7 ms·

Tariffs China imposes on every country

117 points by Four_Star 8y ago

vxNsr 8y ago
I was hearing this as an argument for tariffs right after Trump started talking about it, but I didn't actually understand it until I saw this. It's a war of attrition, and we're both gonna lose but china has a lot more to lose than we do atm.
ForHackernews 8y ago
Fighting for better trade terms with China arguably makes good sense for the USA. On the other hand, picking trade fights with close allies & major partners like Canada and the EU is absurd.
- deleted 8y ago
  [deleted]
- ryanx435 8y ago
  Trump's not "picking fights", he's getting multiple bids. The American economy is open for business to those willing to give a better deal. It is literally the same concept as attempting to get as many offers when you sell a house so you can sell to the highest bidder.
  - ForHackernews 8y ago
    That doesn't make any sense. The US economy is not a single good that can only be sold once to a particular buyer.
    - agon 8y ago
      I hear Putin wants to buy.
- TulliusCicero 8y ago
  Yeah, I hate Trump, but it does seem true that the US' trade relationship with China is rather unfair with respect to tariffs, IP protection, and investment/subsidiary requirements.
- shortoncash 8y ago
  It's not absurd if it gets us better terms. If my friend was selling me a car at a higher, off-market price, I'd still haggle ("pick fights" in your terms) with him. In fact, I'd push for a friend discount. He might even give the discount to me if he thought there was more value to be had in the long term relationship.
  - mikeash 8y ago
    Would you push so hard that you destroy the friendship? There’s nothing wrong with negotiating with friends, but when you go out of your way to constantly piss them off and threaten them, you’re not going to have any friends for long.
    - shortoncash 8y ago
      Negotiating for more favorable terms is destroying friendships now? Come on now. Obviously there's a boundary, but if there's a known market price, it's obvious when someone is being unreasonable.
      - mikeash 8y ago
        “Negotiating for more favorable terms is destroying friendships now?” No. I didn’t say that. Nobody said that. What?
        shortoncash 8y ago
        You didn't say it, but the question you asked implies a stable friendship can be destroyed by "hard" negotiations. I disagree with that premise. Why? Well, I'd argue that if you're seeking "fair value" and are 1) not unreasonable, 2) your friend is not unreasonable, and 3) there is more or less a market price or consensus about the value of an object, there is little no risk of destroying the friendship -- reasonable people can seek fair value and market transactions can support claims about value. If 1, 2, or 3 aren't in place then your friendship is on shaky ground already (someone is unreasonable) or the market for an object is just hard to price (and more information is required for reasonable people to come to a consensus.)
anilshanbhag 8y ago
One important thing people miss is that majority of US exports are commodities. Take soybeans for example. Global soybean market has supply and demand balanced. US exports largely to China and Brazil to Europe. Now, due to tariffs China has started buying from Brazil leading to spike in Brazilian soybean and fall of US soybean price. Supply gets re-routed and market comes back to normal. China on the other hand exports finished goods which can't be re-routed. The larger players in the market know this - the Shanghai index is at a 3 year low which the Dow is at an all time high.
- yread 8y ago
  > majority of US exports are commodities [citation needed] according to this (based on CIA factbook 2017) commodities as <15% http://www.worldstopexports.com/united-states-top-10-exports/ http://www.worldstopexports.com/united-states-top-10-exports...
- ameister14 8y ago
  The Shanghai Composite Stock Index or Containerized Freight Index?
- Nokinside 8y ago
  This is totally incorrect. (unless your measure stick is tonnage and not the value)
Engineering-MD 8y ago
These articles on Chinese trade and barriers often mention forced technology transfer and IP theft. Can someone more knowledgeable than me explain the reality of this? It seems that it is such a large imposition I’m surprised anyone does business in China when you know 10-15 years later they will have copied your business.
- jacknews 8y ago
  I think you only need to look at products available in the market to realize that this is indeed a thing.
- aurelienb 8y ago
  Because on short term it opens you a big market (1+B users/customers). Because if you don't go there, one of your competitors may go there. Because some people still think that they will only lost low tech/low IP.
- zip1234 8y ago
  It's taken awhile for companies to catch on. The saga of how the Chinese stole the SU-27 plans from Russia (Licensed the fighter and planned to use Russian components and then switched to Chinese made components after a couple years) is among the ways they do it. https://en.wikipedia.org/wiki/Shenyang_J-11 https://en.wikipedia.org/wiki/Shenyang_J-11 The Russians were desperate for cash at the time and the Chinese were willing to pay. What the Russians didn't count on was the willingness to straight up steal the design and start manufacturing it in China. Companies have gotten a lot better about protecting their designs now but are up against the Chinese government.
- phil21 8y ago
  > I’m surprised anyone does business in China when you know 10-15 years later they will have copied your business. The Chinese market is huge - many executive types seemingly fall victim to hubris quite often - and this is no exception. That's the most charitable explanation possible. The less charitable and more realistic way this happened in my opinion? No executive cares about 10-15 years from now. At most they are looking a couple years down the road for bonuses.
jacknews 8y ago
I'm not at all a fan of tariffs, but another issue, in the consumer space anyway, is shipping costs - It can be cheaper to ship stuff from china than from the next state. The whole issue of 'fair trade' is rather complex, as all actors attempt to skew the playing field to their benefit, as invisibly as possible. China appears to be quite good at the game.
- akx 8y ago
  This is in part because the Universal Postal Union considers China a developing country. https://www.wsj.com/articles/this-subsidy-for-china-is-dumb-as-a-post-1517963275 https://www.wsj.com/articles/this-subsidy-for-china-is-dumb-...
ahmedalsudani 8y ago
Of course China is playing unfairly. Not many people disagree. The argument has been that the West should fight China as a unified bloc as opposed to the unilateral tariffs being imposed. It makes no sense to alienate Canada, the EU, Japan, and South Korea when confronting China. All of those countries (and the EU) have serious grievances and would have provided the US additional leverage. The current approach is rooted in showmanship rather than strategy. It’s meant to provide a spectacle.
- 67_45 8y ago
  If the other Western countries have grievences, then their trade policy will reflect those grievances even if there is no 'bloc?' and the result of all those countries implementing their policy will be similar to if they had done it as a group. right? And the article points out that the us is singled out by China's tarrifs, so the rest of the bloc would not act in the interest of the US. You also mention SK and Japan but those countries have even higher tarrifs than China for the US, so should they not also be made subject to the global market (ie be engaged in 'trade wars') ? If their trade policy can't survive the free market, why should they not change?
- dxhdr 8y ago
  https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_China https://en.wikipedia.org/wiki/List_of_the_largest_trading_pa... Looks like the US is the largest trading partner with China, how much leverage do you need? How long would it take a "unified bloc" to agree on doing anything?
  - at-fates-hands 8y ago
    >> How long would it take a "unified bloc" to agree on doing anything? This is why most of the time the US does things unilaterally. Whether its militarily, economically or otherwise. We ask other countries if they want to stop China from laying huge tariffs on their products and they say, "Yes, for sure!" Then we say, "Okay, let's all impose tariffs on their imports and fight back!" and suddenly all those countries who were on board to do something suddenly get cold feet and don't want to get sucked into a trade war or deal with the short term consequences of standing up to them. Also, these trade wars with China have been off and on since the 1970's if not earlier.
67_45 8y ago
Wow, how refreshing. An objective relation on the trade tensions between the US and China. I am very disappointed by NPRs marketplace -- their correspondence is essentially like listening to teenage gossip reveling in using the term 'trade war' instead of treating the topic with the respect that it deserves.
leemailll 8y ago
this one offers no real data behind the so-called weighted tariff. US and China clearly import different products from each other, different categories of product might have different tariff on each side. Also when China joined WTO they may be agreed to impose some kind of "extra" tariff because it is viewed as developing country
Nokinside 8y ago
I'm not a trade expert, but I can spot one clear omission missing from the trade deficit discussion: the value-added. Chinese exports to the US have significantly lower value-added than the US exports to China. US exports have high value added, over 80% for exports to China. Chinese exports to US have much lower value added, something like 30-40%. Role of third countries in bilateral trading relationships is important. Extreme case is Chinese made iPhone that leaves very little value-added to China, they just join expensive parts from Taiwan, Japan, South Korea and US together with robots or cheap labor. China exports more to the US, but less of the value stays in China. If you calculate the trade balance using value added trade US-China trade deficit is $200 billion for combined goods and services. >0.7 percent of U.S. GDP depends on Chinese consumption of American-made goods and services, while 3.1 percent of China’s GDP is derived from U.S. demand. So, in any tariff battle, China would likely suffer more. https://www.bloomberg.com/view/articles/2018-07-19/china-s-economy-is-different-no-recessions-in-a-quarter-century https://www.bloomberg.com/view/articles/2018-07-19/china-s-e... Both countries get hurt, but both countries will survive trade war agaisnt each other. But US is not in trade war path only with China. They go against EU, Canada, Mexico and others. Every front trade war would be worse but survivable. The real question is why. Everyone survives trade war but everybody also loses. > And simple trade models, while they do say that trade wars are bad, don’t say that they’re catastrophic. >To do this right, we should use one of those computable general equilibrium models I mentioned above. These suggest substantial but not huge losses – 2 or 3 percent of GDP. https://www.nytimes.com/2018/06/17/opinion/thinking-about-a-trade-war-very-wonkish.html https://www.nytimes.com/2018/06/17/opinion/thinking-about-a-...
oceanswave 8y ago
I’d be interested to see a graph that indicates the actual amounts, in USD, that each country imports and exports relative to one another.

117 points by Four_Star 8y ago

I was hearing this as an argument for tariffs right after Trump started talking about it, but I didn't actually understand it until I saw this. It's a war of attrition, and we're both gonna lose but china has a lot more to lose than we do atm.

ForHackernews 8y ago

Fighting for better trade terms with China arguably makes good sense for the USA. On the other hand, picking trade fights with close allies & major partners like Canada and the EU is absurd.

deleted 8y ago
[deleted]
ryanx435 8y ago
Trump's not "picking fights", he's getting multiple bids. The American economy is open for business to those willing to give a better deal. It is literally the same concept as attempting to get as many offers when you sell a house so you can sell to the highest bidder.
- ForHackernews 8y ago
  That doesn't make any sense. The US economy is not a single good that can only be sold once to a particular buyer.
  - agon 8y ago
    I hear Putin wants to buy.
TulliusCicero 8y ago
Yeah, I hate Trump, but it does seem true that the US' trade relationship with China is rather unfair with respect to tariffs, IP protection, and investment/subsidiary requirements.
shortoncash 8y ago
It's not absurd if it gets us better terms. If my friend was selling me a car at a higher, off-market price, I'd still haggle ("pick fights" in your terms) with him. In fact, I'd push for a friend discount. He might even give the discount to me if he thought there was more value to be had in the long term relationship.
- mikeash 8y ago
  Would you push so hard that you destroy the friendship? There’s nothing wrong with negotiating with friends, but when you go out of your way to constantly piss them off and threaten them, you’re not going to have any friends for long.
  - shortoncash 8y ago
    Negotiating for more favorable terms is destroying friendships now? Come on now. Obviously there's a boundary, but if there's a known market price, it's obvious when someone is being unreasonable.
    - mikeash 8y ago
      “Negotiating for more favorable terms is destroying friendships now?” No. I didn’t say that. Nobody said that. What?
      - shortoncash 8y ago
        You didn't say it, but the question you asked implies a stable friendship can be destroyed by "hard" negotiations. I disagree with that premise. Why? Well, I'd argue that if you're seeking "fair value" and are 1) not unreasonable, 2) your friend is not unreasonable, and 3) there is more or less a market price or consensus about the value of an object, there is little no risk of destroying the friendship -- reasonable people can seek fair value and market transactions can support claims about value. If 1, 2, or 3 aren't in place then your friendship is on shaky ground already (someone is unreasonable) or the market for an object is just hard to price (and more information is required for reasonable people to come to a consensus.)

anilshanbhag 8y ago

One important thing people miss is that majority of US exports are commodities. Take soybeans for example. Global soybean market has supply and demand balanced. US exports largely to China and Brazil to Europe. Now, due to tariffs China has started buying from Brazil leading to spike in Brazilian soybean and fall of US soybean price. Supply gets re-routed and market comes back to normal. China on the other hand exports finished goods which can't be re-routed. The larger players in the market know this - the Shanghai index is at a 3 year low which the Dow is at an all time high.

yread 8y ago
> majority of US exports are commodities [citation needed] according to this (based on CIA factbook 2017) commodities as <15% http://www.worldstopexports.com/united-states-top-10-exports/ http://www.worldstopexports.com/united-states-top-10-exports...
ameister14 8y ago
The Shanghai Composite Stock Index or Containerized Freight Index?
Nokinside 8y ago
This is totally incorrect. (unless your measure stick is tonnage and not the value)

Engineering-MD 8y ago

These articles on Chinese trade and barriers often mention forced technology transfer and IP theft. Can someone more knowledgeable than me explain the reality of this? It seems that it is such a large imposition I’m surprised anyone does business in China when you know 10-15 years later they will have copied your business.

jacknews 8y ago
I think you only need to look at products available in the market to realize that this is indeed a thing.
aurelienb 8y ago
Because on short term it opens you a big market (1+B users/customers). Because if you don't go there, one of your competitors may go there. Because some people still think that they will only lost low tech/low IP.
zip1234 8y ago
It's taken awhile for companies to catch on. The saga of how the Chinese stole the SU-27 plans from Russia (Licensed the fighter and planned to use Russian components and then switched to Chinese made components after a couple years) is among the ways they do it. https://en.wikipedia.org/wiki/Shenyang_J-11 https://en.wikipedia.org/wiki/Shenyang_J-11 The Russians were desperate for cash at the time and the Chinese were willing to pay. What the Russians didn't count on was the willingness to straight up steal the design and start manufacturing it in China. Companies have gotten a lot better about protecting their designs now but are up against the Chinese government.
phil21 8y ago
> I’m surprised anyone does business in China when you know 10-15 years later they will have copied your business. The Chinese market is huge - many executive types seemingly fall victim to hubris quite often - and this is no exception. That's the most charitable explanation possible. The less charitable and more realistic way this happened in my opinion? No executive cares about 10-15 years from now. At most they are looking a couple years down the road for bonuses.

jacknews 8y ago

I'm not at all a fan of tariffs, but another issue, in the consumer space anyway, is shipping costs - It can be cheaper to ship stuff from china than from the next state. The whole issue of 'fair trade' is rather complex, as all actors attempt to skew the playing field to their benefit, as invisibly as possible. China appears to be quite good at the game.

akx 8y ago
This is in part because the Universal Postal Union considers China a developing country. https://www.wsj.com/articles/this-subsidy-for-china-is-dumb-as-a-post-1517963275 https://www.wsj.com/articles/this-subsidy-for-china-is-dumb-...

ahmedalsudani 8y ago

Of course China is playing unfairly. Not many people disagree. The argument has been that the West should fight China as a unified bloc as opposed to the unilateral tariffs being imposed. It makes no sense to alienate Canada, the EU, Japan, and South Korea when confronting China. All of those countries (and the EU) have serious grievances and would have provided the US additional leverage. The current approach is rooted in showmanship rather than strategy. It’s meant to provide a spectacle.

67_45 8y ago
If the other Western countries have grievences, then their trade policy will reflect those grievances even if there is no 'bloc?' and the result of all those countries implementing their policy will be similar to if they had done it as a group. right? And the article points out that the us is singled out by China's tarrifs, so the rest of the bloc would not act in the interest of the US. You also mention SK and Japan but those countries have even higher tarrifs than China for the US, so should they not also be made subject to the global market (ie be engaged in 'trade wars') ? If their trade policy can't survive the free market, why should they not change?
dxhdr 8y ago
https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_China https://en.wikipedia.org/wiki/List_of_the_largest_trading_pa... Looks like the US is the largest trading partner with China, how much leverage do you need? How long would it take a "unified bloc" to agree on doing anything?
- at-fates-hands 8y ago
  >> How long would it take a "unified bloc" to agree on doing anything? This is why most of the time the US does things unilaterally. Whether its militarily, economically or otherwise. We ask other countries if they want to stop China from laying huge tariffs on their products and they say, "Yes, for sure!" Then we say, "Okay, let's all impose tariffs on their imports and fight back!" and suddenly all those countries who were on board to do something suddenly get cold feet and don't want to get sucked into a trade war or deal with the short term consequences of standing up to them. Also, these trade wars with China have been off and on since the 1970's if not earlier.

67_45 8y ago

Wow, how refreshing. An objective relation on the trade tensions between the US and China. I am very disappointed by NPRs marketplace -- their correspondence is essentially like listening to teenage gossip reveling in using the term 'trade war' instead of treating the topic with the respect that it deserves.

leemailll 8y ago

this one offers no real data behind the so-called weighted tariff. US and China clearly import different products from each other, different categories of product might have different tariff on each side. Also when China joined WTO they may be agreed to impose some kind of "extra" tariff because it is viewed as developing country

Nokinside 8y ago

I'm not a trade expert, but I can spot one clear omission missing from the trade deficit discussion: the value-added. Chinese exports to the US have significantly lower value-added than the US exports to China. US exports have high value added, over 80% for exports to China. Chinese exports to US have much lower value added, something like 30-40%. Role of third countries in bilateral trading relationships is important. Extreme case is Chinese made iPhone that leaves very little value-added to China, they just join expensive parts from Taiwan, Japan, South Korea and US together with robots or cheap labor. China exports more to the US, but less of the value stays in China. If you calculate the trade balance using value added trade US-China trade deficit is $200 billion for combined goods and services. >0.7 percent of U.S. GDP depends on Chinese consumption of American-made goods and services, while 3.1 percent of China’s GDP is derived from U.S. demand. So, in any tariff battle, China would likely suffer more. https://www.bloomberg.com/view/articles/2018-07-19/china-s-economy-is-different-no-recessions-in-a-quarter-century https://www.bloomberg.com/view/articles/2018-07-19/china-s-e... Both countries get hurt, but both countries will survive trade war agaisnt each other. But US is not in trade war path only with China. They go against EU, Canada, Mexico and others. Every front trade war would be worse but survivable. The real question is why. Everyone survives trade war but everybody also loses. > And simple trade models, while they do say that trade wars are bad, don’t say that they’re catastrophic. >To do this right, we should use one of those computable general equilibrium models I mentioned above. These suggest substantial but not huge losses – 2 or 3 percent of GDP. https://www.nytimes.com/2018/06/17/opinion/thinking-about-a-trade-war-very-wonkish.html https://www.nytimes.com/2018/06/17/opinion/thinking-about-a-...

oceanswave 8y ago

I’d be interested to see a graph that indicates the actual amounts, in USD, that each country imports and exports relative to one another.