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FYI: The U.S. and China appear increasingly headed toward open trade conflict after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policies, lack of market access in China and a $375 billion U.S. trade deficit. Regards, Ted https://graphics.reuters.com/USA-TRADE-CHINA/0100703S08V/index.html
• the US sold ~130 B to China. • China sold ~500 B to the US.
Let's say that- • we apply a 10% tariff to the 500B: that's a tax of 50 B that US consumers will be paying. • China applies a 10% tariff to the 130B: that's a tax of 13 B on Chinese consumers.
Of course this example is totally simplistic, but it does seem to suggest that we may have a difficult time getting the better end of this deal. Never mind- keep the faith! I'm sure that with his firm grasp of historical trade and economic detail our dear leader will have no problems coming out on top. Trade wars are easy to win!
The willful inability to understand tariffs, how China is largely an assembler economy (with a lot of IP bad behavior), and how supply chains work internationally is crazy bad and will prove crazy destructive.
Maybe worth laying out incoherence of Trump's trade war a bit more coherently. There are three issues that seem to be flashpoints:
1. Chinese bad behavior on intellectual property 2. China's overall trade surplus 3. China's bilateral surplus with the US
Of these, (1) is a real issue -- but should be addressed by a coalition of advanced countries, except that Trump is stirring up trade war with our allies too. And Trump has offered no specifics on what China should do
Meanwhile, (2) is far less important [than] in, say, 2010: Chinese surplus smaller relative to GDP, and the U.S. is no longer at the zero lower bound with high unemployment, so demand drag from foreign surpluses less of an issue. Still, some case for shift in Chinese macro policy.
But (3) is just stupid: China would have large bilateral surplus even with balanced trade, because it's the Great Assembler of goods whose added value comes largely from other countries. Yet (3) seems to be what Trump mainly focuses on.
So what are the Chinese supposed to deliver? They don't even know what concessions might satisfy Trump, and have good reason to believe that nothing would do the trick -- after all, Canada is also in the crosshairs, and does nothing important wrong.
So the only policy that makes sense for China is retaliation -- make this as painful as possible for Trump, and hope that this pushes him into either backing down or at least making comprehensible demands. Not saying they're good guys; but Trump not offering any useful options.
Going to end badly, like all of his base-pandering, a lose-lose set of outcomes.
Meanwhile, some of them are 'behind him no matter what', they say:
• the US sold ~130 B to China. • China sold ~500 B to the US.
Let's say that- • we apply a 10% tariff to the 500B: that's a tax of 50 B that US consumers will be paying. • China applies a 10% tariff to the 130B: that's a tax of 13 B on Chinese consumers.
Of course this example is totally simplistic, but it does seem to suggest that we may have a difficult time getting the better end of this deal. Never mind- keep the faith! I'm sure that with his firm grasp of historical trade and economic detail our dear leader will have no problems coming out on top. Trade wars are easy to win!
I thought the "theory" was the US economy can "handle it", while the Chinese cannot. One thing I can say is Robert Lighthizer who worked for Reagan, Dole, Clinton and now Trump is no idiot. He is the Michael Jordan of Trade. He is the "bully" behind the pulpit. For any reason Trump is "successful" with his tariffs, the credit would and should go to Lighthizer.
@VintageFreak Regardless of prior assignments and theoretical successes , this does not preclude that he ( Robert Lighthizer) may have entered an early dementia stage (he is age 70). I'm trying to discover his speaking schedule to find when he with be speaking at the "American farmers soy bean convention" to wave the American flag.
Well, all "experience" can someday be discounted as "senile". Just wanted to point out the real "brain" behind the tariffs that's all. And it ain't Trump.
Hi @Old_Joe I'm sure I am no longer firing on all cylinders; but I have not yet become a vulgar person, as a result. I'm saddened for those in your state (and other states, too) with the lost of most of their worldly memories and other very personal items from the ongoing fires. Have a pleasant remainder. Catch
@LewisBraham, In spring I have upgraded several old computers. Now we are working on the cell phones. No doubt that the tariff will pass down to consumers in the coming months. So will inflation.
Not to worry about cellphones. Even with the added tariffs, ZTEs will still be cheap. I forget, is that ban on ZTE using US parts on again or off again?
For me, the big deal was buying a new car last year - assembled in Mexico with a German-manufactured transmission. Imagine the tariffs there.
I figure that by the time I'm looking for another car in 15-20 years, this will have all blown over. Either that, or I'll be firing up the coal-buring engine on that car, built in Detroit using Pittsburgh-manufactured steel. Of course the car will be equipped with an infrared windshield so that I (and the autopilot) will be able to see through the smog.
Let's say that- • we apply a 10% tariff to the 500B: that's a tax of 50 B that US consumers will be paying. • China applies a 10% tariff to the 130B: that's a tax of 13 B on Chinese consumers.
From WSJ, July 11: "China doesn’t import enough from the U.S. to match the Trump administration’s planned new tariffs on $200 billion in goods—so Beijing is reviewing plans to hit back in other ways, said Chinese officials familiar with the plans."
Comments
• the US sold ~130 B to China.
• China sold ~500 B to the US.
Let's say that-
• we apply a 10% tariff to the 500B: that's a tax of 50 B that US consumers will be paying.
• China applies a 10% tariff to the 130B: that's a tax of 13 B on Chinese consumers.
Of course this example is totally simplistic, but it does seem to suggest that we may have a difficult time getting the better end of this deal. Never mind- keep the faith! I'm sure that with his firm grasp of historical trade and economic detail our dear leader will have no problems coming out on top. Trade wars are easy to win!
https://www.nytimes.com/2018/07/05/business/china-us-trade-war-trump-tariffs.html
PK today:
Maybe worth laying out incoherence of Trump's trade war a bit more coherently. There are three issues that seem to be flashpoints:
1. Chinese bad behavior on intellectual property
2. China's overall trade surplus
3. China's bilateral surplus with the US
Of these, (1) is a real issue -- but should be addressed by a coalition of advanced countries, except that Trump is stirring up trade war with our allies too. And Trump has offered no specifics on what China should do
Meanwhile, (2) is far less important [than] in, say, 2010: Chinese surplus smaller relative to GDP, and the U.S. is no longer at the zero lower bound with high unemployment, so demand drag from foreign surpluses less of an issue. Still, some case for shift in Chinese macro policy.
But (3) is just stupid: China would have large bilateral surplus even with balanced trade, because it's the Great Assembler of goods whose added value comes largely from other countries. Yet (3) seems to be what Trump mainly focuses on.
So what are the Chinese supposed to deliver? They don't even know what concessions might satisfy Trump, and have good reason to believe that nothing would do the trick -- after all, Canada is also in the crosshairs, and does nothing important wrong.
So the only policy that makes sense for China is retaliation -- make this as painful as possible for Trump, and hope that this pushes him into either backing down or at least making comprehensible demands. Not saying they're good guys; but Trump not offering any useful options.
Going to end badly, like all of his base-pandering, a lose-lose set of outcomes.
Meanwhile, some of them are 'behind him no matter what', they say:
http://www.latimes.com/nation/la-na-missouri-town-tariff-20180705-story.html
Regardless of prior assignments and theoretical successes , this does not preclude that he ( Robert Lighthizer) may have entered an early dementia stage (he is age 70).
I'm trying to discover his speaking schedule to find when he with be speaking at the "American farmers soy bean convention" to wave the American flag.
@catch22- Let those of us who live in plastic houses be wary of casting stones, or anything else, for that matter.
I'm sure I am no longer firing on all cylinders; but I have not yet become a vulgar person, as a result.
I'm saddened for those in your state (and other states, too) with the lost of most of their worldly memories and other very personal items from the ongoing fires.
Have a pleasant remainder.
Catch
https://www.nytimes.com/2018/07/07/opinion/how-to-lose-a-trade-war.html
In spring I have upgraded several old computers. Now we are working on the cell phones. No doubt that the tariff will pass down to consumers in the coming months. So will inflation.
For me, the big deal was buying a new car last year - assembled in Mexico with a German-manufactured transmission. Imagine the tariffs there.
I figure that by the time I'm looking for another car in 15-20 years, this will have all blown over. Either that, or I'll be firing up the coal-buring engine on that car, built in Detroit using Pittsburgh-manufactured steel. Of course the car will be equipped with an infrared windshield so that I (and the autopilot) will be able to see through the smog.
From WSJ, July 11: "China doesn’t import enough from the U.S. to match the Trump administration’s planned new tariffs on $200 billion in goods—so Beijing is reviewing plans to hit back in other ways, said Chinese officials familiar with the plans."