The Yuan Trap – A Speculative Detour Through the Fog of Global Trade

“Regulators and bankers were using the wrong tools and the wrong metrics. Unfortunately, they still are.”

–Jim Rickards, Currency Wars

May 13, 2025 — Hypothesis for the day: Sometimes the answers you get matter less than asking the right questions. Let’s give that a whirl with a few “what ifs…”:

What if the real trade barrier with China wasn’t cheap labor, clever supply chains, or state-owned factories churning out widgets at half the cost?

What if the real barrier — the one no one dares to name in polite diplomatic company — was the yuan itself?

That’s the suspicion lurking in the minds of those who’ve been around long enough to see economic history rhyme, if not repeat.

And it’s a suspicion Jamieson Greer — former chief trade negotiator under Trump and longtime advocate for tougher trade terms — appears ready to drag into the daylight. Greer insists any future deal with China must tackle non-tariff barriers.

But what exactly are we talking about?

First, let’s demystify the term. Non-tariff barriers aren’t tariffs. They’re stealthier. Trickier. More… Chinese.

They include arbitrary food safety rules, tech transfer demands, opaque licensing procedures, outright bans on foreign firms for “national security” reasons — and, yes, currency manipulation.

That last one is the dragon in the room.

Imagine, for a moment, that all the talk of trade deficits and factory closures in Ohio were downstream effects not of wage arbitrage or environmental shortcuts, but a central bank in Beijing intentionally weakening its currency to juice exports and hoard dollar-denominated assets. A grand illusion. A monetary matador’s cape.

Every time you buy a $14 toaster, you’re playing your part in the performance.

Currency manipulation is rarely called out in public, because the implications are too profound. It means the entire framework of “fair trade” is a fantasy. It means all those tariffs and retaliatory duties are just Band-Aids on a broken bone.

Greer knows this. That’s why he’s pushing for something bigger than tariffs. Something comprehensive. Something real.

Because if China’s real advantage is not cheap labor, but artificially cheap currency, then we’re not competing with a country — we’re competing with a monetary mirage.

And it gets worse.

What if the yuan’s next devaluation isn’t just a tweak to boost exports, but a desperate attempt to manage capital flight, mask domestic weakness, or retaliate against U.S. tech sanctions?

In 2015, a minor yuan devaluation sent shockwaves through global markets. Today, with fragile liquidity, bloated debt, and a Federal Reserve still nursing a post-COVID balance sheet hangover, the next one could detonate a global chain reaction.

And markets? They won’t wait for the policy papers. They’ll react — as they always do — to the headline, the rumor, the innuendo. A whisper in the Financial Times. A speech misinterpreted in Shanghai. A Twitter post from someone with a flag avatar and too much time on their hands.

In this climate, even Greer’s quiet insistence that we deal with non-tariff barriers might as well be a klaxon.

So here’s the “what if” – the Grey Swan event – no one wants to entertain out loud:

What if the entire post-WTO global trade regime has been predicated on a silent agreement to look the other way while China juiced its currency, flooded markets with artificially cheap goods, and quietly bought up Treasurys like Monopoly money?

What if the world’s faith in globalization wasn’t ever rooted in comparative advantage, but in mutual monetary gaslighting?

And what happens when that faith runs out?

~ Addison Wiggin

P.S. Greer’s whisper may be the canary in the yuan mine. Meanwhile, gold is inching up, possibly to soar much, much higher, bitcoin is challenging the fiat system anew, and the BRICS are circling the petrodollar, and platforms like Glintpay are doing what Washington won’t — giving you an off-ramp. It’s not the headlines you need to watch. It’s the questions behind them.

“Regulators and bankers were using the wrong tools and the wrong metrics. Unfortunately, they still are.”

–Jim Rickards, Currency Wars

May 13, 2025 — Hypothesis for the day: Sometimes the answers you get matter less than asking the right questions. Let’s give that a whirl with a few “what ifs…”:

What if the real trade barrier with China wasn’t cheap labor, clever supply chains, or state-owned factories churning out widgets at half the cost?

What if the real barrier — the one no one dares to name in polite diplomatic company — was the yuan itself?

That’s the suspicion lurking in the minds of those who’ve been around long enough to see economic history rhyme, if not repeat.

But what exactly are we talking about?

First, let’s demystify the term. Non-tariff barriers aren’t tariffs. They’re stealthier. Trickier. More… Chinese.

They include arbitrary food safety rules, tech transfer demands, opaque licensing procedures, outright bans on foreign firms for “national security” reasons — and, yes, currency manipulation.

That last one is the dragon in the room.

Every time you buy a $14 toaster, you’re playing your part in the performance.

Greer knows this. That’s why he’s pushing for something bigger than tariffs. Something comprehensive. Something real.

Because if China’s real advantage is not cheap labor, but artificially cheap currency, then we’re not competing with a country — we’re competing with a monetary mirage.

And it gets worse.

What if the yuan’s next devaluation isn’t just a tweak to boost exports, but a desperate attempt to manage capital flight, mask domestic weakness, or retaliate against U.S. tech sanctions?

In this climate, even Greer’s quiet insistence that we deal with non-tariff barriers might as well be a klaxon.

So here’s the “what if” – the Grey Swan event – no one wants to entertain out loud:

What if the world’s faith in globalization wasn’t ever rooted in comparative advantage, but in mutual monetary gaslighting?

And what happens when that faith runs out?

~ Addison Wiggin

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Here we sit — investors, analysts, retirees, accountants, even a few masochistic economists — gathered beneath the leafless monetary tree, rehearsing our lines as we wait for Jerome Powell to step onstage and tell us what the future means.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

With U.S. stocks trading at about 24 times forward earnings, plans for capital growth have to go off without a hitch. Given the billions of dollars in commitments by AI companies, financing to the hilt on debt, the most realistic outcome is a hitch.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.

As copper flowed into the United States, LME inventories thinned and backwardation steepened. Higher U.S. pricing, tariff protection, and lower political risk made American warehouses the most attractive destination for metal. Each new shipment strengthened the spread.

The arbitrage, once triggered, became self-reinforcing. Traders were not participating in theory; they were responding to the physical incentives in front of them.

The United States had quietly become the marginal buyer of the world’s most important industrial metal. China, long the gravitational center of global copper demand, found itself on the outside.