| A GREY SWAN PUBLICATION | Wednesday April 16, 2025 | Swan Dive — April 16, 2025 The Peasants Will Be Crying Addison Wiggin Who pays the price in a trade war?
It’s not a mystery, really.
But do the people really need to get demeaned in the process?
In a speech meant to sound statesmanlike but delivered with the subtlety of a frying pan to the face, Chinese President Xi Jinping finally answered U.S. Vice President J.D. Vance’s recent claim that Chinese “peasants” borrow U.S. dollars to make cheap goods to sell back to American consumers.
Xi took the remark and flipped it.
“The peasants will be crying,” he said, calling American consumers “peasants” in return — a rare public insult aimed straight at the U.S. working class.
Petty? Maybe.
Calculated? Absolutely.
About as calculated as this meme depicting American workers reshoring Nike sneaker production:  O, the irony. Populism is no friend to the people who support it.
And so the war of words now matches the war of trade blows, insult for insult, tit for tariff.  The chart above shows what really happens to prices for stuff in a trade war.
That is unless one of the two parties is better at mahjong than the other. And they can look beyond cultural differences to trading again.
In his first 100 days, Trump has signed 112 executive orders, laid off or fired 60,000 federal workers, and unveiled an unprecedentedly massive tariff plan.
What he's about to do next will shock even his most senior staffers.
Find out what it could mean for you and your money here.
📉 Talk, Maybe. Trust? Not Yet. Beijing is floating the idea of trade negotiations — on its terms. Chinese officials say they’ll come to the table only if Trump’s cabinet cools the anti-China rhetoric and assigns someone specific to lead discussions.
It’s diplomacy by precondition.
Meanwhile, China’s economy surprised with strong March data, fueling calls for stimulus but boosting global market sentiment.
However, trade tensions remain the biggest drag on global tech. The Trump administration just blocked Nvidia’s H20 chip from reaching China — a move costing the company $5.5 billion. ASML, the Dutch chip equipment giant, fanned the flames by missing orders, further spooking chip stocks. And just like that, the market is shifting back to fear mode.
🧲 Rare Earths: China’s Precision Strike While politicians are still arguing over who said what, China delivered a gut punch that matters far more than words: it halted exports of rare earth metals.
These aren’t trinkets. They’re critical to everything from semiconductors and missiles to EVs and LED lightbulbs. With 99% control of heavy rare earth production and 90% of rare earth magnet output, Beijing just made life very uncomfortable for the Pentagon and Silicon Valley alike.
In response, Trump launched a national security probe into critical mineral imports. The Commerce Department will now decide if the U.S. needs tariffs to defend its industrial base. Fridge magnets may survive. AI chips and missile systems? Less certain.
🚢 Redirected Exports, Rerouted Influence With U.S. access tightening, Chinese exporters are likely to redirect goods to Europe, echoing Treasury Secretary Scott Bessent’s warning that “China isn’t going to turn off production. It’s an employment agency, not a business.”
The data backs him up: China exported $525 billion to the U.S. last year, $516 billion to the EU, and $587 billion to Southeast Asia — much of which gets re-exported westward.
Analysts Jen and Freire estimate that a third of China’s U.S.-bound exports could shift to Europe, inflating China’s EU surplus by 70% to $420 billion. That’s a massive disinflationary shock.
If Europe throws up barriers, however, Beijing risks full economic isolation. “This process could cascade,” they warn, “leaving China economically adrift.”
Or vice versa with the U.S. Our researchers are betting Trump throwing the U.S. consumer on the barbie will win the concessions the U.S. needs to reshore manufacturing and keep spending up to the U.S. peasants’ liking.
✈️ Boeing Grounded — Again. China also pulled the plug on all Boeing aircraft deliveries, a devastating blow to America’s top exporter. The message: China’s retaliation isn’t just symbolic. It’s surgical.
While we wait for the Trump administration and Xi Jinping to get over trading insults, the market has also been waiting. You already know the stocks that have been getting hammered the most are the Mag 7, which benefitted most during last year's feverish run-up.  The other 493 companies that make up the S&P 500 are on standby.
Yesterday, stocks gained at the open, but rolled over during the day for a small loss.
This spirit continued through the night. Stocks are down in early trading on chip jitters, while investors wait for more clarity from Beijing — or at least fewer insults. Addison P.S.: Grey Swan Live! is tomorrow, April 17, at 11 a.m. ET. We’ll be joined by Jason Cozens, founder of GlintPay.com, to unpack what’s really going on with gold’s historic rise to $3,328 this morning. Hint: When trust breaks down, gold has a habit of speaking up.
As always, your cheerful reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
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