Trade War with China

Hendrik_2000 said:

250 billion of trade out of 13 trillion economy represent what less than 1-3/4 % of GDP
No China is not worry about trade war I say let it rip Let see who can last longer
Don't forget that China was subject to total embargo from 1949 to 1972 when the economy is so much smaller and China is isolated politically and economically then

China can offset the effect of trade war by keep expanding the infrastructure in the western China and improve the social benefit of Chinese people. PLus OBOR will provide work for Chinese industry for decade to come Which come at opportune time for China . As I said using blackmail is a bit too late now the horse has left the barn
There are many ways to retaliate against the Trump tariff say add tariff to junk Holywood or Apple . Make life difficult for American export in China using custom or Initiate anti monopoly law against American company

The experience of American embargo does not show result advantageous to US If anything it will spur China to become more independent in technology mark my word

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According to the Office of The United States Trade Representative imports from China totaled $478 billion dollars in 2016. So while the tariffs right now have been threatened to reach up to $250 billion there is still substantial room to grow.

Either way, I don't think the outcome of this trade war will be good for anyone involved.

If that 200BUSD does get in the game, China must find new ways to retaliate instead of only on tariff because China only imported 130 billion USD of goods from US in 2017. There is not so much US imports left to be targeted.

I think China has few other options in other areas that are not counted in trade figures.

• restrict Chinese tourists to US. (did it to SK).
• restrict Chinese students going to US schools. (a very big US money earning, or Chinese buying, but not counted). This is not to limit access to real good schools like MIT, but 2nd or 3rd tier schools.
• reduce holding of treasure papers.
• targeting US finance sectors operation in China.
• reduce rare earth export to US, same as US ban American supplies to ZTE.

taxiya said:

If that 200BUSD does get in the game, China must find new ways to retaliate instead of only on tariff because China only imported 130 billion USD of goods from US in 2017. There is not so much US imports left to be targeted.

I think China has few other options in other areas that are not counted in trade figures.

• restrict Chinese tourists to US. (did it to SK).
• restrict Chinese students going to US schools. (a very big US money earning, or Chinese buying, but not counted). This is not to limit access to real good schools like MIT, but 2nd or 3rd tier schools.
• reduce holding of treasure papers.
• targeting US finance sectors operation in China.
• reduce rare earth export to US, same as US ban American supplies to ZTE.

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Tax (tariff) iPhones and Apple products selling in China;
Tax American brand fast foot in China;
Tax American brand made in China cars, and force GM and Ford to sell ownerships of China joint ventures (China pays the ownership with the US treasury notes.

SlothmanAllen said:

According to the Office of The United States Trade Representative imports from China totaled $478 billion dollars in 2016. So while the tariffs right now have been threatened to reach up to $250 billion there is still substantial room to grow.

Either way, I don't think the outcome of this trade war will be good for anyone involved.

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A huge portion of Chinese ‘exports’ to the US are by US companies shipping their outsourced products back to US customers.

The US would be hard pressed to avoid placing tarrifs on its own companies, that’s why the originally announced $50bn of goods that they wanted to target this round got whittled down to $34bn.

And it’s not just IS companies outsourcing producing to China. Plenty of European companies also do that, which further shrinks the available products that could be targeted without triggering EU retalition.

Trump evidently applied the kindergarten calculation that since the US imports more than China, he has more scope to expand tarrifs and thinks that’s winning without actually understanding anything about how modern international trade works.

And by targeting pretty much everyone else with tarrifs, he actually removes the incentive for companies to move production from their current Chinese bases, since moving to another country would involve massive costs, reduced effectiveness and efficiency, yet give zero guarantees that once up and running, those new factories won’t get hit with fresh US sanctions against the new county they are based in.

With the rest of the world applying retaliatory tarrifs on US products, there would be even less incentive for companies to re-shore to the US than presently.

America is the world’s biggest market, but the rest of the world combined is still far larger.

As i said before, Trump’s trade agenda makes zero sense, and all his moves are counterproductive for his stated goals.

So either he is a complete moron being advised by other complete morons, or his stated goal isn’t his actual goal.

Because his trade policies will only serve to isolate and diminish the US.

Maybe he is a Russian agent after all.

plawolf said:

A huge portion of Chinese ‘exports’ to the US are by US companies shipping their outsourced products back to US customers.

The US would be hard pressed to avoid placing tarrifs on its own companies, that’s why the originally announced $50bn of goods that they wanted to target this round got whittled down to $34bn.

And it’s not just IS companies outsourcing producing to China. Plenty of European companies also do that, which further shrinks the available products that could be targeted without triggering EU retalition.

Trump evidently applied the kindergarten calculation that since the US imports more than China, he has more scope to expand tarrifs and thinks that’s winning without actually understanding anything about how modern international trade works.

And by targeting pretty much everyone else with tarrifs, he actually removes the incentive for companies to move production from their current Chinese bases, since moving to another country would involve massive costs, reduced effectiveness and efficiency, yet give zero guarantees that once up and running, those new factories won’t get hit with fresh US sanctions against the new county they are based in.

With the rest of the world applying retaliatory tarrifs on US products, there would be even less incentive for companies to re-shore to the US than presently.

America is the world’s biggest market, but the rest of the world combined is still far larger.

As i said before, Trump’s trade agenda makes zero sense, and all his moves are counterproductive for his stated goals.

So either he is a complete moron being advised by other complete morons, or his stated goal isn’t his actual goal.

Because his trade policies will only serve to isolate and diminish the US.

Maybe he is a Russian agent after all.

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All very good points.

I think the reason is twofold. For one he is a complete moron advised by other complete morons, and for two those voting for him are complete morons too.

Neither Trump himself, nor the likes of Navarro, nor those who voted for Trump have any clue about how international trade operates. Congressional Republicans and Democrats MAY understand it, but they are unwilling to step up to Trump.

For Democrats, stepping up to Trump on this could be seen as betrayal of American interests by voters. If they remain silent and let Trump fuck up the US economy, they could then simply blame it on Trump afterwards, and claim huge wins for correcting Trump's mistakes.

For Republicans, they are even less willing to anger Trump voters who are in a large part Republican voters. Nobody wants to risk their political life to step up to Trump. So for them the smart thing is also to watch how this unfolds, and if Trump succeeds (in the sense that he gains more support), they benefit; and if Trump fails, they could always blame it on Trump and not let themselves hurt.

The real losers here are average Americans, American farmers, consumers, taxpayers. Your average Trump voter who voted this guy to power hoping that he could somehow magically solve their problems and bring back those jobs that are long gone. Those jobs are simply not going to come back, no matter how hard they or Trump tries. The problem doesn't lie with China, it lies with the US. If water flows down from a waterfall and you try to stop it by blocking one of its pathway, it will just find another pathway to flow down. As long as there are countries with a lower labour cost than the US, those manufacturing are simply not going to come back to the US.

The real solution is innovation. R&D, improve your product quality and design to maintain a competitive edge, develop new industries, provide government help to retrain your workers so that they possess other skills to move to other industries, build up a better social safety net so that those without a job can live on just fine. The US used to do these things, but now all they know is just tariffs, tariffs and even more tariffs. These are like pain-killers, they soothe the symptoms but do not cure the disease.

For the above reasons I think the US model of democracy is having some big problems. Politicians no longer tell citizens the truth, and come up good policy to address the real issue. Instead they tell what the voters want to hear regardless if that's factually and theoretically correct, and come up with stupid policy that hurts those they are intended to help.

When China faced massive debt problem and low productivity issue for its inefficient SOEs at the end of the 1990s, the central government simply let those SOEs dissolve and tens of millions of workers lost their jobs, high social status, well-paying jobs that come with lots of extra benefits. Yes many people suffered as a result but more managed to survive and found employment in a prospering private sector. Riddance of this problem propelled more than a decade of Chinese double digit growth with China's accession into the WTO. Yes the price is steep to pay, yes the decision is hard to make, yes make families suffered painfully -- but if not the whole country just might sink with them and everybody else suffers.

Good leadership means good decision making, good decision making means making the right decisions, though it can be painful sometimes.

Wouldn't China be able to skirt all these tarriffs by re-exporting through Hongkong ? Hongkong is a part of China but is seen as a seperate entity in trade. Unless the documents specifically mentions Hongkong. China can just re-export through Hongkong.

Franklin said:

Wouldn't China be able to skirt all these tarriffs by re-exporting through Hongkong ? Hongkong is a part of China but is seen as a seperate entity in trade. Unless the documents specifically mentions Hongkong. China can just re-export through Hongkong.

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That's actually one of the ways this could be done. I also wonder, and I believe China can, simply subsidize export industries affected by using the retaliatory tariffs collected. Sure, China exports to the US much more than it imports from the US, but China can simply raise domestic corporate taxes for American companies. There are far greater American investment in China than the other way round. Just collect that money somewhere, and place them back into those affected industries. The effect essentially will cancel out each other, simply making stuff more expensive for consumers. In that front, Americans will suffer more because they import more from China. Chinese don't consume that much American goods anyway so the impact on Chinese consumers would be far less than the impact on American consumers. Also bear in mind is that a lot of Chinese exports to the US are everyday goods that are going to have an impact on consumer prices, but much of American exports to China do not face the consumers directly. Say commercial aircraft, semiconductors, energy, soybeans are probably the only one that's going to have some real impact but for one it won't increase to such an extent that Chinese consumers can't afford, and China could simply plant more soybeans and buy more from other sources. When next year comes those demands should easily be filled with domestic produce or beans from say Brazil.

Franklin said:

Wouldn't China be able to skirt all these tarriffs by re-exporting through Hongkong ? Hongkong is a part of China but is seen as a seperate entity in trade. Unless the documents specifically mentions Hongkong. China can just re-export through Hongkong.

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Note going to work. A standard customs clearance legal document is a cert of origin, and there are very complex rules governing under what circumstances products could be classed as originating from a country.

Normally this requires as threshold in terms of value added/manufacturing process. Merely shipping via will not change the originating country on the cert of origin.

Equation said:

How come your ideas are always straight up insane? Yesterday, you said this would directly lead to all of America's trade partners abandoning it and forming a Sino-centric global trade order. Today, you think it's gonna result in the US pressing for WWIII or using Taiwan threats causing China to fold?? All that change in 1 day? LOL

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LOL The US doesn't dictate what countries the UN recognizes. Taiwan's never going to be independent because it's too close to Mainland for any other force to fight against the PRC for it (not that many want to). Lobbyists, other branches of government, big corporations will assassinate if not impeach Trump before he causes a cessation of trade with China or provokes WWIII for his own ego. It's one thing to try to shake things up on trade potentially causing gains, but likely causing losses (both in a reversible fashion) but it's a whole new dimension when you draw 330 million American lives into a potential nuclear conflict. You don't provoke war with large, nuclear countries; that's a rule that everyone follows and Trump will too if he doesn't want to meet Kennedy.

This is probably going to end with either talks remedying the situation or this being Trump's last term and talks with the next president to make everything normal again.

One possible positive endgame for the US, though, is that Trump is so unreasonable and nasty that he sets up the next incoming US president to make much easier deals by apologizing for Trump and going back on just half or 2/3rds of what Trump was asking for and everyone praises him for being a good guy and signs with him. This would be a net gain for the US in the long term (after the short term turbulence and loss with Trump) that might not have been doable without a rocky era. But, other countries, especially China, can also say, "We'll ease up the same percent by which you ease up." and lead to an evening out, so we'll see.

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Oh I am insane?
Remember I was talking about Trade War and all you guys are saying "it will never happen!"

Now that the trade war is actually here you guys are moving the goal post and still putting your head in the sand like an ostrich.

The fortune favors the prepared and I think you guys are are unprepared that's why you guys are just doing all the wishful thinking to console yourself.

Well when one of my "extreme" (read worst case scenerio) do come true what you guys gonna do? Still saying its not going to happen? LOL!