China announces 25% tariffs on $16B worth US goods(cnbc.com)
cnbc.com
China announces 25% tariffs on $16B worth US goods
https://www.cnbc.com/2018/08/08/china-announces-25percent-tariffs-on-16-billion-worth-of-us-goods-including.html
141 comments
China's economy needs Western imports far, far more than the West needs Chinese imports, they're likely to break first. The short-term impact could be quite painful on both sides, but things will turn out fine for the US if they stay the course. And someone needs to, China has played protectionist games unchecked for far too long.
China's economy needs Western imports far, far more than the West needs Chinese imports, they're likely to break first.
I don't think so. China has a huge amount of power over the US economy[1].
What Happens If China Called in Its Debt Holdings
China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.
China could crash the American economy any time they want. It'd hurt them, but it'd hurt America a lot more. Especially because oil exporters would immediately switch to doing oil trade in Euros, which would make it exceptionally hard for the dollar to recover.
[1] https://www.thebalance.com/u-s-debt-to-china-how-much-does-i...
I don't think so. China has a huge amount of power over the US economy[1].
What Happens If China Called in Its Debt Holdings
China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.
China could crash the American economy any time they want. It'd hurt them, but it'd hurt America a lot more. Especially because oil exporters would immediately switch to doing oil trade in Euros, which would make it exceptionally hard for the dollar to recover.
[1] https://www.thebalance.com/u-s-debt-to-china-how-much-does-i...
China can't just "call in" debt from treasury bonds, that's not how they work at all. And what happens after they sell a bunch of treasury bonds? Everyone knows that the yuan is propped up by the Chinese government and ain't worth a spit internationally, and US treasury bonds are still considered a good investment at present.
Right. Wouldn't they have to find a buyer for the bonds? That'd likely increase the yield quite a bit, which would descrese the value of China's holding a lot, right?
> China could crash the American economy any time they want. It'd hurt them, but it'd hurt America a lot more. Especially because oil exporters would immediately switch to doing oil trade in Euros, which would make it exceptionally hard for the dollar to recover.
But their likely action, according to the article you linked, might actually help the US economy by making its exports more competitive:
> China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.
> It's more likely that China would slowly begin selling off its Treasury holdings. Even when it just warns that it plans to do so, dollar demand starts to drop. That hurts China's competitiveness. As it raises its export prices, U.S. consumers would buy American products instead. China could only start this process if it further expands its exports to other Asian countries and increases domestic demand.
China only amassed so much US debt because it sells RMB to buy dollars to keep the RMB down and fuel exports. Reversing that policy would make Chinese exports less competitive on the world market. Ultimately, that could thwart the CCP's ambitions to create "national champions" by limiting them to their domestic market.
But their likely action, according to the article you linked, might actually help the US economy by making its exports more competitive:
> China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.
> It's more likely that China would slowly begin selling off its Treasury holdings. Even when it just warns that it plans to do so, dollar demand starts to drop. That hurts China's competitiveness. As it raises its export prices, U.S. consumers would buy American products instead. China could only start this process if it further expands its exports to other Asian countries and increases domestic demand.
China only amassed so much US debt because it sells RMB to buy dollars to keep the RMB down and fuel exports. Reversing that policy would make Chinese exports less competitive on the world market. Ultimately, that could thwart the CCP's ambitions to create "national champions" by limiting them to their domestic market.
"oil exporters would immediately switch to doing oil trade in Euros"
How does this affect the US any more than whether they measure oil volume in metric or not? It's not something that changes the real economy, it's just a matter of which ruler you're using. If the oil company has European employees, it still has to pay them in Euros. If the oil company has American employees, it still has to pay them in dollars. Likewise for customers. You have currency coming in, and if it's not what you need, you trade it for what you need.
How does this affect the US any more than whether they measure oil volume in metric or not? It's not something that changes the real economy, it's just a matter of which ruler you're using. If the oil company has European employees, it still has to pay them in Euros. If the oil company has American employees, it still has to pay them in dollars. Likewise for customers. You have currency coming in, and if it's not what you need, you trade it for what you need.
"What Happens If China Called in Its Debt Holdings"
China would be hurt gravely.
China would be hurt gravely.
What debt, exactly, can be "called" at China's choosing?
Well, they can sell their holdings of US bonds on the market. That's a matter of indifference to the US government, because it doesn't affect the repayment schedule at all.
It might affect the price of the next sale of Treasuries, but that's the limit of its impact.
It might affect the price of the next sale of Treasuries, but that's the limit of its impact.
Thaty's about it, and it might not even have too big an impact on the next sale, since those would have different maturity and won't be equivalent.
What if we cancelled the debt?
https://mises.org/wire/why-not-repudiate-national-debt
https://mises.org/wire/why-not-repudiate-national-debt
China's economy would suffer along with everyone else's.
China economy would suffer more.
https://voxeu.org/article/china-s-wto-entry-benefits-us-cons...
https://www.thebalancesmb.com/top-countries-exporting-to-the...
China's #1 customer is the US, by a large margin. Around half of their exports come here. China has far more to lose in a commercial war.
It'd hurt them, but it'd hurt America a lot more.
Nope. The only way they can hurt the US is by economic suicide (dumping all debt). And I mean total annihilation: they'd be shooting themselves. And the USD would suffer, true. But it would recover, US economy has far more autarky.
China economy would suffer more.
https://voxeu.org/article/china-s-wto-entry-benefits-us-cons...
https://www.thebalancesmb.com/top-countries-exporting-to-the...
China's #1 customer is the US, by a large margin. Around half of their exports come here. China has far more to lose in a commercial war.
It'd hurt them, but it'd hurt America a lot more.
Nope. The only way they can hurt the US is by economic suicide (dumping all debt). And I mean total annihilation: they'd be shooting themselves. And the USD would suffer, true. But it would recover, US economy has far more autarky.
Based on what exactly? The US is not the only western nation china exports to.
He said import not export. All the vaunted progress on Chinese AI is based on nvidia gpus. They are irreplaceable.
Yeah once China runs out of nvidia GPU's the whole economy will crash.
Meanwhile everything in the US is "made in china" and our entire manufacturing infrastructure and knowledge has deteriorated while China was slowly taking over...
But everyone knows GPU's are the key to economic dominance.
Meanwhile everything in the US is "made in china" and our entire manufacturing infrastructure and knowledge has deteriorated while China was slowly taking over...
But everyone knows GPU's are the key to economic dominance.
Well their AI progress will stall until they come up with an alternative to CUDA which, if you talk to futurists here, is almost just as bad. And this is just one example. Many industries are reliant on some special American component that they haven't figured out yet.
Relying on some special part is different from the entire US manufacturing sector being surpassed by China.
"everything in the US is "made in china""
I think people get a distorted picture of that as an artifact of labeling rules. The US exports a lot of industrial equipment, for instance. Most of the economy does not involve the final step of constructing consumer products that leads to the label "made in..." on the shelf of Wal-Mart.
I think people get a distorted picture of that as an artifact of labeling rules. The US exports a lot of industrial equipment, for instance. Most of the economy does not involve the final step of constructing consumer products that leads to the label "made in..." on the shelf of Wal-Mart.
China has no trade beef with "The West". The US is attacking both The West and China.
Actually EU is negotiating 0-tarriff with the US and a great realignment is occurring against China.
But the negotiations left out the most important sector, which is automobiles. The US is still pursuing a "national security" review on the automobile industry under Section 232.
EU has floated 0 tariffs on autos, which they've never done before
https://www.cnbc.com/2018/07/04/eu-could-agree-a-us-autos-ta...
https://www.cnbc.com/2018/07/04/eu-could-agree-a-us-autos-ta...
China is a human rights nightmare, they literally have concentration camps. I think ethically the US shouldn't even do trade with China.
I don't disagree, and I would add that the US has some very dubious incarnation practices. Getting locked up for minor crimes, and running prisons for profit is unethical in my mind. Your point is very valid though.
But without the US trade, it'd be much worse because much more people would've starved to death. Don't forget that behind a government, there still are people.
Since the situation in Xinjiang has not hit mainstream media yet, these are the camps the parent poster refers to:
https://www.independent.co.uk/news/world/asia/china-re-educa...
The estimated number of inmates keeps growing by the week. I think it's more accurate to call them re-education camps, but it's an issue that I wish more countries would push China on. I don't get why our (German) government spent so much time on negotiating the Liu Xiaobo issue instead.
https://www.independent.co.uk/news/world/asia/china-re-educa...
The estimated number of inmates keeps growing by the week. I think it's more accurate to call them re-education camps, but it's an issue that I wish more countries would push China on. I don't get why our (German) government spent so much time on negotiating the Liu Xiaobo issue instead.
Exactly. Also worth studying Mao's Great Famine. Great podcast on this released yesterday: http://www.econtalk.org/frank-dikotter-on-maos-great-famine
Not sure why you're being downvoted, you can argue to what degree Mao was responsible, but in the end China's authoritarian government was at least partially responsible.
They estimate 20 and 43 million died, if not caused by, then exacerbated by policies implemented under Mao.
https://en.wikipedia.org/wiki/Great_Chinese_Famine
https://en.wikipedia.org/wiki/Four_Pests_Campaign
They estimate 20 and 43 million died, if not caused by, then exacerbated by policies implemented under Mao.
https://en.wikipedia.org/wiki/Great_Chinese_Famine
https://en.wikipedia.org/wiki/Four_Pests_Campaign
Can these wiki links be viewed within China? Can someone try?
According to https://en.wikipedia.org/wiki/Censorship_of_Wikipedia#China
"Since June 2015, all Wikipedias redirect HTTP requests to the corresponding HTTPS addresses, thereby making encryption mandatory for all users. As a result, Chinese censors cannot see which specific pages an individual is viewing, and therefore cannot block a specific subset of pages (such as Ai Weiwei or Tiananmen Square) as they did in past years. As a result, Beijing chose to block the whole Chinese Wikipedia"
"Since June 2015, all Wikipedias redirect HTTP requests to the corresponding HTTPS addresses, thereby making encryption mandatory for all users. As a result, Chinese censors cannot see which specific pages an individual is viewing, and therefore cannot block a specific subset of pages (such as Ai Weiwei or Tiananmen Square) as they did in past years. As a result, Beijing chose to block the whole Chinese Wikipedia"
pm90(8)
Well, on one hand we have the EU and Canada with an actual free-trade deal, the TPP is happening and China is spending hundreds of billions in trade-related infrastructure throughout the world.
On the other hand we Trumps incredible negotiating skills. Same ones he used to bring Kim Jong Un to heel and denuclearize North Korea.
On the other hand we Trumps incredible negotiating skills. Same ones he used to bring Kim Jong Un to heel and denuclearize North Korea.
Well of course they don't, they still enjoy the benefits of developing nation status in the WTO despite moving from a poverty stricken 3rd world country 20 odd years ago to the 2nd largest economy in the world, as well as a leader in some hi-tech fields and ready to challenge in many more.
In my estimation they seem a hell of a lot smarter than most other countries as well, I don't think they need or deserve help from third parties any longer.
In my estimation they seem a hell of a lot smarter than most other countries as well, I don't think they need or deserve help from third parties any longer.
That's clearly not true; China engages in a number of unfair trade practices, including requiring foreign companies to surrender their technology to Chinese ones.
Are you joking? It's the other way around. Most of our manufacturing infrastructure and knowledge has deteriorated while China's knowledge has only risen.
Manufacturing goods is the root of an economy. China is the root, the US is a leaf.
Manufacturing goods is the root of an economy. China is the root, the US is a leaf.
> Manufacturing goods is the root of an economy.
Not any longer.
Once upon a time, agriculture was the root of an economy, but these things change. Manufacturing became the root. But it's not any more - now technology is.
Not any longer.
Once upon a time, agriculture was the root of an economy, but these things change. Manufacturing became the root. But it's not any more - now technology is.
Last I checked, technology needs to be manufactured to exist. I could be wrong though.
More countries can manufacture it than can develop it. The manufacturing gets driven down to low margins. Developing is therefore the root of the economy, rather than manufacturing.
Make no mistake. Manufacturing something is just as complex if not more complex than design. When you know how to manufacture a car, you probably know how to design one as well.
You can literally be taught how to design a car in CAD. It can be done on your computer with a mouse. But to fabricate a car takes a life time of knowledge from multitudes of disciplines.
The proof is in the pudding. China is well known for replicating and ripping off patented designs in seconds because design is trivial once you know how to fabricate something.
The only reason why China can't produce an nvidia GPU is because they don't have the knowledge to fabricate it.
You can literally be taught how to design a car in CAD. It can be done on your computer with a mouse. But to fabricate a car takes a life time of knowledge from multitudes of disciplines.
The proof is in the pudding. China is well known for replicating and ripping off patented designs in seconds because design is trivial once you know how to fabricate something.
The only reason why China can't produce an nvidia GPU is because they don't have the knowledge to fabricate it.
I don't think it's a joke. At least in the US, the free market values services a lot more than manufacturing. Services make up 79.6 of the U.S economy [1].
Granted, I don't have the stat for the entire world, so it might be bigger. Considering the US and EU are half of global GDP, I doubt it.
1) https://2016.trade.gov/publications/ita-newsletter/1010/serv...
Granted, I don't have the stat for the entire world, so it might be bigger. Considering the US and EU are half of global GDP, I doubt it.
1) https://2016.trade.gov/publications/ita-newsletter/1010/serv...
Trust me, a modern technological economy exists because human labor is augmented by physical machines. You take away the machines you'd have a service economy similar to services provided during a time when modern machinery was nonexistent (the stone age).
>Manufacturing goods is the root of an economy. China is the root, the US is a leaf.
Let's put your statement to the test then
Can China put tariffs on iPhones, Windows operating systems, Apple computers, Intel/AMD cpus, Nvidia GPUs?
Let's put your statement to the test then
Can China put tariffs on iPhones, Windows operating systems, Apple computers, Intel/AMD cpus, Nvidia GPUs?
Windows is pirated by everyone in China so a tarrif is useless. iPhones and apple computers are manufactured in China so YES they can put a tarriff on every freaking part of a mobile device/computer except for the GPUs and CPUs.
This may be the case as of this exact moment, but I see two things here that work in China's favor:
1) Given the current balance of trade between the US and China, each $1 of retaliatory Chinese tariffs has a larger impact as a percentage of trade flow than each $1 of US tariffs.
2) The Chinese economy is much more nimble and diverse than the US, and – especially with government intervention – may have an easier time developing domestic alternatives to US goods.
On an unrelated note, it's interesting that they're implementing a tariff on recyclables. That could be a devastating blow to the already struggling US recycling market.
1) Given the current balance of trade between the US and China, each $1 of retaliatory Chinese tariffs has a larger impact as a percentage of trade flow than each $1 of US tariffs.
2) The Chinese economy is much more nimble and diverse than the US, and – especially with government intervention – may have an easier time developing domestic alternatives to US goods.
On an unrelated note, it's interesting that they're implementing a tariff on recyclables. That could be a devastating blow to the already struggling US recycling market.
>1) Given the current balance of trade between the US and China, each $1 of retaliatory Chinese tariffs has a larger impact as a percentage of trade flow than each $1 of US tariffs.
That doesn't benefit China. What you are saying is that China has less total trade that they can tariff than the US.
>2) The Chinese economy is much more nimble and diverse than the US, and – especially with government intervention – may have an easier time developing domestic alternatives to US goods.
Source? It's common knowledge that the US has the most largest and most diverse economy in the world.
https://atlas.media.mit.edu/en/profile/country/usa/
https://atlas.media.mit.edu/en/profile/country/chn/
That doesn't benefit China. What you are saying is that China has less total trade that they can tariff than the US.
>2) The Chinese economy is much more nimble and diverse than the US, and – especially with government intervention – may have an easier time developing domestic alternatives to US goods.
Source? It's common knowledge that the US has the most largest and most diverse economy in the world.
https://atlas.media.mit.edu/en/profile/country/usa/
https://atlas.media.mit.edu/en/profile/country/chn/
On (1), I mean that $16B worth of goods is 12% of US->China exports, whereas it is only 3% of China->US exports, meaning that if this continues to escalate in this manner it will disproportionately affect US->China exporters.
I will concede (2) was not well expressed. I just find it much much easier to imagine – due to differences in labor forces, natural resources, environmental regulations, etc. – a suddenly growing Chinese motorcycle industry than, say, a resurgent US steel industry.
I will concede (2) was not well expressed. I just find it much much easier to imagine – due to differences in labor forces, natural resources, environmental regulations, etc. – a suddenly growing Chinese motorcycle industry than, say, a resurgent US steel industry.
china produces about half the worlds steel
China's economy is where a large part of the world's future growth will occur, in the longer term capital will reallocate itself around trade barriers to get access to it.
In the short term, the US could potentially get some concessions that it wants. However, things have already gotten further than most predicted, lots of people expected China to give Trump a few crumbs that didn't really matter but allow him to declare victory. Trump seems to not want that, so it might be too late to avoid damage.
In the short term, the US could potentially get some concessions that it wants. However, things have already gotten further than most predicted, lots of people expected China to give Trump a few crumbs that didn't really matter but allow him to declare victory. Trump seems to not want that, so it might be too late to avoid damage.
You mean China's current aging population with a reverse pyramid demography due to one child policy is where global growth is at?
This is a good point. Personally, I think the inverted pyramid means that China won't achieve parity with US in per capita wealth. However, there's still a ton of growing that it can do. Think of all the millions of cars, washing machines, air conditioners, not to mention increased consumption of pharmaceuticals, personal care, apparel, meat, etc.
Capital is not going to pass this growth up.
Capital is not going to pass this growth up.
> You mean China's current aging population with a reverse pyramid demography due to one child policy is where global growth is at?
Given we're talking about the CCP, I suppose they could right their reverse pyramid using the same brutal means they used to create it. Say, by heavily pushing euthanasia options onto retired folks who can't care for themselves, with financial sanctions for their families if they refuse to comply.
Given we're talking about the CCP, I suppose they could right their reverse pyramid using the same brutal means they used to create it. Say, by heavily pushing euthanasia options onto retired folks who can't care for themselves, with financial sanctions for their families if they refuse to comply.
Yes. High populations don't correlate with GDP. In fact there's an inverse correlation. Look at India.
edit: source for those who don't believe me: https://www.kaieteurnewsonline.com/2013/01/17/population-gro...
edit: source for those who don't believe me: https://www.kaieteurnewsonline.com/2013/01/17/population-gro...
But China is only putting tariffs on US stuff, and only the US has tariffs on Chinese stuff.
There is no western trade alliance because Trump is challenging the multi-lateral trade institutions such as the WTO which the US created. Given that the Tariffs that Trump is imposing will likely be illegal under WTO rules, Europe and Canada will not simply work with the US when their products are also at risk from Trump's tariffs.
You may think that the west has a collective interest, but does Trump think so when he gets mad every time he sees a Mercedes car running down Fifth avenue?
http://fortune.com/2018/05/31/trump-mercedes-benz-german-car...
Also Canada is balking at how the US is abandoning NAFTA just so that it could use its larger size in trade negotiations.
You may think that the west has a collective interest, but does Trump think so when he gets mad every time he sees a Mercedes car running down Fifth avenue?
http://fortune.com/2018/05/31/trump-mercedes-benz-german-car...
Also Canada is balking at how the US is abandoning NAFTA just so that it could use its larger size in trade negotiations.
> There is no western trade alliance because Trump is challenging the multi-lateral trade institutions such as the WTO which the US created.
The WTO is ineffective and broken. Based on prior precedent, if the US raised objections to the "China 2025" policy, the adjudication of the dispute will probably be finish sometime around 2030. In the past, the Chinese government has typically ignored adverse WTO rulings or dragged its feet until they were moot. IIRC, after all off that, only then will the WTO sanction tariffs. It's basically the definition of too little, too late.
https://news.ycombinator.com/item?id=17403673#17408876
The WTO is ineffective and broken. Based on prior precedent, if the US raised objections to the "China 2025" policy, the adjudication of the dispute will probably be finish sometime around 2030. In the past, the Chinese government has typically ignored adverse WTO rulings or dragged its feet until they were moot. IIRC, after all off that, only then will the WTO sanction tariffs. It's basically the definition of too little, too late.
https://news.ycombinator.com/item?id=17403673#17408876
Honest question: If some Chinese goods become "too expensive" because of the tariff, wouldn't some other country's goods become the new more affordable one?
If so, does anyone here know who's next in line after China?
ps: i'm already looking for a potential alternative to AliExpress to buy integrated circuits :)
If so, does anyone here know who's next in line after China?
ps: i'm already looking for a potential alternative to AliExpress to buy integrated circuits :)
This sounds awful, we have technology in china that costs millions to replace.
My company is seriously hurting, where last year we have our best profits in decades, this last quarter was survival.
I hate money in politics, but I'm starting to think that big companies will be supporting politicians that will end these tariffs.
My company is seriously hurting, where last year we have our best profits in decades, this last quarter was survival.
I hate money in politics, but I'm starting to think that big companies will be supporting politicians that will end these tariffs.
Your company was on its way to export your job to China next, you know, to reach another profit record.
[deleted]
The global economy is very complicated, there will be different suppliers in different countries with various qualities of the different goods they are selling therefore I don't think there is an easy answer to that question.
Maybe, but it is a dangerous bet.
If a country is already producing something they can probably produce a little more: just work some overtime. To do anything more than a little though requires new manufacturing plants. Building them isn't hard, but it takes time: you risk that your expensive new plant opens the day this all resolves. If that happens you go bankrupt.
If a country is already producing something they can probably produce a little more: just work some overtime. To do anything more than a little though requires new manufacturing plants. Building them isn't hard, but it takes time: you risk that your expensive new plant opens the day this all resolves. If that happens you go bankrupt.
Is anything made outside China? Well, does anyone remember the flooding in Thailand that caused a shortage of hard drives in 2011?
That depends entirely if another country can spin up the infrastructure to manufacture that stuff at the low cost that China was known for.
India, probably. And then Africa, probably Nigeria - hopefully, that'd help them a lot. (IMHO, not an expert)
It'll move to central and southern Africa.
China has been sinking serious finances and engineering personnel into Africa for about 20 years. The Koreas have been trying too. Basically as soon as the Chinese middle class pushes up wages past the point where manufacturing is viable, they'll need a cheaper workforce.
Thanks to these long-view investments, they'll likely maintain control over manufacture for another few decades, at least.
India is already cooked. Despite their wage inequality, they're practically already post-manufacture. They've missed the boat.
China has been sinking serious finances and engineering personnel into Africa for about 20 years. The Koreas have been trying too. Basically as soon as the Chinese middle class pushes up wages past the point where manufacturing is viable, they'll need a cheaper workforce.
Thanks to these long-view investments, they'll likely maintain control over manufacture for another few decades, at least.
India is already cooked. Despite their wage inequality, they're practically already post-manufacture. They've missed the boat.
Of all the nutty, anxiety-inducing and self-destructive things administration is doing right now, this trade war with China leaves me least concerned. In fact I'm curious to see where it leads. Change my mind?
This was an interesting read: https://piie.com/blogs/trade-investment-policy-watch/we-know....
Thanks
It has the potential for the most dramatic long term consequences as it could dramatically speed up China's rise. China's economy is where future growth is, to get access to that growth capital will reallocate itself around these trade barriers to China's advantage if they persist.
Also, part of the reason the US dollar is the chief world trading currency and the US Treasury is considered the world's safest investment is open trade policy. This preferential place in the world financial system gives the US economy major advantages, including low interest rates.
Attacking the entire world at the same time is a really bad plan. The chance of wringing concessions from China would be much greater if the US would make common cause with the EU, Japan, etc. But the opposite is happening, the rest of the world is moving on w/o the US as we saw with TPP and the recent EU / Japan deal. Expect to see things like China start canceling deals w/ Boeing and inking new deals with Airbus.
Finally, there's a military dimension to this. China is raising tariffs on US oil at the same time it is saying it won't respect Trump's sanctions on Iran. Its unlikely anything would happen in the immediate term but if this situation persists its not far fetched to imagine things getting tense.
Also, part of the reason the US dollar is the chief world trading currency and the US Treasury is considered the world's safest investment is open trade policy. This preferential place in the world financial system gives the US economy major advantages, including low interest rates.
Attacking the entire world at the same time is a really bad plan. The chance of wringing concessions from China would be much greater if the US would make common cause with the EU, Japan, etc. But the opposite is happening, the rest of the world is moving on w/o the US as we saw with TPP and the recent EU / Japan deal. Expect to see things like China start canceling deals w/ Boeing and inking new deals with Airbus.
Finally, there's a military dimension to this. China is raising tariffs on US oil at the same time it is saying it won't respect Trump's sanctions on Iran. Its unlikely anything would happen in the immediate term but if this situation persists its not far fetched to imagine things getting tense.
[deleted]
do you realise that global tariffs was a strong factor into the build up of the Great Depression?
To me, its the most concerning aspect of all of Trump's activity as it has the capacity to strongly influence global events.
Good on China. I'm glad China is reacting to the ridiculous actions of the US. Is everyone in these comments shortsighted in thinking that this is good for the long term? The US does not benefit from these huge trade tariffs on China. Protectionism is not a good idea. It'll only slow job growth in the US.
> Is everyone in these comments shortsighted in thinking that this is good for the long term?
How deeply have you thought about the issue? I mean really, really thought about it. Trying to poke holes in your own deeply held beliefs, that kind of thinking.
“He who knows only his own side of the case knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion... Nor is it enough that he should hear the opinions of adversaries from his own teachers, presented as they state them, and accompanied by what they offer as refutations. He must be able to hear them from persons who actually believe them...he must know them in their most plausible and persuasive form.”
― John Stuart Mill, On Liberty
I can think of several ways things could play out in this trade war that would end in terrible results for the US, China, the whole world, and every different combination you can think of.
Can you think of even one scenario where the current status quo might produce bad results for even one nation? Or, do you truly believe that our current model (which objectively is still very much protectionist, in a variety of very complicated ways) happens to be designed absolutely perfectly to produce the optimum outcome for everyone under all scenarios that our infinitely complex and unpredictable world throws at us?
Personally, I believe a better approach is for everyone to get out of their ideological mental straight jackets and practice critical thinking, conversation, honesty, and cooperation skills. And if we can pull that off, then maybe then we can hold our respective political leaders to some sort of a similar standard.
How deeply have you thought about the issue? I mean really, really thought about it. Trying to poke holes in your own deeply held beliefs, that kind of thinking.
“He who knows only his own side of the case knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion... Nor is it enough that he should hear the opinions of adversaries from his own teachers, presented as they state them, and accompanied by what they offer as refutations. He must be able to hear them from persons who actually believe them...he must know them in their most plausible and persuasive form.”
― John Stuart Mill, On Liberty
I can think of several ways things could play out in this trade war that would end in terrible results for the US, China, the whole world, and every different combination you can think of.
Can you think of even one scenario where the current status quo might produce bad results for even one nation? Or, do you truly believe that our current model (which objectively is still very much protectionist, in a variety of very complicated ways) happens to be designed absolutely perfectly to produce the optimum outcome for everyone under all scenarios that our infinitely complex and unpredictable world throws at us?
Personally, I believe a better approach is for everyone to get out of their ideological mental straight jackets and practice critical thinking, conversation, honesty, and cooperation skills. And if we can pull that off, then maybe then we can hold our respective political leaders to some sort of a similar standard.
Why wouldn't be good for the long term? If we correct our trade deficit with China(it's 5:1 right now) how is that against our interests?
China has been playing by their own set of rules from the rest of the world and it's time to end it.
China has been playing by their own set of rules from the rest of the world and it's time to end it.
> If we correct our trade deficit with China(it's 5:1 right now) how is that against our interests?
Why is a trade deficit bad? Is there some reason the capital account surplus needs to flow out instead of in? What negative effect do you perceive the trade deficit as having in the economy?
Trade deficits are basically neutral. They fund the foreign investment in the US and purchases of US bonds by foreign governments.
Why is a trade deficit bad? Is there some reason the capital account surplus needs to flow out instead of in? What negative effect do you perceive the trade deficit as having in the economy?
Trade deficits are basically neutral. They fund the foreign investment in the US and purchases of US bonds by foreign governments.
There are pros and cons to any complicated issue.
The biggest worry over a trade deficit that I'd have are National Security implications due to the dependance on trade with that county. To explain why that would matter, consider the following:
- Because of the much lower wages and regulatory costs, manufacturing here in the U.S. seems to have been strangled in the last few decades and mostly moved over to China.
- This has caused a shift in the way the U.S. economy works, with cheap parts / goods from China being considered a given and a transition to businesses that depend on those cheap imports.
- Once our economy wholly depends on that overseas manufacturing in China, that gives China large leverage over us because we don't have the factories here in the U.S. anymore to pick up the slack if China stopped trading with us and instead found another buyer for their goods.
- MUCH more importantly though, is the affect this dependance on a foreign nation would have on us if China decided to do things that we find reprehensible in the world. Think about what Russia did with Crimea. Now imagine China doing something similar. With Russia we were able to slap strong economic sanctions on them... but if our economy is strongly intertwined that makes taking any strong stance against that nation extremely difficult. I don't think anyone wants their future and safety dependent on strangers from a different society that have different cultural values.
The biggest worry over a trade deficit that I'd have are National Security implications due to the dependance on trade with that county. To explain why that would matter, consider the following:
- Because of the much lower wages and regulatory costs, manufacturing here in the U.S. seems to have been strangled in the last few decades and mostly moved over to China.
- This has caused a shift in the way the U.S. economy works, with cheap parts / goods from China being considered a given and a transition to businesses that depend on those cheap imports.
- Once our economy wholly depends on that overseas manufacturing in China, that gives China large leverage over us because we don't have the factories here in the U.S. anymore to pick up the slack if China stopped trading with us and instead found another buyer for their goods.
- MUCH more importantly though, is the affect this dependance on a foreign nation would have on us if China decided to do things that we find reprehensible in the world. Think about what Russia did with Crimea. Now imagine China doing something similar. With Russia we were able to slap strong economic sanctions on them... but if our economy is strongly intertwined that makes taking any strong stance against that nation extremely difficult. I don't think anyone wants their future and safety dependent on strangers from a different society that have different cultural values.
We actually sell more to China than they do to us. The deficit is an accounting game and basically a lie from the layman's perspective.
https://www.bloomberg.com/news/articles/2018-06-12/the-1-4-t...
https://www.bloomberg.com/news/articles/2018-06-12/the-1-4-t...
Oh yes, because the US (not we, I'm European, thank you very much) has a trade deficit with China it's inherently bad for the US?
Where are you going to get a good price for steel (and not only steel) when you add a 25% tariff on it when it comes from China? It'll lead to American products also being more expensive and it'll lead to a lower purchasing power in the US.
Other countries can also higher their prices for the US because why wouldn't they? The US isn't gonna get it cheaper from China... This leads to an endless price war that is not good for anyone.
Edit: also see thinkcontext's comment: https://news.ycombinator.com/item?id=17716933
Where are you going to get a good price for steel (and not only steel) when you add a 25% tariff on it when it comes from China? It'll lead to American products also being more expensive and it'll lead to a lower purchasing power in the US.
Other countries can also higher their prices for the US because why wouldn't they? The US isn't gonna get it cheaper from China... This leads to an endless price war that is not good for anyone.
Edit: also see thinkcontext's comment: https://news.ycombinator.com/item?id=17716933
Don't mix short term and long term. Short term we have 25% tariffs. What about long term? Trump has stated some goals that would end the tariffs. If he succeeds that changes things and it is worth the short term trade.
Of course who knows if he will succeed. Ask me in 20 years what the real result was.
Of course who knows if he will succeed. Ask me in 20 years what the real result was.
Chinese market is down. US market is up. I don’t think this is going to end well for China.
Luckily for their leaders, they don't need to worry about elections.
Elections? The least violent outlet for social unrest?
Yeah, China doesn't have to worry about elections.
Yeah, China doesn't have to worry about elections.
The Tienanmen Square protests weren't very violent for the party leaders, same can't be said for the protesters.
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Makes sense, a very rational response really.
Not sure why you're being downvoted here, it's absolutely true. They'd be mad not to enact their own tariffs in response. How long it can carry on before one side backs down is the real question here.
I heard a claim in a podcast the other day that I'm not able to put my hands on (it may have been EconTalk or Vox's Weeds) where someone claimed that trade is generally so beneficial to the recipient that even if your partner puts tariffs on your goods that retaliation is just shooting yourself in the foot purely for appearances.
I wish I could provide a link or more details but there does seem to be an economic case for non-retaliation.
Can someone (or a link) explain how these tariffs actually work in practice?
As in, what does "25% tariffs on $16B" mean, exactly?
It means that if your product is affected, upon entering China a 25% levy must be paid, effectively making it's price 25% more expensive.
$16B is an estimation of the value of the imported goods in recent years that will be affected by that tariff.
Good. Cargo ships are absolutely terrible for the environment: https://www.theguardian.com/uk-news/2017/may/18/dirty-diesel...
Note, it is "only" $16B. I think, China by can do by far a more painful bite with embargoes, and export tariff, than the other way around
What is the net outcome of a trade war? Is it just money shifting around?
I'm not squeamish about putting some pain on China, but who's to say they won't resume the same tactics later on?
I'm not squeamish about putting some pain on China, but who's to say they won't resume the same tactics later on?
One consequence is the reduction of trust and perceived-value in the global economy, which reduces our capacity for investment and growth*
As far as I can tell, as long as the economy runs super well and everybody trusts that it'll continue to do so, we are all able to collectively defer debt among ourselves to invest in augmenting our production capacity right now. In practice this means people trust that the work (or product) that they are doing (or delivering) now can be payed later, so they can wait to be paid. Meanwhile that work (or product) can be put to use _right now_ to increase production as a whole.
I'm certain someone with a more formal grasp of macroeconomics can explain this better.(Maybe even yourself, if that was a rhetorical question)
* many caps apply, and IMO foremost the accelerated consumption of natural resources is the most critical one. Eternally growing economies mean eternally accelerating change of the natural environment.
As far as I can tell, as long as the economy runs super well and everybody trusts that it'll continue to do so, we are all able to collectively defer debt among ourselves to invest in augmenting our production capacity right now. In practice this means people trust that the work (or product) that they are doing (or delivering) now can be payed later, so they can wait to be paid. Meanwhile that work (or product) can be put to use _right now_ to increase production as a whole.
I'm certain someone with a more formal grasp of macroeconomics can explain this better.(Maybe even yourself, if that was a rhetorical question)
* many caps apply, and IMO foremost the accelerated consumption of natural resources is the most critical one. Eternally growing economies mean eternally accelerating change of the natural environment.
This isn't a "trade war." It's a national security negotiation. But you know? I think maybe trade wars are "easy to win," as Trump said.
So dropshipping GGWP?