China To Trump: YOU WILL FOLD After Market Crash

Let's go to China. Yeah, huge story. Really huge story come out of China. There's been all of these swings in the trade war. So for example, you guys covered with Emily, Trump announces a 100% tariff on China in retaliation for rare earth minerals being cut off. The Chinese are holding incredibly firm, and the administration

is now taking a very different tone, saying, actually, we are in a sustained trade war now with China. Let's take a listen to Trump yesterday in the Oval Office. You're meeting with President Xi in a few weeks. If you can't come to an agreement or a deal at that meeting, are we in for a sustained trade war with China?

Well, you're in one now. Look, we have 100% tariff. If we didn't have tariffs, we would be exposed as being a nothing.

We would have no defense. We're in one now. So he's declaring the trade war. This actually needs to pair with these comments from Secretary Scott Besant, who is ripping the Chinese negotiators, taking a very, very hard line, despite some of the things going on behind the scenes.

We'll tell you about in a bit.

But let's take a listen to that first. What happened from your point of view? Because I thought talks were going well, lines of communication were open, and then we learn about this rare earth mineral restriction from China, and now it's back and forth and things are heating up again.

They are. And the Chinese are trying to backfill the narrative, saying, well, the US did A, B, and C, therefore we had to do D. And that's not true. There was a lower level trade person who was slightly unhinged here in August. I think his name is Li Guanggang, and threatening, saying that China would unleash chaos on the global system if the US went ahead with our docking fees for Chinese ships.

And this is clearly something that they were planning all along. I think that things can de-escalate. We don't want to have to escalate. We have things that are more powerful than the rare earth export controls that the Chinese want to put on. And so to be clear, this is China versus the world. It's not a US-China problem. Good news is that this is IMF week. A lot of my counterpart, or all my counterparts are here.

We're going to be speaking with our European allies, with Australia, with Canada, with India and the Asian democracies. And we're going to have a fulsome group response to this because bureaucrats in China cannot manage the supply chain or the manufacturing process for the rest of the world.

So he frames it as China against the world. However, big news actually just out this morning from New Delhi, the finance minister of India is actually skipping this year's annual meeting of the World Bank and of the IMF over unresolved differences on trade and the Indian purchases of Russian oil. By the way, Trump did say yesterday Modi told him he would stop buying Russian oil. Has yet to be confirmed by New Delhi.

So I'll let you decide whether that one's true or not. And I did check the overnights coming out from there. But the point remains, China's holding firm. They're like, no, do it then. Do it. And the reason why, it's kind of amazing, I've been reading into their strategy,

let's put this up here on the screen, from the Wall Street Journal, who obviously got this from the CCP itself, it's from their Beijing bureau. They say, China betting it can win a trade war is playing hardball with Trump.

I just wanna read this to all of you, just to show the incredibly weak position that we are in. Xi Jinping is betting the US economy cannot absorb a prolonged trade conflict with the world's second largest economy. China is holding a firm line because of its conviction that an escalating trade war will tank markets

as it did in April after Trump announced Liberation Day, prompting Beijing to hit back. China expects the prospect of another market meltdown will ultimately force Trump to negotiate an unexpected summit with Xi later this month. Beijing continues to play hardball this month, escalating the trade fight by Monday, sanctioning

U.S. units of South Korean shipping. The move whipsawed U.S. markets on Tuesday, triggering a sharp early sell-off as hopes for easing tensions had faded before markets partially rebounded and steadied in the afternoon as it looked again as if negotiations were going to happen. Beijing is imposing restrictions on the export of rare earth minerals, which is vital to the consumer electronics and tech industry.

Now if you want to know how America is going to hit back at China for rare earth minerals, literally one of the most critical things that we have. Let's go ahead and put C5 on the screen just to see the cards that we're holding. This is from Trump. I believe China purposefully not buying our soybeans and causing difficulty for our soybean farmers is an economically hostile act.

We are considering terminating business with China having to do with cooking oil and other elements of trade as retribution.

I'm sure there's substitutes for that.

As an example, we can easily produce cooking oil ourselves. We don't need to purchase it

from China.

Oh, devastating blow.

China's got us on rare earth minerals, which we need to power consumer electronics, iPhones, everything. Rare earth minerals, EV bat, whatever. You know, so many different things. We're like, yeah, yeah, yeah, but we won't buy your cooking oil.

Not great.

Not great.

It's not great.

Okay, so, yeah, it's not good, okay? I'll just put it that way.

In terms of- They're also just so much smarter than we are. I mean, they plan. When Emily and I covered this, we were talking about Arno's thread, where he's talking about one of the vulnerabilities China actually had was on helium, which is something you wouldn't necessarily think of,

but they're very dependent on us for helium. And so over years, they were like, we're gonna make, we're not going to send you rare earth minerals anymore, and they will have limited ways that they can retaliate. So they did all that planning in advance.

Meanwhile, Besson's comments about like, it's the world versus China. You all picked a fight with the entire freaking world. This is something you and I have been saying since Liberation Day. If you actually want to isolate China, then you have to isolate China.

You have to have friendly relations with the rest of it. We have to give them reasons that we want to be on your side and not looking for a reason to actually side with China.

And so you see the fallout with India. We've been extraordinarily provocative and towards them and really screwed up that relationship. So yeah, we're not in a great position here. And I think the smart money is on Trump taco, because the Chinese are absolutely right.

Our entire economy is just a bet on AI, and China can screw that up. Like they can pop the bubble. So I think they're intelligent enough to realize that. Trump lives and dies by what the stock market is doing. So, you know, when they're able to genuinely threaten the performance of the market in

a way that really stings, yeah, he's going to back down. I think that's a good bet.

The S&P is near an all-time high. If you see even a 10% correction, it's going to be big problems for Trump, because that is floating the whole economy. And if you start to see stops in our credit markets, which is fueling all of this AI stuff, good luck. Because then, what do we talk about here all the time

when we talk about AI? It's literally covering up an actual recession. Without them, we're dead. We have a recession in almost every other industry. We have problems with employment. We have problems with consumer demand. We have the bifurcated economy of the rich and the poor. If you see the contraction

of, again, even 10 percent, that's going to cause fear in the top 10 percent of consumers. They will cut back, which means that's 50 percent of all consumer spending, which will take a hit. By the way, it's October. We're going into November and December, which is when the vast majority of retail sales happen in a very short period of time during the Christmas season. That also factors into travel, everything. You know, it can go on forever. And so the point just broadly with the China tariffs and with the war of where we are right

now is they know exactly who we are. They know who we are. And the problem is that we created the situation in like multiple different ways. So for example, we blew our wad entirely in sanctioning Russia. And we showed that even with the full force of United States sanctions against you, that as long as you have enough material, enough weapons, and a war, and some sovereignty,

and some few allies like China and India, not only can you survive, your GDP can grow. China is what? Orders of magnitude, 20, 50, 100 times more powerful than Russia. So for them, they're like, yeah, it'll hurt for sure. But as I told everybody in the original parts of the trade deal, they have a functioning government. So when they knew that Chinese producers were going to have a hit to their sales as a result

of tariffs. What did they do? They created an immediate slush fund. They don't need Congress or Kristen Sinema or whatever. They created an immediate slush fund and they gave it to producers and said, here is a way for you to tide over.

Then they forced the Amazons of China to say, you guys are all going to massively discount made in China products to make sure that production doesn't die on the Chinese side. And of course, they survived. By the way, meantime, they have thousands of bureaucrats intimately studying, and these aren't just our bureaucrats,

these are people who are actually highly educated to the technocratic engineering state, which studies all of their critical industries and is looking with a one, a five, a 10-year plan, and intimately making sure that they have no disruption, that not all of this is in there.

And it's not as if they haven't been planning for this for the last five years, because they knew Trump was going to come into office. So just compare that level of seriousness to where we are. Of course it's not gonna work. I mean, yeah, if we had a requisite similar program, we could do it. I have no doubt that we don't have the human capital

or the money, of course we have the money, we have the political capital. There's so much that we could, but not under this, not under this. Like, yeah, not only in terms of blinking, but it does look like they're gonna get everything because it's not just gonna be rare earth minerals. Trump has caved on TikTok. Trump has caved on, I mean, on Nvidia, on the chips.

Like, the most hawkish members, China hawks of his former first term are freaking out about this. They're writing open letters in the Wall Street Journal and the Financial Times. They're like, this is a disaster.

It's basically capitulation. That's what Trump has chosen. The path of independence is gone, in my opinion, especially after the tax bill. We had a chance there, but that's it. It's over. Didn't I say that in our, maybe I said it in our last show,

you only open up the tax code every five years. Five years from now, where's China gonna be? It's done.

Yeah, and our sequencing is all wrong. They're talking now about, oh, we're going to take more stakes in companies and designate certain things. It's like national security risk. We're going to put price floors in place. It's like, you do all of that preparation before you launch the trade war. That's the way that that works. I did look it up.

According to Grok, U.S. imports of Chinese cooking oil account for approximately 0.007% of China's GDP. So we're really hitting them where it hurts. Critical, critical part of their economy, that 0.007% there.

Yeah, exactly.

That is so crazy, 0.007%. I can't even get over it. I can't even get over it. By the way, do we even want that stuff? You know, they cook with vegetable oil. I thought this was Maha, right?

What happened to Maha? This seed oil's galore over there.

Again, this is, again, according to Grok, and I haven't fact-checked it outside of Grok, but apparently most of their exports consist of used cooking oil, a byproduct collected from food services, processed for export as a biofuel feedstock.

So it's not like the stuff you're buying in the grocery store. It's like going to livestock or whatever.

It's just going into the fuel or into the livestock, which we also eat. Right, got it.

Yeah.

Again, what happened to my huh?

What happened to that?

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