Americans do. As the stock market falls and the experts say a recession is more likely, trump talks of a necessary, short term adjustment. Someone wrote that it looks like a confused program searching for a bygone era.

A bit more on our tariff war. There is an argument to be made that we need to address our trade relations with China. But, the analysis and strategy are lacking. First, US citizens pay tariffs; trump still doesn’ seem to understand that. Then, there is no real analysis of tariff levels; why increase tariffs on all of our trading partners? Shouldn’t we get them on our side to deal with China? It is estimated that our tariffs could cost the average American family about $2000 per year; trump talks as if this is new money coming from foreigners.

Tariffs will clearly impact the cost of resources for American businesses. Looking at specific products, China buys airplanes and agricultural products from us; they can purchase them from other suppliers. China supplies most of the rare earths and magnets required for manufacturing airplanes, cars, computers and other products. They can/have cut us off. The consequences could be major. In addition, as our friend, Kris, was quick to remind us, China owns a significant portion of our national debt. A quick google search reveals that as of the end of November 2024, China owns approximately $768.6 billion in U.S. Treasury securities, almost 9% of the total U.S. debt held by foreign countries (foreign countries own about 23% of the US debt). If China were to dump the debt it holds for less than its value, it could devalue the dollar and have economic consequences that reveberate.

Analysts argue that China is better prepared for a trade war than the US. And, they have made much more significant steps in creating international friends. Trump announced Liberation Day with great fanfare and now has backed off for 90 days. Who knows what’s next? International markets don’t like uncertainty, but that’s what we have.

Right now, I’d bet on China.