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The world is getting smaller

27 Jun 2024

The internet has made the world a much smaller place.

If you're an average Net user then chances are that you have a circle of friends and colleagues that spans the face of the globe.

Distance is no longer the factor it was in the pre-internet age.

It still boggles my mind that I have a device in my pocket that allows me to talk to almost any other person on the planet simply by mashing a few buttons with my stubby fingers.

Likewise, I can post a message, picture or video and anyone on the face of the planet can read, watch or listen to whatever it is I've uploaded.

However, things are changing. Cracks are appearing in our tiny world.

These cracks are in the form of trade barriers and protectionism.

The driving force behind these barriers is the USA.

Once the world's strongest supporter of free trade and the power of unfettered capitalism, the US government seems to be backtracking quite rapidly in some areas and has begun to raise the drawbridge of international trade.

I've already mentioned in a previous column that it's very likely there'll be a ban on the importation and use of Chinese made DJI drones but that's just a tiny part of the changes afoot.

Biden has also signaled that there will be increasing tariffs applied to the importation of Chinese-made EVs, something that will effectively price them out of the market despite the obvious benefits such cheaper alternatives would offer to US consumers.

The long-threatened ban on Chinese-based online services such as TikTok also remains a probability.

And let's not forget that Huawei was banned quite some time ago by the USA with most of its key allies (UK, Australia, New Zealand) following suit shortly after.

Now you may have noticed a common theme amongst these bans and restrictions...

Yes, the target seems to be China.

Many of the implemented or proposed barriers have been justified by allegations that the products represent a security threat to the USA - but do they? Really?

Whilst, as in all good conspiracy theories, there is likely a small germ of truth involved, the reality is that commercial imperatives are a far more likely factor.

The USA was once the world's one and only real superpower. Its industry had the most advanced products and the highest levels of production. It was unchallenged in many key technology areas and its businesses enjoyed unparalleled levels of profitability.

However, China has now stolen that crown in an increasing number of industries.

Take a look around the average home anywhere in the world and you'll find the "Made in China" label on everything from electric kettles to living room furniture.

The USA is definitely second tier these days and that's really hurting its economy and many of the industries that drive that economy.

Tesla may have been the first company to reliably deliver practical, affordable EVs but now China stands miles out in front when it comes to delivering highly functional and truly affordable EV options and there's just no way for Mr Musk to compete.

It has been claimed, perhaps quite rightly, that a great deal of China's competitiveness in markets such as EVs, is down to massive subsidies from the Chinese government. Even if that is true, one only has to look at how much money the US government has poured into the EV market by way of tax credits on new car purchases to see that they are being a little hypocritical here.

The US government claims that it's this "dumping", combined with the risk of all those Chinese-made EVs festooned with cameras and internet connectivity that makes it essential to effectively ban such vehicles or at least tax them out of reach.

From an outsider's perspective, the USA's constant claims of "security" when actually persuing an agenda of protectionism makes them look like fools.

The USA's new slogan should be "If you can't innovate, legislate" -- because that's exactly what they're doing.

US-made drones represent attrocious value for money when compared to their Sino-equivalent and the same goes for EVs. These are cutting-edge high-growth markets and the USA simply has no answer to China's massive dominance so they simply change the rules of the game and show contempt for the very principles of capitalism that they've extoled for so very long.

How interesting it is that, at least from a trade perspective, the USA is trying to erase China from the world map.

Carpe Diem folks!

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