Last April, President Trump launched 59 Tomahawk cruise missiles into Syria.
He was responding to an alleged chemical weapons attack by Bashar al-Assad’s Syrian government.
It was Trump’s most dramatic military move since he became president. It was also the United States’ first deliberate attack on the Syrian government.
At the exact moment he ordered the strike, Trump was also hosting China’s president, Xi Jinping, for dinner at Mar-a-Lago, Trump’s Florida resort. Xi’s wife was also there.
I was sitting at the table. We had finished dinner. We are now having dessert. And we had the most beautiful piece of chocolate cake that you have ever seen. And President Xi was enjoying it. And I was given the message from the generals that the ships are locked and loaded. What do you do? And we made a determination to do it. So the missiles were on the way. And I said: ‘Mr. President, let me explain something to you… we’ve just launched 59 missiles… heading toward Syria and I want you to know that.’
When asked how President Xi responded, Trump claimed: “He paused for 10 seconds and then he asked the interpreter to please say it again.”
The timing of the attack was meant to intimidate Xi and send China a message.
You see, China and Syria are allies. The Chinese give Assad’s government diplomatic, military, and economic support. China has also used its veto power at the UN several times to support Syria.
Essentially, Trump invited President Xi and his wife to his home for dinner. Then, over cake, he bombed one of Xi’s friends.
Trump hoped his hardball diplomacy would encourage China to tighten the screws on North Korea. He also wanted China to make changes in other areas like trade. He explicitly told Xi as much.
However, on closer look, Trump’s Syrian fireworks show was nothing but a hollow gesture. That’s because, without China, Trump would have no missiles to launch at anyone.
The guidance systems on the Tomahawk cruise missiles Trump launched at Syria depend on special materials that China has a near monopoly on producing. Surely, Xi knew this. Though Trump probably didn’t at the time.
And it’s not just the missiles…
If China decided to cut off these special materials, the entire US military would cease to function in short order.
Not surprisingly, Trump’s display of machismo did not impress the Chinese. Nor did it make them change their approach to North Korea.
A few months later, North Korea tested both an intercontinental ballistic missile capable of hitting the continental US and a thermonuclear weapon for the first time. Both might’ve been prevented if China had pushed harder to reign in North Korea.
So eventually – and likely soon – the US government will try to force China’s hand through trade and economic means.
Trump already threatened to cut off trade with any country that does business with North Korea. He was talking about China.
And Trump’s Secretary of the Treasury threatened to kick China out of the US dollar if it doesn’t crack down on North Korea. That would be akin to dropping a financial nuclear bomb on Beijing.
Sure, these seem like exaggerated threats. But it shows Trump’s frustration. It also means trade penalties against China could be imminent.
I think a full-blown trade war is coming soon.
But China has a big card to play. It could restrict access to that special material I just mentioned – the material used to make advanced electronic components, like the Tomahawk cruise missile guidance system.
China has used this strategy before. About six years ago, it restricted exports during a spat with Japan. The supply crunch caused a veritable mania in the special material’s industry.
Almost overnight, the price of this special material went up over 10 times.
Companies in the industry went up many times higher.
The US and China are in the early stages of a trade war. It’s only a matter of time before it escalates. That will probably happen soon. The perilous situation with North Korea guarantees it.
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Nick Giambruno: Nick is Doug Casey’s globetrotting companion and is the Senior Editor of Casey Research’s International Man. He writes about economics, offshore banking, second passports, value investing in crisis markets, geopolitics, and surviving a financial collapse, among other topics. In short, Nick’s work helps people make the most of their personal freedom and financial opportunity around the world. To get his free video crash course, click here.