3 ms·

John Mauldin made a much better analysis of this. If we charge a tariff on China, will it really improve our trade deficit so much that our goods will be from

John Mauldin made a much better analysis of this. If we charge a tariff on China, will it really improve our trade deficit so much that our goods will be from Vietnam, Indonesia or [other country here]? I suggest that anyone skeptical of this should go to their local mall and stop by a few clothing stores, like the Gap, Old Navy, AE, Banana Republic, etc. What you'll find is interesting. At the lower end shops (like the Gap and Old Navy), a lot of the merchandise is no longer made in China. But in higher end shops (like the Banana Republic), it still is. I thought this was fascinating for different reasons than my mother (who discovered it), because you can see quite clearly, right there in the mall, that the economics is working, and China isn't some magical demon that can somehow keep on producing the cheapest. It's already cheaper to produce in El Salvador and Vietnam than it is in China. Moreover, if you impose a tariff, then we'll just be buying crap from those other countries, which isn't going to help our trade deficit and our economy, and will likely start a trade war, which will in likelihood hurt our economy. Think about China pressuring everyone in their neighborhood to buy Airbus instead of Boeing.

cstross 17y ago
Think about China pressuring everyone in their neighborhood to buy Airbus instead of Boeing. Bad example: 51% of the sub-assemblies in the Airbus 380 super-jumbo are made in the USA. Meanwhile, around 51% of the sub-assemblies in the Boeing 787 are made ... guess where? (The Boeing/Airbus cross-subsidy cat-fight in front of the WTO has been going on for about two decades now, and both sides are (a) firmly entrenched and (b) have been working for years on "poison pill" policies to deter both the USA and the EU from slapping an embargo on the rival manufacturer.) One of the side-effects of the current free trade regime (and, importantly, our vastly improved global communication infrastructure) is that it becomes much harder for countries to haul up the trade barriers because complex fabrications come from non-obvious places. (Another random example: the best-selling Japanese SUV in the UK, the Nissan Qashqai, was designed in, and is largely manufactured in ... England.)

cstross 17y ago

Think about China pressuring everyone in their neighborhood to buy Airbus instead of Boeing. Bad example: 51% of the sub-assemblies in the Airbus 380 super-jumbo are made in the USA. Meanwhile, around 51% of the sub-assemblies in the Boeing 787 are made ... guess where? (The Boeing/Airbus cross-subsidy cat-fight in front of the WTO has been going on for about two decades now, and both sides are (a) firmly entrenched and (b) have been working for years on "poison pill" policies to deter both the USA and the EU from slapping an embargo on the rival manufacturer.) One of the side-effects of the current free trade regime (and, importantly, our vastly improved global communication infrastructure) is that it becomes much harder for countries to haul up the trade barriers because complex fabrications come from non-obvious places. (Another random example: the best-selling Japanese SUV in the UK, the Nissan Qashqai, was designed in, and is largely manufactured in ... England.)