WITH CHINA, WHICH WOULD MEAN
EVERY GOOD COMING FROM CHINA
WOULD BE SUBJECT TO SEND U.S.
TERRORISTS ARE NOT EXTREME CASE.
TO READ RIGHT NOW FOR THE MOST
RETURN OF GLOBAL ECONOMICS
EDITOR, FOX NEWS CONTRIBUTOR
FROM ALL AROUND GENIUS, JON
HILSENRATH.
WOULD YOU MAKE OF THIS?
IT'S LIKE DATING, BANG, BANG,
CRAZY.
>> ON THE CHINA FRONT WE'RE AT
AN IMPORTANT CROSSROADS RIGHT
HERE BECAUSE OF THE PRESIDENT
DID WITH HIS FIRST 50 BILLION
TARIFFS VENTILATE AMERICAN
CONSUMERS.
IT WAS MOSTLY INDUSTRIAL
PRODUCTS HE WAS GOING AFTER.
YOU WERE IN A POSITION WITH A
CHINESE OR AMERICAN COMPANIES
WERE OBSERVING THAT IN THEIR
PROFIT MARGIN.
IF YOU CAN GO TO 200 BILLION
CERTAINLY IF HE GOES TO
400 BILLION, THIS WILL HIT THE
CORE OF WHAT AMERICANS CONSUMED
FROM THE CHINESE.
iPHONE PRODUCTS, COMPUTERS,
CLOTHING, TOYS, BOOKS, YOU NAME
IT, WE IMPORT SO MUCH FROM
CHINA.
HE PUT THE 10% TARIFFS ON IT IT
WILL HIT AMERICAN POCKETBOOKS.
THE PRESIDENT WILL DISCOVER IF
HE DOES THIS JUST HOW FAR HE CAN
TAKE THIS TRADE BATTLE WITH THE
CHINESE IF AMERICAN CONSUMERS
REVOLT IS NOT GOING TO BE ABLE
TO PUSH IT SO HARD.
IF THEY ABSORB THAT AND EXPECT
THAT COME HE'S REALLY GOT THE
CHINESE IN THE CORNER BECAUSE
THEY DEPEND SO MUCH ON DRIVING
THEIR ECONOMY THROUGH EXPORTS TO
AMERICA.
NEIL: MAYBE THAT IS THE POSITION
OF WHICH HE ELUDED OBVIOUSLY
WITH BUSINESS FOLKS IN
WASHINGTON.
ONE OF THE THINGS WE'VE ALWAYS
ECHOED IN YOU AND I CHAT ABOUT
THIS QUITE A BIT OF THE WORLD
NEEDS US IN ALL THESE COUNTRIES
MADE US A HECK OF A LOT MORE
THAN WE NEED THEM, PARTICULARLY
CHINA.
CHARLIE BRADY, OUR STOCKS AT
EITHER THE STUDY AND A
PHENOMENON I DIDN'T KNOW SINCE
ALL OF THIS TUSSLE BEGAN AROUND
THE BEGINNING OF MARCH.
THE CHINESE MARKETS HAVE TUMBLED
11% OR 12%.
WE ARE UP A LITTLE BIT SINCE
THEN WITH ALL OF THAT.
YOU COULD MAKE AN ARGUMENT THAT
THERE WERE KNOWN TO US THAT WE
ARE TO THEM.
WHAT DO YOU THINK OF THAT?
>> YOU CAN MAKE AN ARGUMENT OF
THE PRESIDENT HAS ARGUED UNITED
DATES KILLED AS A TRADE WAR.
ON A GLOBAL BASIS I DON'T KNOW
IF I WOULD AGREE WITH THAT.
NEIL: I THINK THAT'S A VERY
RISKY URGENT STRATEGY THERE.
>> IT IS.
WHEN IT COMES TO THE CHINESE
GOVERNMENT ATTORNEYS ARE ASKING
THEMSELVES WHAT CAN WE DO TO
RETALIATE?
WE DON'T SELL SO MUCH STUFF TO
THEM THAT THEY CAN UP THE
TARIFFS THAT THEY PUT ON AN
AGRICULTURAL PRODUCTS OR
AIRPLANES, BUT THEY DON'T HAVE
AS BIG OF A LIST TO CHOOSE FROM
AS WE DO.
THE NEXT STEP FOR THEM IF THEY
START MAKING LIFE DIFFICULT FOR
AMERICAN MULTINATIONAL COMPANIES
DOING BUSINESS IN CHINA THAT WE
FIND OUT THEY START FEELING
HEALTH INSPECTIONS OR FOOD
INSPECTIONS.
NEIL: YOU ARE ALREADY SEEING
SOME SIGNS OF WORRY REFLECTED IN
SHAREHOLDERS, THE ISSUE DOWN 3%.
EVEN THE SEMICONDUCTOR MAKERS TO
GET MOST OF THEIR REVENUES FROM
THAT NECK OF THE WOODS.
SO THERE IS A SENSE THAT MAYBE
THAT IS WHERE THEY SEE THE SOFT
SPOT FOR AMERICANS.
I'M WONDERING WHETHER THEY EVER
HIT THE "NUCLEAR OPTION" AND
THAT IS START SELLING OUR DEBT.
>> YOU KNOW, I THINK THAT'S A
REALLY DIFFICULT PROPOSITION
FOR THEM.
IF THE SELLER., THAT MEANS
BASICALLY THAT GOT US THERE IS
FOLLOWING DOLLARS THAT WEAKENS
THE U.S. CURRENCY AND
STRENGTHENS THEM.
AGAIN, THEIR TRADE SURPLUS IS
PREMISED IN PART ON HAVING THIS
CURRENCY ADVANTAGE.
THEY END UP SHOOTING THEMSELVES
IN THE FOOT IF THEY GET RID OF
U.S. BONDS.
INTEREST RATES ARE VERY LOW
RIGHT NOW.
A LOT OF BUYERS ELSEWHERE IN THE
WORLD.
I DON'T KNOW IF IT'S A WINNING
PROPOSITION FOR THEM.
CHINESE DON'T HAVE A LOT OF
GREAT OPTIONS IN THIS
ENVIRONMENT.
NEIL: WE GOT NEWS THAT RUSSIA IS
SLOWLY UNWINDING A LOT OF ITS
POSITION AND I DON'T THINK
THEY'RE A VERY BIG PLAYER, BUT
AS IF TO SAY, HEY, WE CAN ALL
T-TANGO HERE.
>> THE OTHER POINT I SHOULD MAKE
IS THE CHINESE ARE IN IS THAT A
MOMENT WHEN THEIR OWN ECONOMY IS
SLOWING DOWN.
THEY HAD DEBT BUBBLE THEY'VE
BEEN TRAINED TO UNWIND THE BAR
WHEN THEY DID TO KEEP THEIR
ECONOMY GROWING.
THEY'RE NOT IN A GREAT POSITION
TO GET A TRADE WAR WITH OUR
LARGEST CUSTOMER AT A TIME WHEN
GROWTH IS SLOWING DOWN.
YOU THINK ABOUT THE CHINESE AND
THE COMMUNIST PARTY IN CHINA.
THEIR PRIMARY OBJECTIVE IS
ECONOMIC AND SOCIAL STABILITY.
THEY VALUE THAT MORE THAN
ANYTHING.
THEY DON'T WANT THEIR ECONOMY TO
SLOW DOWN BECAUSE THE WEEDS TO
SOCIAL UNREST.
NEIL: COOLER RATIONAL HEADS
PREVAIL HERE, BUT CHINA COULD
TAKE A LIKENESS.
>> YOU MENTIONED CANADA AT THE
OUTSET.
HE'S GOT A REAL ADVANTAGE IN THE
SITUATION WITH THE CHINESE.
CANADA AND MEXICO IS A LITTLE
MORE COMPLICATED.
AS YOU SAID EARLIER CORRECTLY WE
ARE RUNNING A TRADE SURPLUS WITH
CANADIANS AT THE ACCOUNT SERVICE
IN THAT.
WE SELL A LOT OF AGRICULTURAL
GOODS TO MEXICO.
AND ALSO A LOT OF SUPPLY CHAINS
IN THE AUTO ARE TIED TO MEXICO
AND CANADA.
WE DISCOVER IT'S HARD TO TARIFF
NAFTA WALK AWAY.
WE MIGHT HAVE MORE OF AN