Until the pandemic, President Donald Trump’s biggest failing, and much of Congress’ as well, has been the vehement anti-Sino, kneejerk reaction to China, which especially impacts technology. This has caused a paradigm shift in the global trade ecosystem, and a new world technology order is on the horizon if this path continues. For the time being, a technology curtain has been raised between the United States and one of, if not, the most powerful and globally advanced technological counties – China.
While there is a variety of fallout, across virtually every technological segment and platform from his doing. In the end, the one thing he has managed to accomplish is to assure the world that the United States is no longer the technological leader.
The directions Trump and much of Congress continue to take boggle the mind. What should be unbelievable is that, by now, one would think he would get it. Virtually all the measures that come out of Trump’s administration are incomplete, improvisational and detrimental to what are the great strengths of the American innovation system, even the military.
One shining example of his complete lack of understanding of global economics is his stance on foreign semiconductors. There have been many warnings by various entities on the damage his anti-China stance is going to cause to the U.S. semi industry. Just recently, both organizations that represent the majority of semi manufacturers are saying how damaging his policies are. It is estimated that it will cost the United States upwards of $2 billion to flush Huawei and ZTE in its wireless networks.
To fix all of this, the administration thinks that all it has to do is find replacement vendors. The plan is to throw money at a variety of organizations, TSMC, Nokia, Ericsson, Samsung, and others, to find ways to fill the technology void created by the washing of China.
I suppose it seems like a good plan in his simple mind. However, it is much more complicated than he seems to think it is. First, it will be a while before all this ramps up and produces results. Also, if vendors such as TSMC and Samsung cut ties with Huawei to align with the United States and it quaking allies, do they feel the business gained will cover the business lost by China? As well, by that time, we will have lost any lead we had in many segments of technology.
China has accepted the situation and is not waiting around while the United States tries to reboot its tech sector. They have advanced 5G deployments, advanced AI platforms and they just announced a massive MIMO 5G indoor deployment. There is more, but one gets the picture.
China has now accepted its predicament and is moving on. What this administration seems not to be able to understand is that China is a massive geographical footprint and the population and resources to go with it. Sure, like any country it lacks some things. But it is rich with certain resources for high tech.
It also still has allies. In fact, in its most recent annual worldwide threat assessment to Congress, the U.S. intelligence community noted that “China and Russia are more aligned than at any point since the mid-1950s.” Regardless of our president’s chummy relationship with Putin, Russia has always considered itself Eurasian.
However, let us put this aside for a moment and move to the economic ecosystem.
The pandemic has placed new strains on the U.S. monetary structure. The U.S. just dumped over $2 billion into the economy to put the brakes on a pandemic-based economic tailspin. While that helped, it did not entirely stop the downward slide. There has been talk, but no action on another similar program for a similar amount.
On the tech side, the U.S. government, along with the National Science Foundation (NSF) and the Department of Energy (DOE), has committed to dumping another $1 billion into various segments of tech – 5G, AI, and quantum computing. Well, guess that says we are not so much ahead in the game as we thought.
There is more. Our government is looking at all kinds of places to dump funds to get the post-pandemic economy back on its feet.
If my math is right, we just amped up our debt load by about $5 trillion if the second economic bump makes it. Although that is likely to be closer to the $1.75 trillion figure.
To date, the U.S. is running a $3 trillion deficit. If we look at pre-pandemic 2019, we spent about $4.5 trillion.
So, doing simple math, let us say the 2020 non-Covid budget is the same as last year. Now add the $2 trillion economic package, another billion in technology platform boosts, and another stimulus package and 2020 will cost us over $9 billion!
Our revenue for 2019 was only $3.4 trillion – short almost a trillion dollars. And it is going to be even worse this year. For the first 10 months of 2020 – The U.S. budget deficit climbed to $2.81 trillion, exceeding any on record. From an accountant’s perspective, we are never going to see daylight without massive tax increases or selling off the deep south part of the country.
It appears to me that this administration and Congress have no clue or realistic plans to resolve this, other than printing money.
On top of that, “There’s a tech war a-comin’” if this trajectory remains past the November election – make no mistake about it.
But then, in November, cooler heads could prevail. We can stop the sinophobia, return to a non-antagonistic position against our allies, and a non-aggressive position against China, and maybe, together, globally, we can find our way out of this hole we have dug ourselves into.