Trump is now caught in internal and external troubles, the tariff stick has not achieved the expected effect, and he is also being strangled by China's countermeasures. For instance, the ban on the export of heavy rare earths directly chokes the throat of the US military industrial complex. This time, China's ban includes seven types of heavy rare earth-related items such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These rare earth elements are widely used in advanced technology fields such as optical lasers, radar equipment, high-performance magnets for wind turbines, and jet engine coatings, which will directly deal a heavy blow to the production lines of the US military industry.

Besides, rare earths are not only at the core of military materials but also key to new energy and electronics industries. Take Tesla as an example; its motor permanent magnets require dysprosium and terbium to enhance heat resistance, and China controls 95% of the global supply of dysprosium. If there is a cutoff, Tesla's motor costs will skyrocket by 30%, and they might even have to suspend production. Apple is also affected; the vibration motor and screen backlight of the iPhone rely on gadolinium, dysprosium, and yttrium. After China's control, Apple's plan to transfer its supply chain to India was hindered because it could not bypass the processing环节 in China.

In short, China's export control of medium and heavy rare earths has brought the most direct effect of halting the sixth-generation fighter F47, and in the long run, it cuts off America's possibility of developing new technologies.

This is not all. According to data from the US Treasury Department, $6.5 trillion worth of US Treasury bonds will mature in June 2025, accounting for 70% of the total debt maturing that year. These debts are mainly five-year bonds issued during Trump's term in 2020 to cope with the impact of the pandemic. At that time, the US government borrowed heavily at low interest rates, and now, with the Federal Reserve's aggressive interest rate hikes, US bond yields continue to soar.

Japan can no longer withstand the pressure of America's tariff stick. From the private sector, people are selling US Treasuries en masse. Japan holds the largest amount of US Treasuries globally, reaching $1 trillion. Japanese banks have been devastated by the decline in the stock market and must sell US Treasuries to fill the gap.

Although the Japanese finance minister has assured the US that Japan will not sell US Treasuries, official assurances aside, the private sector is not stopping its actions. As the largest overseas holder of US Treasury bonds (holding about $1.27 trillion), various Japanese institutions holding US Treasuries are selling them frantically. Even at one o'clock in the morning, there are still institutions hanging $20 billion worth of US Treasury sell orders.

As a transit trade country, a plummeting exchange rate would increase the cost of importing raw materials and lower export prices, cutting into its own flesh. Therefore, Japan must maintain the exchange rate between 130 and 150. For transit trade countries, both sharp rises and falls in exchange rates are dangerous; stability is key. The Bank of Japan currently has little dollar reserves left and can only rely on selling US Treasuries to obtain more dollars. In future currency wars, they aim to protect the yen exchange rate.

Due to the outbreak of the US debt crisis, Trump even sent bombers to Japan to pressure Japan into compromise in the tariff war.

What makes Trump despair is the division within his supporters. Rarely, Republican Senator Ted Cruz "opened fire," warning that if the tariff policy continues to harm the economy, the Republican Party will face a "bloodbath" in the midterm elections. There are reports that Tesla CEO Elon Musk has suggested canceling tariffs to Trump, but the White House has ignored this advice. Ironically, voters supported Trump due to dissatisfaction with the Democratic Party's economic performance, yet Trump's "big moves" have made the economic situation worse, and discontent among swing voters is brewing.

Moreover, the Democratic Party has launched a counterattack. Biden and Obama have appeared to criticize Trump's policies. The Democratic Party is even willing to trigger a US debt crisis to deliver a fatal blow to Trump.

Currently, the Democrats hold fewer seats than the Republicans in both the US House of Representatives and the Senate. However, including steadfast Trump supporter Ted Cruz, Republican lawmakers have warned that if the tariff measures continue to cause a US economic recession, the Republicans will face a "bloodbath" at the midterm elections in 2026. If both chambers fall into Democratic hands, Trump will become a "lame duck" president.

For this reason, the Democrats are willing to trigger a financial crisis on Wall Street. Wall Street has always been the core force of the American economy, controlling large amounts of funds and resources. Trump and Musk's reforms have caused significant impacts on their interests.

For instance, reforming to strictly examine fiscal loopholes means that channels for them to gain profits through improper means may be cut off.

Statistics show that in recent years, the Wall Street financial circle has gained substantial benefits from the government's finances through some gray methods, with the exact amount potentially reaching hundreds of billions of dollars.

Once the reform succeeds, their ill-gotten gains may vanish. Once Wall Street is triggered, the Republican Party where Trump belongs will suffer a severe blow. How many people would support them if the Democrats jumped out to attack Hoover during the 1929 stock market crash and promoted Roosevelt's New Deal?

But in 1932, it was different; everyone was living in Hoover villages, drinking Hoover soup. The Democrats won easily. Because Great Hoover gave Americans a lasting lesson, the Republicans did not produce a president for 20 years. The Democrats want this result.

Original article: https://www.toutiao.com/article/7493934307673702953/

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