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Arnaud Bertrand

@RnaudBertrand

Jul 3

I have to say, there's something immensely ironic about the Dalai Lama arguing his reincarnation should be determined by a tax-exempt Swiss foundation incorporated in Zurich (dalailamafoundation.org/who-we-are/the…), while Beijing insists on maintaining the traditional centuries-old Golden Urn selection process.

And the even bigger irony is that everyone will doubtlessly denounce China for "destroying Tibetan traditions and culture" for doing so.

👇

https://x.com/CloudedLeo16931/status/1940597245067604069

😅

https://x.com/CloudedLeo16931/status/1940597245067604069

Read 4 tweets

Arnaud Bertrand

@RnaudBertrand

Apr 3

To illustrate just how nonsensically these tariffs were calculated, take the example of Lesotho, one of the poorest countries in Africa with just $2.4 billion in annual GDP, which is being struck with a 50% tariff rate under the Trump plan, the highest rate among all countries on the list.

Why? Does Lesotho apply extortionate tariffs on U.S. products and the U.S. is merely being "reciprocal" here? Not at all, despite what Trump is saying, it's NOT the way these tariffs are defined.

As a matter of fact Lesotho, as a member of the Southern African Customs Union (SACU), applies the common external tariff structure established by this regional trade bloc.

Which means it applies the same tariffs on U.S. products as South Africa does, as well as the 3 other members of the bloc: Namibia, Eswatini and Botswana.

So since the tariffs charged by these 5 countries on U.S. products are exactly the same, they must all be struck with a 50% tariff rate by the U.S., right? Not at all: South Africa is getting 30%, Namibia 21%, Botswana 37% and Eswatini just 10%, the lowest rate possible among all countries.

So what gives? Again, the way these tariffs are calculated has absolutely zero relationship with actual tariffs imposed by these countries on U.S. products. Instead, they appear to be simply derived from trade deficit calculations.

Looking at Lesotho specifically, every year the U.S. imports approximately $236 million in goods from Lesotho (primarily diamonds, textiles and apparel) while exporting only about $7 million worth of goods to Lesotho (wits.worldbank.org/CountryProfile…).

Why do they export so little? Again this is an extremely poor country where 56.2% of the population lives with less than $3.65 a day (databankfiles.worldbank.org/public/ddpext_…), i.e. $1,300 a year. They simply can't afford U.S. products, no-one is going to buy an iPhone or a Tesla on that sort of income...

The way the tariffs are ACTUALLY calculated appears to be based on a simplistic and economically senseless formula: you take the trade deficit the U.S. has with a country, divide it by that country's exports to the U.S and declare this - falsely - "the tariff they charge on the U.S."

And then as Trump did in his speech last night, you magnanimously declare that you'll only "reciprocate" by charging half that "tariff" on them.

As such, for Lesotho, the calculation goes like this: ($236M - $7M)/$235M = 97%. That's the "tariff" Lesotho is deemed to charge this U.S. and half of that, i.e. roughly 50% is what the U.S. "reciprocates" with.

It's extremely easy to see why this makes no sense at all.

First of all, there's nothing Lesotho can do about it: they can't change tariffs they allegedly charge the U.S. to reduce the tariff rate the U.S. "reciprocates" with because, again, it's NOT based on any tariff that they charge.

Similarly they can't do much about reducing the trade deficit they have with the U.S. because, again, they simply don't have enough money to buy U.S. products.

Also the main rational Trump gave for the tariffs is to get production back to the U.S., to "bring manufacturing back". 47.3% of Lesotho's exports are diamonds: how do you bring the "manufacturing" of that "back to the U.S."? Anyone can see it makes just about zero sense.

The Lesotho example exposes the fundamental economic incoherence of these tariffs. Rather than addressing actual trade barriers, they punish countries based on trade deficits that arise from structural economic realities. All the more countries like Lesotho which pose zero competitive threat to American industry.

Worse yet, these tariffs will likely make these structural realities even worse: the U.S. is Lesotho's second most important export destination so it's a fair bet that applying 50% tariffs on their products will make people in Lesotho even poorer, and therefore even LESS able to afford U.S. products.

But perhaps the most unfair and detrimental aspect of all this is that these tariffs represent a complete reversal of longstanding U.S. development policy, and therefore a betrayal of countries - like Lesotho - who chose to follow U.S. advice in the past.

For decades the U.S. has used preferential trade access to encourage economic development in the world's poorest nations, recognizing that trade, not just aid, could get them out of poverty and ultimately put them in a position where they too could afford iPhones or Tesla.

They're now effectively penalizing countries for following previous U.S. policy, a lesson which I bet they won't forget anytime soon.

So all in all the irony is painful: in the name of fighting unfair trade, America has just demonstrated what truly unfair trade looks like.

This isn't something designed to address genuine trade issues, but simply a mechanism based on arbitrary math to punish countries for the affront of selling more to the United States than they buy.

https://x.com/JamesSurowiecki/status/1907657860793696281

The arbitrary math used to define the tariffs (which has nothing to do with tariffs charged on the U.S.) was just unwittingly confirmed by Deputy White House Press Secretary Kush Desai, in a way that shows he himself doesn't understand it 👇😅

https://x.com/JamesSurowiecki/status/1907657860793696281

Further confirmation

https://x.com/AlanMCole/status/1907595748583121372?t=kQlVhaQOzHkxbubcOlQVSg&s=19

Read 6 tweets

Arnaud Bertrand

@RnaudBertrand

Mar 24

This could potentially be quite transformational for peace in Ukraine and for Europe generally: welt.de/politik/auslan…

German newspaper Welt Am Sonntag, citing "EU diplomatic sources familiar with the matter", reports that "China proposed to the EU to participate in the 'Coalition of the Willing'" so as to "increase Russia's acceptance of peacekeeping forces in Ukraine."

Russia has so far vehemently rejected the idea of European peacekeeping troops in Ukraine but could indeed potentially be swayed if China were to be part of the coalition.

Such a move would also of course have the potential to fundamentally change the nature of EU-China relations and mark a huge shift in the continent's security architecture, where China would be an alternative security partner to the US in European affairs.

It would also strategically position Europe in a much more enviable position were it wouldn't be at the mercy of Washington's every whims, and could leverage competition between Beijing and Washington in a way that'd enhance its sovereignty and bargaining position.

All that being said, given the EU's proven history of diplomatic incompetence and strategic inertia, this scenario is more likely than not to remain theoretical.

Some people reply that this could be fake news because this is inconsistent with China's historical position BUT it isn't: China was already one of the guarantor states in the 2022 draft "Treaty on Permanent Neutrality and Security Guarantees for Ukraine" negotiated in Istanbul (see screenshot, from here static01.nyt.com/newsgraphics/d…).

2022 treaty on which Lavrov said a peace deal must be based ("Our approach to the potential settlement has not changed: we are ready for dialogue on the basis of the 2022 agreements", mid.ru/en/foreign_pol…) 🤷

Retired PLA Senior Colonel Zhou Bo had also recently said on the sidelines of the Munich Security Conference that "China could also be part of security guarantees, alongside other powers," depending on the conditions.
scmp.com/news/china/dip…

Read 4 tweets

Arnaud Bertrand

@RnaudBertrand

Feb 26

This "China is depleting the oceans with its huge fishing fleets" story is yet another utterly shameless piece of propaganda when China actually proportionally fishes much less than the rest of the world, since - unlike others - it gets the immense majority of its fish supply from aquaculture 👇 (src: openknowledge.fao.org/items/06690fd0…)

The worst culprit when it comes to depleting the oceans is actually Europe, relative to its population size. They fish about 33kg of fish per person per year compared with 10kg for China, a crazy 230% more!

Actually if you read the report it's 13 million tones for China x.com/realSandkraken… Which corresponds to 14.3% of global captures of aquatic animals, which is less than Europe with 15.2 million tones or 16.7% of global captures. This is of course despite China having twice Europe's population...

In other words, Europe has 9% of the world's population but fishes 16.7% of the fishes while China has 18% of the world's population but fishes 14.3% of the fishes.

Now you tell me who is overfishing and who isn't...

Can you even read a graph? China is fishing only about a third the amount of the rest of Asia (13 million tones for China vs 30 million tones for the rest of Asia) 🤷‍♂️

https://x.com/AScully789/status/1894737630115348717?t=5HJmR5uc9uabCI-Lev2MNA&s=19

Read 4 tweets

Arnaud Bertrand

@RnaudBertrand

Feb 17

If anyone wonders how to constitute the China allocation of their portfolio, these tickers, based on seating arrangements, are probably not a bad place to start.

That was actually the basic strategy of a friend of mine, very successful investor in China: he simply studied policy statements very deeply as well as signals like this meeting 👇 to understand what were China's strategic economic objectives and which companies would benefit from this. Just like the US has a "don't fight the fed" investment principle, China has in some way a "don't fight the government" equivalent.

(Not investment advice 😉)

https://x.com/shen_shiwei/status/1891363977722241261

A list of some of the attendees 👇

https://x.com/shen_shiwei/status/1891363977722241261

And for your portfolio, it's also important to check who was NOT at the meeting 😅

https://x.com/DetroitShowtyme/status/1891492519491387654?t=yYZxl4VaqgimuZOEgzvtFg&s=19

Read 4 tweets

Arnaud Bertrand

@RnaudBertrand

Jan 19

Wow, this is huge. I just tried it myself with a foreign phone number (you can apparently choose any country, see screenshot) and it's true: you can now join Douyin - the Chinese version of TikTok - as an international user.

Which means the Great Firewall is coming down in the most unexpected way: with the world joining the China side of the wall.

Really feels like a Berlin wall moment, except in the opposite direction.

For people wondering where the hell I found the app, given it's not on Western app stores: apkpure.com/douyin/com.ss.…

Zero "TikTok refugee" on here so far that I've seen, pure Chinese content

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