Mike Whitney – The Unz Review May 6, 2025

On Thursday, President Donald Trump delivered a fiery statement on his Truth Social website. He said:

ALERT: All purchases of Iranian Oil, or Petrochemical products, must stop, NOW! Any Country or person who buys ANY AMOUNT of OIL or PETROCHEMICALS from Iran will be subject to, immediately, Secondary Sanctions. They will not be allowed to do business with the United States of America in any way, shape, or form. Thank you for your attention to this matter, PRESIDENT DONALD J. TRUMP @realDonaldTrump

Most people who read Trump’s statement assumed that the president was planning to tighten economic sanctions on Iran. But that misses the point entirely. The real target is China because China imports 85-90% of Iran’s oil output, roughly 1.5 million barrels per day (bpd). What Trump is saying in blunt terms, is that, if China continues to purchase oil from Iran “they will not be allowed to do business with the United States of America in any way, shape, or form.” In other words, Trump is doubling down on his tariffs policy (which is 145% on Chinese goods) and imposing a complete embargo. Trump was apparently hoping that this new threat would force Beijing to the negotiation table where they would make the concessions that he seeks.

But the Chinese are not giving an inch, in fact, Beijing is more resolute than ever. China’s Foreign Minister has said repeatedly that Beijing will not bow to Trump’s bullying, nor will they negotiate until all the unilateral tariffs are removed. The western media has deliberately misled its readers on this point by making it seem like there’s “wiggle-room” on the Chinese side. But there is no wiggle room. Either Trump lifts his tariffs or there will be no talks. And if there are no talks, there will be no trade. End of story.

China believes it has the moral high-ground on this issue because it is defending the rules of international trade which cannot be changed by executive fiat or the arbitrary actions of an impulsive autocrat who thinks the system should be reconfigured to suit his interests. Chinese leaders have made it quite clear that they are not going to budge on an issue which they consider to be a matter of principle.

The Era of Bullying is Over.

What that means in practical terms, is that Trump is going to be forced to cave in. And he is going to be forced to cave in sooner than many Americans realize. Activity at U.S. ports on the West Coast, has slowed significantly as of early May, and the absence of imports will become increasingly noticeable as May drags on. Take a look:

According to Gene Seroka, Executive Director of the Port of Los Angeles, predicted a 35% decrease in cargo arrivals for the week following April 29, 2025, compared to the same period in 2024….

For the week of May 4–10, 2025, only 17 vessels carrying 85,486 twenty-foot equivalent units (TEUs) were scheduled to arrive, a 28.6% drop from the prior week and 10.5% lower than the previous year.

Approximately 45% of the port’s business comes from China, and many large importers, including major retailers, have paused or halted shipments from China due to tariffs as high as 145% on Chinese goods….

Port of Long Beach is also experiencing a steep decline in freight vessel traffic from China. For the week of May 4–10, 2025, only 12 vessels were scheduled to arrive, down from 22 the week of April 20–26… China accounted for 61% of Long Beach’s containerized imports in 2024, making it highly vulnerable to the trade disruptions….

Broader Trends:
Nationwide, ocean container bookings from China to the U.S. have fallen 20% year-over-year, with some reports indicating a 60% drop in bookings over the past three weeks since tariffs intensified.

What we are seeing now is a slow-motion trainwreck that was entirely avoidable, and which will severely damage the US economy. Many experts now think we could see a near 50% year-over-year drop in West Coast port activity accompanied by critical supply chain breakdowns similar to those that would occur during a World War. The dearth of imports will affect everything from unemployed dockworkers and truckers, to wholesalers and retailers, to Mom and Pop stores across the country. The knock-on effect will result in higher prices, mass layoffs, slower growth and volatile, chaotic markets. For the first time in living memory, Americans will experience real shortages, panic buying and empty shelves, reminders of the self-inflicted wound brought on by poor leadership.

At the same time, China is unlikely to feel much pain at all. Keep in mind, China not only has a current account surplus of $422 billion (Economist Brad Setser argues that China’s “true” surplus may be $300 billion larger), nominal GDP of $18.1 trillion, with gross domestic savings at $8 trillion in 2023, and household savings at $19-20 trillion 2024… The Chinese government also has $3.1 trillion foreign exchange reserves. ($784.3 billion of which are US Treasuries)

In contrast, the United States is $36 trillion in debt, with credit card debt soaring to $1.2 trillion, (according to the Federal Reserve Bank of New York), U.S. student loan debt currently topping $1.75 trillion, and a majority of American families that claim to be unable to cover even a $500 emergency. (without procuring a loan.)

In short, China is flush with cash while the US is drowning in an ocean of red ink. Secretary of the Treasury Scott Bessent would like you to believe that America’s lack of funds put it at an advantage in its competition with China. But that is not the case. China’s massive savings enable the government to heavily invest in projects that keep the economy expanding during financial crises, trade wars or recessions. So, while Trump continues to lay-off more government employees and slash federal expenditures, (which slows growth) China is diverting its surplus into fiscal stimulus that will keep workers employed and the economy growing. Check out this excerpt from an article at the Global Times:

China’s stepped-up fiscal policies are emerging as a pillar in its efforts to stabilize the economy, offering much-needed support to sectors under financial strain and helping the world’s second-largest economy weather persistent global uncertainty.

In 2025, the country pledged to intensify counter-cyclical adjustments, raising the deficit-to-GDP ratio to 4 percent and setting the government deficit at 5.66 trillion yuan (about 786 billion U.S. dollars), both at their highest levels in recent years.

While vowing a more proactive fiscal policy, China plans to issue 1.3 trillion yuan in ultra-long special treasury bonds, up from 1 trillion yuan in 2024, alongside 4.4 trillion yuan in local government special-purpose bonds.

Data points to an accelerated roll-out of bond issuance. In the first quarter alone, the total issuance of government treasury bonds surpassed 3.3 trillion yuan, while local government bond issuance exceeded 2.8 trillion yuan, an over 80 percent increase from the same period last year.

These funds are swiftly being channeled into efforts to boost consumer demand, accelerate infrastructure investment, and subsidize people in difficulties. Economists said this front-loaded fiscal drive reinforces short-term stability and leaves ample leeway for further issuance of ultra-long treasury bonds and capital support measures for banks later in the year.

So far, the efforts have been translating into robust domestic demand…. Retail sales of consumer goods, a key barometer of economic strength, rose 4.6 percent year on year in January-March, with the figure in March recording the strongest single-month growth since 2024…..

Ramped-up financial support has also been directed toward local governments, enabling them to advance major infrastructure projects vital for sustaining investment momentum.…

“In the first quarter, our project received 1.497 billion yuan in local government special-purpose bonds, which has been instrumental in keeping construction on track,” said the project manager.

Aside from more expansionary fiscal spending, local governments have been granted more flexibility in channeling their special-purpose bonds toward project categories, an effort to enhance investment efficiency and regional responsiveness.

Results suggest that the policy shift has gained traction…. Infrastructure investment jumped 5.8 percent year on year… the bond supply may exceed expectations in the second quarter, as the government looks to offset external challenges through fiscal expansion. “The faster pace of issuance enhances counter-cyclical adjustment and creates space for future policy maneuvering,” Feng noted. China’s financial salvo gains speed to shore up economic growth, Global Times

What’s ironic, is that China grasps the economic theories of John Maynard Keynes better than anyone in the Trump administration. In Keynes masterpiece, The General Theory, the British economist pointed out that that recessions occur due to insufficient aggregate demand that can be offset by government fiscal stimulus. (which makes up for the loss of private investment and personal consumption) Stimulus injects money into the economy, which encourages further consumption, and keeps the economy growing during slumps, financial crises or trade wars. Once the crisis has passed or the recession ends, the government can withdraw its stimulus and balance its accounts.

We shouldn’t expect a similar response from the neoliberal economists in Trump administration who view every crisis as an opportunity to implement their far-right, “shock doctrine” theories about shrinking government, lowering taxes, and further strengthening the western oligarchy. And we shouldn’t confuse Trump’s blather about economic nationalism (America First) as being the driving force behind the China tariffs. The real driver is Wall Street as we will explain in a minute. But first, a word about Trump’s Treasury Secretary Scott Bessent, Wall Street’s man in the White House. This is from Wikipedia:

Scott Bessent is a former hedge fund manager who was formerly a partner at Soros Fund Management (SFM) and founded Key Square Group, a global macro investment firm….. In September 1992, he was a leading member of the group that profited by $1 billion on Black Wednesday, the British Pound sterling crisis. He made another $1.2 billion profit for SFM in 2013 betting against the Japanese yen. After he left the Soros Fund in 2015, he established Key Square Group, a hedge fund….

In 2000, Bessent hosted a fundraiser for Al Gore at his home in East Hampton, New York. That year, he also donated $1,000 to John McCain. In 2007, he donated $2,300 to Barack Obama and in 2013, he donated $25,000 to Hillary Clinton’s campaign. At that time, he was described as a Democrat who supported liberal causes….

In 2016, after the election of Donald Trump, Bessent donated $1 million to Trump’s 2017 presidential inaugural committee. In 2023 and 2024, he donated more than $1 million to Trump’s 2024 presidential campaign…. Bessent has advocated pushing for concessions from U.S. trading partners to restrict their economic relationships with China in order to isolate China and gain leverage over it in potential trade talks.

So, Bessent worked for globalist billionaire George Soros, contributed to whatever political party might end up in power, and made his bones as a high-flying hedge fund manager.

Are we supposed to believe that a man like Bessent—who is obviously a creature of Wall Street—has launched a trade war on China to bring jobs back to the United States and rebuild the anemic US manufacturing sector?

No, that is not his real objective. Bessent is Wall Street’s man in the White House. His job is to do everything in his power to remove the obstacles that block the banksters from access to China’s massive savings and financial markets. Thus, the goal of the Trump tariffs is not reindustrialization. It’s ‘open markets’. Here’s more from Grok:

Bessent’s push for China to open its markets includes liberalizing its financial and capital markets, which directly involves Wall Street banks. Here’s how they fit into his vision, based on his April 2025 statements and broader trade policy:

Access to China’s Financial Sector:

Bessent’s Demand: China should remove restrictions on foreign financial institutions, allowing U.S. banks to operate freely in its $18.6 trillion economy, particularly in banking, asset management, and securities. Bessent argues this would integrate China into global finance, reducing trade imbalances by fostering a “fair deal” (April 23, 2025, Institute of International Finance). (Note—So, providing access to China’s financial markets would reduce trade imbalances?? In other words, no need for rebuilding manufacturing in the US, just let the banksters ‘do their thing’ and everything will be hunky-dory.)

Wall Street’s Role: Banks like JPMorgan, Goldman Sachs, and Morgan Stanley seek greater market share in China’s $55 trillion financial sector (2024, including banking and securities). Currently, foreign banks hold only 1.3% of China’s banking assets ($59 trillion) and face caps on ownership (e.g., 51% in securities until 2020 reforms)….(Note—“Hand over the $55 trillion and nobody gets hurt.” Where have we heard that before?)

Benefit: Opening markets would allow Wall Street to compete with Chinese banks, tapping into China’s $19-20 trillion household savings. (Note—“Wall Street wants access to your personal savings, too.”)

Scott Bessent, as U.S. Treasury Secretary in April 2025, demands that China “open their markets” to address trade imbalances, reduce export overcapacity, boost domestic consumption, and liberalize trade and capital markets….. Wall Street banks—major U.S. financial institutions like JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Citigroup—play a significant but complex role in Bessent’s demands. They stand to benefit from China’s market opening, particularly in financial services and capital markets, but their involvement also raises concerns about financial extraction and geopolitical tensions… (Note- Well, duh!)

Bessent’s Demand: China should relax capital controls, allowing freer flows of foreign investment and yuan convertibility, integrating its $3.1 trillion foreign exchange reserves and $12 trillion bond market into global finance. Bessent sees this as part of “restoring equilibrium” to global markets. (Note—China is being asked to trust its national savings with the crooks who blew up the financial system in 2008 costing the world over $50 trillion.)

Bessent’s Demand: China’s market opening is a condition for de-escalating the trade war... Financial market access is a key U.S. demand in talks(Q3 2025 target, per Reuters). (Note—There it is in black and white; ‘You either do what we say, or we blow your brains out. Can you see what’s going on here??)

Bessent’s Demand: China’s state-driven model, with $7.894 trillion savings and $422 billion surplus…. Bessent wants China to “graduate” from developing-nation status at the World Bank, opening markets to reduce its financial dominance. Grok

So, Bessent is ordering China to abandon its state-owned economic model (which is the primary reason for its success) to ensure that the world’s wealth remains in the hands of the world’s richest Capitalists. In other words, Bessent is candidly admitting that he is leading the effort to obliterate the most successful “economic development model” in history simply because it is not under the control of voracious western oligarchs. It’s not only an admission that the tariffs are a smokescreen aimed at concealing the administration’s real motives (access to China’s financial markets). It is also an admission that the western model is no longer competitive because the (Chinese)state recycles profits into more productive outlets while western oligarchs divert profits into stock buybacks, dividends, derivatives-trading and other forms of unproductive activity. One system creates an optimistic future for all of humanity while the other generates crushing poverty, political instability, and war.

There’s no doubt which system is better.

 

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