LOS ANGELES.–Chinese President Xi Jinping and German Chancellor Friedrich Merz sought to consolidate economic ties with Germany. China’s biggest selling BYD SUVs are selling like hotcakes in Germany and Merz plans to keep it that way, despite trade protectionist policies coming out of the White House. No BYD cars are currently sold in the U.S. market because of past and current tariff policies, leaving the cars out of reach for average American consumers. Unlike the U.S. under Trump, EU leadership under Ursula von der Leyen have encouraged EV sales, part of the EU’s global climate change policy. Trump has sought to reverse the push toward EV by former President Joe Biden, believing that most U.S. consumers don’t want to buy EVs. But like everything else, there’s a price point where U.S. consumers could jump on the EV bandwagon if they see the economic benefits.
Xi knows that the European Union has a nominal GDP around $20 trillion, making just under the U.S. at just under $28 trillion. When you consider the economic upheaval going on with all of Trump’s tariffs, the U.S. economy has shown remarkable resilience with the jobs sector continuing to remain strong despite fears of recession. Whether admitted to or not by the White House, all of Biden’s post-Covid spending, including whopping trillion-plus dollar spending bills like the Inflation Reduction Act and Infrastructure bill, have kept jobs growth strong. Trump’s idea of balancing the U.S. budget with the Department of Government Efficiency [DOGE] on the backs of federal employees is a bad idea. With over $3 million federal employees, Trump saw federal employment as an easy target but federal employees pay taxes like everyone else.
Trump’s “big beautiful bill” attempts to pick on the $870 billion Medicaid program, providing health care to the poor population, and in certain states to illegal aliens. But the best estimates in California and elsewhere have Medicaid spending on undocumented workers at only $3 billion, a small fraction of total expenditures. Democrat Minority Leader Hakeem Jeffries (D-N.Y.) sayd cutting Medicaid funding $700 billion would decimate the health care industry, including all the doctors, nurses, labs and clinics that go with it. Millions of jobs would be lost, all because Trump finds it an easy target to reduce federal budget deficits. But on the revenue side, Trump is unwilling to compromise on raising taxes even for those making over $2.5 mllion a year. Senate Republicans are unlikely to agree to Medicaid cuts because of what it does to the health care industry.
Throwing millions of health care workers into unemployment would be a bad idea for the economy that thrives on government spending, an essential component to the U.S. economy. Every economist, partisan or not, knows that legendary economist John Maynard Keynes figured out 100 years ago that government spending was a stimulus for the overall economy. So when it comes to capitalism and free trade, certain Keynesian principles require government to spend a sizable portion of GDP on government-sponsored jobs like defense and health care. With Medicare and Medicaid combined $1.9 trillion in spending, the economy would quickly spiral into a recession or depression. So, when it comes to working with world economies, the U.S. can’t go it alone, with domestic manufacturing. There simply isn’t the infrastructure in place to accommodate all the import demands of U.S. consumers.
Germany’s Merz wants Xi to know that China can count of Germany as a stable trading partner, comfortable with the current tariff scenarios. When you think in the restrictive EU market that China sells BYD EVs into the European market, it speaks volumes about how capitalism still prevails in socialist markets like the EU. Well, in fairness, German consumers are willing to spend $40,000 euro for a BYD EV that sells for less that $20,000 euro in China. Whether Trump knows it or not, free markets are better for American consumers, knowing they can choose whatever is available on world markets. BYD EVs sell in Mexico for about $44,000. Tesla CEO Elon Musk knows he must stay out of politics and sell more affordable models if he wants to stay competitive in the U.S. U.S. carmakers like Ford and GM have made progress selling EV vehicles.
Trump has learned the hard way that it doesn’t pay to rock the boat with tariffs trying to level out international trade or reduce current trade imbalances. “China is willing to work with Germany to open a new chapter in their all-around strategic partnership, to send China-EU relations toward new developments, and to contribute to the stable growth of the global economy,” Xi told Merz. Xi told Merz that “international turmoil and transformation,” Germany and China could get beyond the turbulence. “Chancellor Merz emphasized the importance of fair competition and reciprocity,” Xi said on CCTV. Trump has bit off with the tariffs more than he can chew, leaving the U.S. economy vulnerable, recently downgraded by Moody’s from AAA to AA1. Plunging the U.S. economy into turmoil doesn’t help drive U.S. Gross Domestic Product.
About the Author
John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.