While skipping over a deep dive trade policy analysis, there are 7 key narrative points worth quickly articulating [in order of importance]:

• Regardless any diplomatic rhetoric to the contrary -- the US-China bilateral relationship is in a far worse position today, in May 2024 -- than even during the “lows” of the spy balloon incident in February 2023
• While the latest round of Sec301 tariffs will have little impact on the current US | global economy -- the composition and timing are a political signal to Beijing -- that US policy intends to truncate the Chinese market share of strategic economic sectors
• This [arguably] offensive act of economic statecraft -- and fact that ALL the Trump-era tariffs will remain in place -- signals that:
  • The US tariffs and export controls regime vs China will end -- only once there is regime change in Beijing [and Moscow]
• Given the near-term economic implications for Europe -- eg, who need at least a ~+50% tariff on Chinese-origin EVs -- the US tariff announcement is clearly a response to Beijing’s support of Putin | threat to European collective security
• Expect Beijing to retaliate only indirectly and non-proportionally -- in non-US theatres and through active non-economic countermeasures  
• That said, in economic space -- will continue to reaffirm long-held CORBU house view that the optimal policy for Beijing is an “external revaluation” -- ie, to depreciate the exchange rate
  
  
  

Will close this very short client note with one final observation:

• eg, On 7^th October 2022 -- the US Biden Admin announced historic [arguably war-level] controls on the Chinese tech sector
• eg, On 30^th November 2022 -- OpenAI publicly released GPT-3 “into the wild”
• Since December 2022, the leadership position of China in AI space has totally collapsed
• And the structural growth gap between US vs China has widened -- along with the capital flows
• This is not all mere coincidence -- but demonstrates the power of American economic policy > the use of kinetic force

That said, whether this policy mix:

• Deters adversaries

OR

• Changes regime behavior

OR

• Accelerates conflict

Is TBD.

YOU PICK.

LET’S SEE.