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China Once Looked Tough on Trade. Now Its Options Are Dwindling

200 points by enitihas 8y ago

euroclydon 8y ago
Are tariffs just straight up revenue for the US government, like income taxes?
- ghrifter 8y ago
  lol
- xyzzyz 8y ago
  Yes, but it is relatively small amount of revenue. Even with the new 10% tariffs on extra $200B, China tariffs in total will be less than 3% of federal government revenue.
  - debacle 8y ago
    3% of federal government revenue for tariffs on a single country seems substantial, but I get your point.
  - propman 8y ago
    They will apparently collect $7.5B from steel tarrifs from everyone by the end of the year. That 10% is going up to 25% in January and China has no real counter to that since they’ve already tarriffed all our exports including some which really harm them. And trump has threatened another 267B. 3% is a substantial amount but I doubt it’ll be close to that much. Supply chains will move to avoid tarrifs, parts will be shipped to Brazil or Mexico and then into the US. Or from China to Vietnam etc. I highly doubt it’ll get to 3% but if it does and the economic impacts of that thus far are fairly minimal, that would be significant. Makes up for the entire tax cut deficit and more when accounted for dynamic scoring but again it’s still monumentally dumb to count on tariffs for revenue which Trump has been stupidly bragging about. I do completely support Trump’s trade war thus far however with the end goal of fair and reciprocal trade and limiting China militarily through the economy.
- jandrewrogers 8y ago
  Yes. There was no income tax for the majority of US history, and tariffs were a major source of revenue for the government back then.
  - sgslo 8y ago
    I didn't know this was the case, thank you for sharing. For anyone else reading, it appears federal income tax was first implemented in 1913, more reading here: https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
    - pdwetz 8y ago
      Not quite; from same link, "President Abraham Lincoln and the United States Congress introduced in 1861 the first personal income tax in the United States." It was declared unconstitutional in 1895 by the Supreme Court, prompting the constitutional amendment.
    - wahern 8y ago
      Tariffs were a source of bitter controversy between Northern and Southern states from the very beginning. It wasn't until the 1840s or 1850s that controversy over slavery became the dominate dynamic. Northern manufacturers wanted high tariffs on manufactured goods and low tariffs on agricultural products. Southern farmers wanted high tariffs on agricultural products and low tariffs on manufactured goods--to placate Europeans so they'd buy Southern agricultural products, and to check the economic power of the North. And of course the Federal government relied on tariffs for income--the Articles of Confederation being considered a failure largely because the Federal government had no independent source of income--and as a foreign policy tool. Everybody was at odds. (Note that it was also common back then to impose export tariffs, which added considerable complexity to the debate. Today export tariffs are largely unheard of in the U.S. but perhaps ripe for rediscovery. Though we recently loosened restraints on the export of crude oil and natural gas, so it probably won't happen any time soon.)
- deleted 8y ago
  [deleted]
- joshdick 8y ago
  Yep, that's right.
- riphay 8y ago
  Yes, but they are paid by the importer and (usually) passed on to the consumer. In effect they become a subsidy for local industry paid by consumers.
  - adventured 8y ago
    It's equivalent to the US implementing a VAT, except superior as it directly encourages replacement domestic manufacturing rather than merely acting as a tax on goods (as in the case of steel and aluminum, which are seeing US steel companies boom again with vast profit growth). It doesn't merely redistribute wealth from one company to another. It reclaims critical domestic industrial investment and blue collar jobs as well. Nucor's profit for all of 2016 was $796m, and $679m for 2014 (2015 was a bad year). For just the second quarter it was $683m and they've yet to see the full benefit of the tariffs. Alcoa, which has been a disaster the last several years, produced a billion dollars in operating income in the first two quarters, equal to a full year's operating income previously. US Steel which has been bleeding to death for years, looks capable of producing a billion dollars in annual profit again in the near future ($214m in profit in the second quarter on a large bump in sales). Yes, we'll pay slightly higher steel & aluminum prices than we would have otherwise if we were getting artificially low dumping-level prices set by the Chinese impact on the global markets. It's worth it to regenerate major US industry back to health and the blue collar jobs that go with that. We can afford the slightly higher prices, we can't afford a hollowed-out industrial base.
    - kasey_junk 8y ago
      It’s not at all like a VAT as it doesn’t impact everyone equally. It’s redistributing wealth to specific market participants from others. In this case almost all profits that come to the domestic producers of steel come from the domestic consumers (and those impacted by tit for tat tariffs). There might be very good reasons to prefer some industries to others but as a revenue source tariffs are not at all like a neutral VAT.
  - toephu2 8y ago
    and the government collects that money? what do they do with it?
cthalupa 8y ago
>Proponents of the plan say letting Washington impose more tariffs than Beijing would actually hurt the United States more because tariffs are ultimately paid by consumers and businesses in the countries that levy them. Well, this is actually the fundamental problem, isn't it? There's no way actual trade evens out, so tariffs are the only real outcome here. Even if we "win", it's not actually winning.
- Invictus0 8y ago
  The "winning" scenario for the United States is that China agrees to change its IP policies. IP is America's most valuable product, and the Chinese have been stealing it with 0 consequences for decades. A win on this front would see an end (or at least decrease) in cyberattacks and more US friendly IP laws.
  - kevin_b_er 8y ago
    And the "losing" scenario is a WTO ruling like Antigua and Barbuda where China is directly permitted to ignore US copyrights and patents from trade disputes.
    - lovich 8y ago
      Aren't they doing that anyway? It was my understanding that most companies didn't send their latest generation products to be built in China due to them bring consistently stolen and china not backing up the IP protections
  - h8liu 8y ago
    Like which IP policy? Any specific policy document that you can point out? China has been having IP laws and protection since around 1980, and China government never said once that stealing IP is okay. It is IP law execution and enforcement in China that is sub-par. Policing is sometimes hard. Also, I believe the US really wants to treat IP as an "asset" rather than a "product".
    - 8y ago
apo 8y ago
Some hard-liners want a more aggressive stance. Lou Jiwei, who retired as finance minister in 2016 but is still the head of the country’s social security fund, suggested on Sunday that China could deliberately disrupt American companies’ supply chains by halting the export of crucial components mostly made in China. But Chinese trade experts dismiss that idea as impractical and not the government’s position. If anything would play into the administration's hands, it would be that move. By taking themselves offline, the Chinese would be ceding market share to upstart competitors and encouraging further reshoring of mission-critical supply chain components.
- adventured 8y ago
  It would no doubt be disruptive, temporarily. And it would also prompt a multi hundred billion dollar redirection of investment into moving those supply lines to other countries. Vietnam would love to get some more of China's tech manufacturing action, as would a dozen other developing countries. Others would welcome gains to be had in apparel or autos by moves like that by China. One of the biggest problems China has in this trade war: they're entirely replaceable. They offer nothing strictly unique that can't be replaced by another country, even though there may be a serious cost involved. The mistake of not being a large technology originator.
  - justicezyx 8y ago
    > One of the biggest problems China has in this trade war: they're entirely replaceable. They offer nothing strictly unique that can't be replaced by another country, even though there may be a serious cost involved. I cannot see evidences that China is particularly more so than any other country.
    - Retric 8y ago
      Saudi Oil is a commodity, but many country’s don’t have oil. Every country has low skilled workers.
      - 8y ago
enitihas 8y ago
I initially used to think China might have more leverage against any potential trade war agains the US, as: 1. The Chinese had option of imposing high tariffs on politically significant US agricultural products, like soyabean, which are not very large in $ value, but affect a lot of areas. 2. Since some swing states are highly influential in US elections, the Chinese always had the option of imposing tariffs which impact the swing states mostly. Both of these thoughts arose from the fact that as a democratic country, the US would have to take into account both short and long term trade prospects. Now reading this article, it seems being a predominantly export driven economy and having a huge trade surplus with the US, the Chinese don't really have that much leverage.
- raws 8y ago
  Yeah their leverage ends up being limited but even if they had focused their tariffs on soy beans, it would have hurt them more than not given the Importance of the us in their imports.
- MarkMc 8y ago
  Trump has countered the soybean attack by handing out subsidies to soybean farmers.
  - duxup 8y ago
    For now, I belive the subsidies are only going to last a while. Granted considering the current administration's lack of care for deficit spending.... they probabbly would just dial up more subsidies after a while.
  - cuboidGoat 8y ago
    Meantime, other soybean manufacturers will dial up production, so when the tariffs are dropped by China, the US soybean manufacturers will be selling to an oversupplied market, dropping the price. And given the US subsidies will almost certainly go when the Chinese tariffs do, the risk to the US soybean industry has only been postponed, rather than countered.
raws 8y ago
That was a great piece, very insightful and enlightening!
sct202 8y ago
China still hasn't pulled out the boycott card like they have recently done to both Korean and Japanese companies for perceived slights. A lot of F500 companies are reliant on China's consumer market to meet their quarterly goals, and would be vulnerable.
- adventured 8y ago
  That's because China would be largely punching itself in the face at the same time. One of the unexpected benefits of China having forced everyone to partner up with local companies. They'd be considerably harming their own companies and economy in the process. When your country owns the majority of the popular Shanghai Disney park, do you call a boycott on it (via boycotting all things Disney)? When your country owns the majority of all value derived from local McDonald's franchises, do you call a boycott on that American brand? When your companies have partnership deals on manufacturing with GM, such that most Chinese-purchased GM vehicles are made domestically in China, do you call a boycott on those cars? And so on. China feels a lot more free to play the boycott card in dealing with Japan and South Korea because there's a vast difference in the scale of the benefit in question. China only has a small trade surplus with Japan, of about ~$20b. But China is a very large export market for Japan, equal to 2.5% of Japan's economy in scale, so they can hammer Japan there (by contrast China's imports from the US are merely equivalent to 0.5% of the US economy). With the US, China has a $400b trade surplus that is at risk, the damage is overwhelmingly tilted at themselves in any boycott.
  - seanmcdirmid 8y ago
    That didn't stop protestors from smashing up Japanese branded cars, which were all built in 51-49 JVs.
pastor_elm 8y ago
Donald Trump was right about one crucial thing. The leaders of most other nations just don't have any backbone.
- phailhaus 8y ago
  Doesn't quite make sense, given that China has not shown any indication of backing down.
- tabtab 8y ago
  Don't forget, "an eye-for-an-eye leaves everybody blind". The Dale Carnegie approach to dispute resolution usually works better than the Yosemite Sam approach by my observation. I'm reluctant to bet on Sam. Hopefully this is a new and improved Sam.
- debacle 8y ago
  I don't know if this is necessarily fair. The US is almost alone globally in having such a strong economy (right now), and many/most resource and manufacturing based economies are struggling. The biggest problem with modern representative democracies is that they tend to be myopic.
tabtab 8y ago
It's a game of chicken. T is okay with the unpredictability of that game, for he thrives on, well, let's say "activity". China's gov't is, on the other hand, more conservative and cautious by nature. They must feel really rattled. (I'm not picking a winner yet.)
- piyh 8y ago
  In game theory chicken the unpredictable one wins more often, as long as they don't self destruct.
  - tabtab 8y ago
    Then T definitely has the edge, and doesn't seem to worry about the "self destruct" path in the probability tree.
lgleason 8y ago
As much as some people here may hate Trump, the fact is that he was right when we said that it is difficult for us to lose a trade war with China since we import more from them than we export. Is there going to be some short term pain? Absolutely! But, long term it is likely to create more jobs in the US. As an extra bonus, there won't be as much of a carbon footprint for shipping things half way around the world and we might begin to focus on quality instead of quantity which what we consume if the labor is now a larger part of the price...
- SubiculumCode 8y ago
  His trade war with China (and only China) is one of the few administration's positions I whole wholeheartedly support (as a economics dilettante, no expert).
  - debacle 8y ago
    Our "trade war" with Canada is a proxy trade war with China. Our "trade war" with Europe is, to a much more limited degree, a proxy trade war with China. A big part of the rationale with all of these little trade wars is to make China stand alone on the global stage, so that they are more easily negotiated with. A secondary effect is to eliminate "Made in $country" goods that are 90% manufactured in China and finished in e.g. Italy or Canada.
    - pergadad 8y ago
      That doesn't make much sense at all. Ruining goodwill and relationships (and of course trade) with YOUR MOST IMPORTANT ALLIES is certainly not just proxy economic warfare. The EU economy as a whole is bigger than either China or the US. Don't try to find a logic when there clearly is none. Trade war with EU and Canada might be the most unhelpful thing Trump has done.
      - debacle 8y ago
        You're providing an emotional response to a logical appeal.
Simulacra 8y ago
I think a heavy hand with China is absolutely needed. Trade and manufacturing from cheap, and some say abusive, labor practices have done nothing to improve human rights for China, but it's done wonders to prop up the current regime. It seems the only thing China will respond to is losing money. Who would've thought communists would've made such great capitalists.
- methodover 8y ago
  > Trade and manufacturing from cheap, and some say abusive, labor practices have done nothing to improve human rights for China Your comments were narrow — you only cited “human rights”, which yes, China is abysmal. But what about quality of life in general? My understanding is that QOL has gone up dramatically in China.
gonvaled 8y ago
Extremely one sided comments, with a US centric view. The world is not the US, and HN readers are not only US citizens, so let me express a different point of view. Assumption: Trump wants fair trade. HN readers want fair trade. What is needed: fair trading rules, fair IP rules, fair capital structures, and a fair currency. Tackling some of the unfair trade practices does not address all those issues. In particular it does not address the services trade imbalances, the favouring of US IP holders (as incumbents and head starters), and the massive advantage that the dollar gives to the US economy. And we have not yet started talking about the weaponizing of the dollar, which can be recently seen in the conflict with Iran. All this to say that the US demands are not fair. You can obviously pursue your interests, but you will not sell it as being a "fair" policy. The Chinese, the Europeans, all countries have equally fair, if not fairer, demands, which must be respected. The core of the problem is obviously that the initial assumption is false: Trump and HN do not want fairer trade, but trade one-sidedly beneffiting the US. We will fight this policies, if needed at the personal level, by selectively consuming products according to country of manufacture.
- fastball 8y ago
  So where are you from?
  - gonvaled 8y ago
    Not from the US.
- pergadad 8y ago
  There are some real grievances where China is not playing fair - forced partnerships, cheap loans for state-backed companies, etc. Lots of empty promises each year with no change to the rules and approaches. So while I think trump is insane and his policies are mostly harmful to both his country and the remainder of the world, pointing out the false pretences and pretend-market-economy of China is definitely not the worst thing he has done. It will certainly cause harm, but if it gets China to actually stick to its commitments everyone might be better off long term. That might be a long shot though, as Trump is crazy and the Chinese leader currently transforming himself into a dictator. For both of them the main way to stay in power is to pretend they are the only ones that will guarantee their country's standing and respect in the world (even as in realpolitik terms they do the opposite) - fueling nationalism and us vs them thinking. I wouldn't say the US is strictly playing fair in the economic game either though, even before trump US economic power was a major weapon. The only ones that really seem committed to fait trade are the EU and maybe Canada, Japan, Korea.
User23 8y ago
China is in an extremely weak economic position. Their economy is large, but fragile and extremely vulnerable to external disruption. If you doubt me, realize that Chinese leadership also realizes this, which is why they created the One Belt One Road initiative to shore up that vulnerability.
joefranklinsrs 8y ago
This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess) is 1.) 40-60 percent of a company’s supply chain moves out of China 2.) China restricting the movement of capital/equipments out of China (similar to what happened with Korean companies last year) 3.) China growing homebrew competitors to the foreign companies leaving, part of the ‘made in 2025 in China’ strategy, via state enterprises or state spendings in startups. China will also make US companies’ operation in China very hard, either with license restrictions, or increased local ownership. 4.) China will disincentivize Chinese consumers from purchasing US (or foreign) products, via propaganda, taxes, or control (similar to what happened with Japanese and Korean products last few years). This would be hard, as Chinese consumers prefer higher quality, higher brand value, and higher perceived value foreign products. 5.) China will have to target US farmers with tariffs, as there isn’t much US imports to tax otherwise. Plus, there is also face saving. 6.) US will increase the tariff coverage to all Chinese imports, either triggered by tariffs on US farmers, or threats to US companies. 7.) China local governments will try to seize US owned corporate assets, or prevent factories from shutting down by its owners. This will escalate the urgency for US companies to move out of China. 8.) 70-100% of company’s supply line will be out of China 9.) Eventually, most direct trades between both countries shrink down to less than $50B. Down to a significant level where it starts to effect GDP for both countries (China way more than US) 10.) China will have no choice but to embrace its lost decade, ala Japan. It will tighten controls on its citizens. It will try to contain high inflation and high unemployment rate. It will try to unwind its debt for the next 10-20 years. Its gdp growth will go towards 0 or negative. Its GDP will shrink 20-30%. (posted this in another thread but didn't get any discussion)
- NathanCH 8y ago
  It's interesting because you can replace "China" with "The United States" and most of those bullet points are still true.
  - pathseeker 8y ago
    The US doesn't implement capital controls so this replacement fails at step 2.
ElBarto 8y ago
Time is on China's side. The US can throw a tantrum all they want. They should play a long game. There is no benefit for them in retaliating to hurt the US as long as it does not cause issues in domestic politics. They should focus on not getting hurt too much and let time do the rest.
- gscott 8y ago
  The US would need to implement tarrifs of several hundred percent to make a difference. A 20% tariff China can just make a small change to the price of their currency and ride it out. An article today has a quote from Jack Ma that he thinks this trade war will last 20 years. https://markets.businessinsider.com/news/stocks/alibaba-stock-price-jack-ma-trade-war-could-last-20-years-2018-9-1027543478 https://markets.businessinsider.com/news/stocks/alibaba-stoc...
  - wahern 8y ago
    It can't last that long. Eventually the disputes will reach a WTO tribunal, at which point both sides will either need to acquiesce, or risk going it alone outside the WTO system, or perhaps destroy the WTO altogether. U.S. conservatives love bilateral trade deals, but that's only because most trade occurs through the WTO system, making bilateral negotiations tractable. If either the U.S. or China lost the benefit of the WTO system, they would be indisputably worse off. So would everybody else. But in any event the end game will be resolved, for better or worse, long before 20 years is up. If there's still a dispute raging in 20 years then the next 20 years will be filled with economic and political strife much like those of the 20th century.
    - bhouston 8y ago
      Trump could easily destory the wto or declare it irrelevant to the us. Similar to his reaction to the icj.
      - wahern 8y ago
        Every president has declared the ICJ irrelevant. The Pentagon would send tanks to the White House if a President so much as hinted at accepting ICJ jurisdiction. And in any event, the U.S. doesn't dispute the usefulness of the ICJ or its jurisdiction over other countries, it just disputes the usefulness of the U.S. being subject to ICJ jurisdiction. By contrast, the WTO deeply matters to the wealth and security of the U.S. economy. But much like NATO, Congress is willing to call Trump's bluff. [EDIT: I confused ICJ with ICC. My bad.]
spectrum1234 8y ago
Seems like a more game theory correct response for China is to not copy Trump dollar for dollar, but maybe 50% of that, dollar for 50 cents. Game theory has much more merit for a country like China given the (lack of) election cycle.
spectrum1234 8y ago
The value of imports and exports seems like the wrong thinking. What does matter is the utility for each country. Considering Chinas much lower PPP/capita all tariffs hurt them more.
1024core 8y ago
China should just levy heavy duties on goods from states Trump won big, and the states where Republicans are in peril; while at the same time offering concessions to goods from states where Trump lost and Democrats are doing well. Then it should start an advertising blitz to highlight how workers/farmers in the former states are suffering.
- jcriddle4 8y ago
  Advertising would be considered influencing elections, like Russia is claimed to have done. Trying to split the American people that openly would almost certainly backfire and push undecided voters to Trump. China is already, in some ways, doing some targeting specific voters like the soy bean tariffs. What are you proposing to get the middle class growing again?
lacker 8y ago
One of the things that seems the most unfair to me about global trade is that for many American internet companies, China just totally bans them. Everything from Facebook and Google to smaller players gets hit by the great firewall. That is way more impactful than a tariff of 5% or 25%. With all of the talk of how China is or is not playing fair, I feel like their internet bans get taken for granted, and I wish there was more pressure to play fairly there.
- robszumski 8y ago
  I agree, but it starts to get awfully close to the subject of encryption backdoors, more censorship/lockdown of political ads and other topics that are more convenient for the government to be handled separately, without the comparison to China, hence they don't bring it up.
- dis-sys 8y ago
  > With all of the talk of how China is or is not playing fair, I feel like their internet bans get taken for granted, and I wish there was more pressure to play fairly there. In a fair environment, you'd be seeing Facebook/Google/Twitter used by hundreds of millions Chinese when most Americans paying their bills using Alipay and talk to their friends using WeChat. US dominance in tech is _NOT_ something called fair.
  - abandonliberty 8y ago
    what's blocking WeChat?
    - dis-sys 8y ago
      WeChat is not blocked, just like a long list of US internet services not blocked in China - Amazon, NH, booking.com, ebay, uber, airbnb, expedia and many more. That being said, Huawei and Alipay's expansion into the US has been repeatedly blocked by the US federal government [1]. By citing the same national security concerns, using such logic, Cisco and Microsoft should have long been banned in China - but they are not, both are making good $ in China. [1] https://www.reuters.com/article/us-moneygram-intl-m-a-ant-financial/u-s-blocks-moneygram-sale-to-chinas-ant-financial-on-national-security-concerns-idUSKBN1ER1R7 https://www.reuters.com/article/us-moneygram-intl-m-a-ant-fi...
Bucephalus355 8y ago
A couple of points I’d like to add to your post. Japan was able to endure a lost decade(s) due to immense social solidarity that few countries, perhaps even the US, possess. China is known as an unusually fragile country in some ways due to its tendency to break up or devolve into Afghanistan-like warlordism. A collapse of their economy, which seems probable at some point after 40 years of malinvestment, will crush any cohesion the CCP has built. To maintain it, they will of course try more authoritarian measures as they are doing now. The bigger picture though is that they will shift this internal “civil war” outside the country in the form of a war against someone else. This solves the lack of manufacturing demand issue, deals with population issues (perhaps unloyal ethnic groups can be put on the front-lines), and would draw on a reservoir of nationalistic fever not really touched since WWII. Steve Bannon has been clear that he believes WWIII will be a global, non-nuclear war between China and US. I used to think this would only be the case if Trump remained president, but now no matter who is elected, it still seems like a considerable chance.
- statguy 8y ago
  > Japan was able to endure a lost decade(s) due to immense social solidarity that few countries, perhaps even the US, possess. Your points make no sense. Civil war, countries breaking up etc. almost always happen only when people's basic needs (food, water, clothing, heat, electricity) are not being met. Even during its lost decade, Japan has been a top 25 country by per-capita income.
browsercoin 8y ago
My opinion is not a popular one but I'll reiterate-China will not overtake US at least for the next 100 years. I think this trade war has been very telling, it showed the underlying fragility of China's boasting as a superpower. All in all, I see USA recovering from the Trump blunder, and I believe that it will come out stronger than ever. If anti-fragile by Taleb holds true, the US Gov is relatively anti-fragile to Russian or Chinese ones. Note that anti-fragility refers to the recoverability when exposed to unforseen circumstances. We see the US democratic system evolving and we will see a much stronger democratic process as a result. On the other hand, things don't look good for Russia's economy along with China now facing an exodus of foreign investors and corporations nervous with China's new dictator.
- FruityFarm 8y ago
  Can you explain why?
- rgbrenner 8y ago
  China will not overtake US at least for the next 100 years. On what metric? By GDP PPP, they've already passed us: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) They are a much larger country. At about 15k gdp per capita, they'll match our gdp... and that's just a solid middle-income country... not exceptional. As they start to exceed that, certainly that economic power will start to show itself globally. For comparison, Taiwan and South Korea are at ~$30k. That would result in a gdp 2x as large as the US (about 40T).
bitxbit 8y ago
I am not a big fan of what’s happening in China but what do you expect them to do at this point? If they let the SV firms come and do business as usual, China is not going to last. Sure, it really doesn’t help that the govt is “investing” in questionable areas and aiding in tech “transfer”. But this whole notion of opening its doors wide open is never going to happen. A billion people effectively slaved through the past two decades and you expect them to just give that away? I think China has all the advantages against Trump. All that said, what this administration is doing to confront China is amateurish at best.
cromwellian 8y ago
What would happen if say, Foxconn no longer assembled phones? How would Apple, for example, recover their supply in any reasonable time? You can't just spin up that capability overnight. Seemed to me that if China wanted to amp this up and play hardball, they could just give Tim Cook a phone call and tell him they won't be making iPhones anymore. Estimates I've seen is that about 40% of Foxconn is Apple products. They could probably replace this demand with more Japanese/Korean/Domestic IHVs, combined with banning domestic sale of iPhones and accelerating the marketshare loss that's been ongoing.
- samcheng 8y ago
  Foxconn is a Taiwanese company. Even though many of their factories are in China, the company also has factories across the world, with headquarters located free from Chinese government control. It's also apparently the largest private employer in China. It seems like it's really easy to shoot yourself in the foot with this trade war stuff...
- sidstling 8y ago
  In what world would you close a billion dollar income stream to “win”?
  - cromwellian 8y ago
    A billion is small potatoes to the tariffs being thrown around, and Foxconn could probably fill much of that demand from other IHVs as one of Apples common strategies is fighting competitors by locking down parts of the manufacturing and supply chain.
Proven 8y ago
They should have never been accepted to the WTO in the first place. But thanks to crooked Bill Clinton and Wall Street scammers they mercantilized the world for two decades.
phobosdeimos 8y ago
We are running into a problem here: how do you kill a parasite without killing the host? The US is not an export economy, it produces very little tangible goods. Its a very insular economy that because of its superpower history has deeply spread its cancer cells across the global economy. How do you fight it?
peter303 8y ago
I have been asking around if anyone has seen tariff effects yet. So far very little. I have noticed that can soda pop prices have increased about ten cents a can after being stable most of this century. An acquaintance who owns a family farm said the bottom fell out of soybeans- one of the Big Three crops in the US. No one is buying so farmers are putting into storage. My guess is the traditional Black Friday bargains wont look that good this year due to the tax-everything-from-China policy. Then maybe the US consumer could wake up. The rightwing fake news will blame it on Democrats of course.
ksec 8y ago
I don't mind this trade wars to continue, after all there will always be dispute between two largest nation. What I am worried is that this may turn into an actual war. And from what I can tell, China is not ruling out this possibility, it may not happen within next 2 - 3 years, but they are investing heavily into their military. And if you look into the reporting from US media and Chinese media, they are both extremely one sided. ( But I guess that is... how it suppose to work ? ) Most US citizen do not realise how the USD works, and how currency works today. Most Chinese do not realise how closed their market are and their nation's unfair tactics. If tension continues.....
- enitihas 8y ago
  Well this certainly looks to set start another cold war. The US was not going be the only power for too long. And I think China is in a much better position than the USSR, at least economically. Let's see how this goes.
  - Judgmentality 8y ago
    I'd have to go digging for the article, but one of the more interesting arguments I've heard for why the US won the Cold War is because of our superior manufacturing in-house. Similarly, think of China's advantage today in producing electronics and goods, and how they're so entrenched it's difficult for high security government projects to find parts that are considered safe. I think our slow decline in manufacturing over the previous decades would be what would cause the US to lose.
    - ksec 8y ago
      I am not entirely convinced. At first I thought robotics were still a little far off in all industry ( Apart from Cars ), for many task, they are not as fast as a human worker, at least those in Foxconn who are now trained themselves to muscle memory speed. But now I believe Apple's Dasiy, the disassemble machine, are basically the testing phase of how to do iPhone assembly all by machines, and doing so quickly. Dasiy is already 4x faster than the original Liam, and I believe the threshold os robotics replacing manufacturing may reach a critical point where it makes sense to move back to US, and with ease. I don't know when will we reach that critical points, as with everything in life, the last 20% always takes the same amount of time as the first 80%. But once it does, China is looking at a potential job lost of 5 - 50M or more.
En_gr_Student 8y ago
Irony: In trying to win, the Chinese leaders are enforcing a death spiral. History judges with brutal honesty, and not on intentions. Play it through: - they can't back down --> means they can't not lose half a trillion per year in current revenue --> means they don't get to spend that money on "Chinese advancement", but they might foolishly think they look "tough". I can think of five ways out of this where they win. If they are too stupid to do so, then they don't really deserve to be in power, do they. One of the big arguments for the authoritarian structure is that they get fewer pretty faces, and 3/4 the way up the chain of command they should get higher levels of actual capability.

200 points by enitihas 8y ago

euroclydon 8y ago

Are tariffs just straight up revenue for the US government, like income taxes?

ghrifter 8y ago
lol
xyzzyz 8y ago
Yes, but it is relatively small amount of revenue. Even with the new 10% tariffs on extra $200B, China tariffs in total will be less than 3% of federal government revenue.
- debacle 8y ago
  3% of federal government revenue for tariffs on a single country seems substantial, but I get your point.
- propman 8y ago
  They will apparently collect $7.5B from steel tarrifs from everyone by the end of the year. That 10% is going up to 25% in January and China has no real counter to that since they’ve already tarriffed all our exports including some which really harm them. And trump has threatened another 267B. 3% is a substantial amount but I doubt it’ll be close to that much. Supply chains will move to avoid tarrifs, parts will be shipped to Brazil or Mexico and then into the US. Or from China to Vietnam etc. I highly doubt it’ll get to 3% but if it does and the economic impacts of that thus far are fairly minimal, that would be significant. Makes up for the entire tax cut deficit and more when accounted for dynamic scoring but again it’s still monumentally dumb to count on tariffs for revenue which Trump has been stupidly bragging about. I do completely support Trump’s trade war thus far however with the end goal of fair and reciprocal trade and limiting China militarily through the economy.
jandrewrogers 8y ago
Yes. There was no income tax for the majority of US history, and tariffs were a major source of revenue for the government back then.
- sgslo 8y ago
  I didn't know this was the case, thank you for sharing. For anyone else reading, it appears federal income tax was first implemented in 1913, more reading here: https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
  - pdwetz 8y ago
    Not quite; from same link, "President Abraham Lincoln and the United States Congress introduced in 1861 the first personal income tax in the United States." It was declared unconstitutional in 1895 by the Supreme Court, prompting the constitutional amendment.
  - wahern 8y ago
    Tariffs were a source of bitter controversy between Northern and Southern states from the very beginning. It wasn't until the 1840s or 1850s that controversy over slavery became the dominate dynamic. Northern manufacturers wanted high tariffs on manufactured goods and low tariffs on agricultural products. Southern farmers wanted high tariffs on agricultural products and low tariffs on manufactured goods--to placate Europeans so they'd buy Southern agricultural products, and to check the economic power of the North. And of course the Federal government relied on tariffs for income--the Articles of Confederation being considered a failure largely because the Federal government had no independent source of income--and as a foreign policy tool. Everybody was at odds. (Note that it was also common back then to impose export tariffs, which added considerable complexity to the debate. Today export tariffs are largely unheard of in the U.S. but perhaps ripe for rediscovery. Though we recently loosened restraints on the export of crude oil and natural gas, so it probably won't happen any time soon.)
deleted 8y ago
[deleted]
joshdick 8y ago
Yep, that's right.
riphay 8y ago
Yes, but they are paid by the importer and (usually) passed on to the consumer. In effect they become a subsidy for local industry paid by consumers.
- adventured 8y ago
  It's equivalent to the US implementing a VAT, except superior as it directly encourages replacement domestic manufacturing rather than merely acting as a tax on goods (as in the case of steel and aluminum, which are seeing US steel companies boom again with vast profit growth). It doesn't merely redistribute wealth from one company to another. It reclaims critical domestic industrial investment and blue collar jobs as well. Nucor's profit for all of 2016 was $796m, and $679m for 2014 (2015 was a bad year). For just the second quarter it was $683m and they've yet to see the full benefit of the tariffs. Alcoa, which has been a disaster the last several years, produced a billion dollars in operating income in the first two quarters, equal to a full year's operating income previously. US Steel which has been bleeding to death for years, looks capable of producing a billion dollars in annual profit again in the near future ($214m in profit in the second quarter on a large bump in sales). Yes, we'll pay slightly higher steel & aluminum prices than we would have otherwise if we were getting artificially low dumping-level prices set by the Chinese impact on the global markets. It's worth it to regenerate major US industry back to health and the blue collar jobs that go with that. We can afford the slightly higher prices, we can't afford a hollowed-out industrial base.
  - kasey_junk 8y ago
    It’s not at all like a VAT as it doesn’t impact everyone equally. It’s redistributing wealth to specific market participants from others. In this case almost all profits that come to the domestic producers of steel come from the domestic consumers (and those impacted by tit for tat tariffs). There might be very good reasons to prefer some industries to others but as a revenue source tariffs are not at all like a neutral VAT.
- toephu2 8y ago
  and the government collects that money? what do they do with it?

cthalupa 8y ago

>Proponents of the plan say letting Washington impose more tariffs than Beijing would actually hurt the United States more because tariffs are ultimately paid by consumers and businesses in the countries that levy them. Well, this is actually the fundamental problem, isn't it? There's no way actual trade evens out, so tariffs are the only real outcome here. Even if we "win", it's not actually winning.

Invictus0 8y ago
The "winning" scenario for the United States is that China agrees to change its IP policies. IP is America's most valuable product, and the Chinese have been stealing it with 0 consequences for decades. A win on this front would see an end (or at least decrease) in cyberattacks and more US friendly IP laws.
- kevin_b_er 8y ago
  And the "losing" scenario is a WTO ruling like Antigua and Barbuda where China is directly permitted to ignore US copyrights and patents from trade disputes.
  - lovich 8y ago
    Aren't they doing that anyway? It was my understanding that most companies didn't send their latest generation products to be built in China due to them bring consistently stolen and china not backing up the IP protections
- h8liu 8y ago
  Like which IP policy? Any specific policy document that you can point out? China has been having IP laws and protection since around 1980, and China government never said once that stealing IP is okay. It is IP law execution and enforcement in China that is sub-par. Policing is sometimes hard. Also, I believe the US really wants to treat IP as an "asset" rather than a "product".
  - 8y ago

apo 8y ago

Some hard-liners want a more aggressive stance. Lou Jiwei, who retired as finance minister in 2016 but is still the head of the country’s social security fund, suggested on Sunday that China could deliberately disrupt American companies’ supply chains by halting the export of crucial components mostly made in China. But Chinese trade experts dismiss that idea as impractical and not the government’s position. If anything would play into the administration's hands, it would be that move. By taking themselves offline, the Chinese would be ceding market share to upstart competitors and encouraging further reshoring of mission-critical supply chain components.

adventured 8y ago
It would no doubt be disruptive, temporarily. And it would also prompt a multi hundred billion dollar redirection of investment into moving those supply lines to other countries. Vietnam would love to get some more of China's tech manufacturing action, as would a dozen other developing countries. Others would welcome gains to be had in apparel or autos by moves like that by China. One of the biggest problems China has in this trade war: they're entirely replaceable. They offer nothing strictly unique that can't be replaced by another country, even though there may be a serious cost involved. The mistake of not being a large technology originator.
- justicezyx 8y ago
  > One of the biggest problems China has in this trade war: they're entirely replaceable. They offer nothing strictly unique that can't be replaced by another country, even though there may be a serious cost involved. I cannot see evidences that China is particularly more so than any other country.
  - Retric 8y ago
    Saudi Oil is a commodity, but many country’s don’t have oil. Every country has low skilled workers.
    - 8y ago

enitihas 8y ago

I initially used to think China might have more leverage against any potential trade war agains the US, as: 1. The Chinese had option of imposing high tariffs on politically significant US agricultural products, like soyabean, which are not very large in $ value, but affect a lot of areas. 2. Since some swing states are highly influential in US elections, the Chinese always had the option of imposing tariffs which impact the swing states mostly. Both of these thoughts arose from the fact that as a democratic country, the US would have to take into account both short and long term trade prospects. Now reading this article, it seems being a predominantly export driven economy and having a huge trade surplus with the US, the Chinese don't really have that much leverage.

raws 8y ago
Yeah their leverage ends up being limited but even if they had focused their tariffs on soy beans, it would have hurt them more than not given the Importance of the us in their imports.
MarkMc 8y ago
Trump has countered the soybean attack by handing out subsidies to soybean farmers.
- duxup 8y ago
  For now, I belive the subsidies are only going to last a while. Granted considering the current administration's lack of care for deficit spending.... they probabbly would just dial up more subsidies after a while.
- cuboidGoat 8y ago
  Meantime, other soybean manufacturers will dial up production, so when the tariffs are dropped by China, the US soybean manufacturers will be selling to an oversupplied market, dropping the price. And given the US subsidies will almost certainly go when the Chinese tariffs do, the risk to the US soybean industry has only been postponed, rather than countered.

raws 8y ago

That was a great piece, very insightful and enlightening!

sct202 8y ago

China still hasn't pulled out the boycott card like they have recently done to both Korean and Japanese companies for perceived slights. A lot of F500 companies are reliant on China's consumer market to meet their quarterly goals, and would be vulnerable.

adventured 8y ago
That's because China would be largely punching itself in the face at the same time. One of the unexpected benefits of China having forced everyone to partner up with local companies. They'd be considerably harming their own companies and economy in the process. When your country owns the majority of the popular Shanghai Disney park, do you call a boycott on it (via boycotting all things Disney)? When your country owns the majority of all value derived from local McDonald's franchises, do you call a boycott on that American brand? When your companies have partnership deals on manufacturing with GM, such that most Chinese-purchased GM vehicles are made domestically in China, do you call a boycott on those cars? And so on. China feels a lot more free to play the boycott card in dealing with Japan and South Korea because there's a vast difference in the scale of the benefit in question. China only has a small trade surplus with Japan, of about ~$20b. But China is a very large export market for Japan, equal to 2.5% of Japan's economy in scale, so they can hammer Japan there (by contrast China's imports from the US are merely equivalent to 0.5% of the US economy). With the US, China has a $400b trade surplus that is at risk, the damage is overwhelmingly tilted at themselves in any boycott.
- seanmcdirmid 8y ago
  That didn't stop protestors from smashing up Japanese branded cars, which were all built in 51-49 JVs.

pastor_elm 8y ago

Donald Trump was right about one crucial thing. The leaders of most other nations just don't have any backbone.

phailhaus 8y ago
Doesn't quite make sense, given that China has not shown any indication of backing down.
tabtab 8y ago
Don't forget, "an eye-for-an-eye leaves everybody blind". The Dale Carnegie approach to dispute resolution usually works better than the Yosemite Sam approach by my observation. I'm reluctant to bet on Sam. Hopefully this is a new and improved Sam.
debacle 8y ago
I don't know if this is necessarily fair. The US is almost alone globally in having such a strong economy (right now), and many/most resource and manufacturing based economies are struggling. The biggest problem with modern representative democracies is that they tend to be myopic.

tabtab 8y ago

It's a game of chicken. T is okay with the unpredictability of that game, for he thrives on, well, let's say "activity". China's gov't is, on the other hand, more conservative and cautious by nature. They must feel really rattled. (I'm not picking a winner yet.)

piyh 8y ago
In game theory chicken the unpredictable one wins more often, as long as they don't self destruct.
- tabtab 8y ago
  Then T definitely has the edge, and doesn't seem to worry about the "self destruct" path in the probability tree.

lgleason 8y ago

As much as some people here may hate Trump, the fact is that he was right when we said that it is difficult for us to lose a trade war with China since we import more from them than we export. Is there going to be some short term pain? Absolutely! But, long term it is likely to create more jobs in the US. As an extra bonus, there won't be as much of a carbon footprint for shipping things half way around the world and we might begin to focus on quality instead of quantity which what we consume if the labor is now a larger part of the price...

SubiculumCode 8y ago
His trade war with China (and only China) is one of the few administration's positions I whole wholeheartedly support (as a economics dilettante, no expert).
- debacle 8y ago
  Our "trade war" with Canada is a proxy trade war with China. Our "trade war" with Europe is, to a much more limited degree, a proxy trade war with China. A big part of the rationale with all of these little trade wars is to make China stand alone on the global stage, so that they are more easily negotiated with. A secondary effect is to eliminate "Made in $country" goods that are 90% manufactured in China and finished in e.g. Italy or Canada.
  - pergadad 8y ago
    That doesn't make much sense at all. Ruining goodwill and relationships (and of course trade) with YOUR MOST IMPORTANT ALLIES is certainly not just proxy economic warfare. The EU economy as a whole is bigger than either China or the US. Don't try to find a logic when there clearly is none. Trade war with EU and Canada might be the most unhelpful thing Trump has done.
    - debacle 8y ago
      You're providing an emotional response to a logical appeal.

Simulacra 8y ago

I think a heavy hand with China is absolutely needed. Trade and manufacturing from cheap, and some say abusive, labor practices have done nothing to improve human rights for China, but it's done wonders to prop up the current regime. It seems the only thing China will respond to is losing money. Who would've thought communists would've made such great capitalists.

methodover 8y ago
> Trade and manufacturing from cheap, and some say abusive, labor practices have done nothing to improve human rights for China Your comments were narrow — you only cited “human rights”, which yes, China is abysmal. But what about quality of life in general? My understanding is that QOL has gone up dramatically in China.

gonvaled 8y ago

Extremely one sided comments, with a US centric view. The world is not the US, and HN readers are not only US citizens, so let me express a different point of view. Assumption: Trump wants fair trade. HN readers want fair trade. What is needed: fair trading rules, fair IP rules, fair capital structures, and a fair currency. Tackling some of the unfair trade practices does not address all those issues. In particular it does not address the services trade imbalances, the favouring of US IP holders (as incumbents and head starters), and the massive advantage that the dollar gives to the US economy. And we have not yet started talking about the weaponizing of the dollar, which can be recently seen in the conflict with Iran. All this to say that the US demands are not fair. You can obviously pursue your interests, but you will not sell it as being a "fair" policy. The Chinese, the Europeans, all countries have equally fair, if not fairer, demands, which must be respected. The core of the problem is obviously that the initial assumption is false: Trump and HN do not want fairer trade, but trade one-sidedly beneffiting the US. We will fight this policies, if needed at the personal level, by selectively consuming products according to country of manufacture.

fastball 8y ago
So where are you from?
- gonvaled 8y ago
  Not from the US.
pergadad 8y ago
There are some real grievances where China is not playing fair - forced partnerships, cheap loans for state-backed companies, etc. Lots of empty promises each year with no change to the rules and approaches. So while I think trump is insane and his policies are mostly harmful to both his country and the remainder of the world, pointing out the false pretences and pretend-market-economy of China is definitely not the worst thing he has done. It will certainly cause harm, but if it gets China to actually stick to its commitments everyone might be better off long term. That might be a long shot though, as Trump is crazy and the Chinese leader currently transforming himself into a dictator. For both of them the main way to stay in power is to pretend they are the only ones that will guarantee their country's standing and respect in the world (even as in realpolitik terms they do the opposite) - fueling nationalism and us vs them thinking. I wouldn't say the US is strictly playing fair in the economic game either though, even before trump US economic power was a major weapon. The only ones that really seem committed to fait trade are the EU and maybe Canada, Japan, Korea.

User23 8y ago

China is in an extremely weak economic position. Their economy is large, but fragile and extremely vulnerable to external disruption. If you doubt me, realize that Chinese leadership also realizes this, which is why they created the One Belt One Road initiative to shore up that vulnerability.

joefranklinsrs 8y ago

This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess) is 1.) 40-60 percent of a company’s supply chain moves out of China 2.) China restricting the movement of capital/equipments out of China (similar to what happened with Korean companies last year) 3.) China growing homebrew competitors to the foreign companies leaving, part of the ‘made in 2025 in China’ strategy, via state enterprises or state spendings in startups. China will also make US companies’ operation in China very hard, either with license restrictions, or increased local ownership. 4.) China will disincentivize Chinese consumers from purchasing US (or foreign) products, via propaganda, taxes, or control (similar to what happened with Japanese and Korean products last few years). This would be hard, as Chinese consumers prefer higher quality, higher brand value, and higher perceived value foreign products. 5.) China will have to target US farmers with tariffs, as there isn’t much US imports to tax otherwise. Plus, there is also face saving. 6.) US will increase the tariff coverage to all Chinese imports, either triggered by tariffs on US farmers, or threats to US companies. 7.) China local governments will try to seize US owned corporate assets, or prevent factories from shutting down by its owners. This will escalate the urgency for US companies to move out of China. 8.) 70-100% of company’s supply line will be out of China 9.) Eventually, most direct trades between both countries shrink down to less than $50B. Down to a significant level where it starts to effect GDP for both countries (China way more than US) 10.) China will have no choice but to embrace its lost decade, ala Japan. It will tighten controls on its citizens. It will try to contain high inflation and high unemployment rate. It will try to unwind its debt for the next 10-20 years. Its gdp growth will go towards 0 or negative. Its GDP will shrink 20-30%. (posted this in another thread but didn't get any discussion)

NathanCH 8y ago
It's interesting because you can replace "China" with "The United States" and most of those bullet points are still true.
- pathseeker 8y ago
  The US doesn't implement capital controls so this replacement fails at step 2.

ElBarto 8y ago

Time is on China's side. The US can throw a tantrum all they want. They should play a long game. There is no benefit for them in retaliating to hurt the US as long as it does not cause issues in domestic politics. They should focus on not getting hurt too much and let time do the rest.

gscott 8y ago
The US would need to implement tarrifs of several hundred percent to make a difference. A 20% tariff China can just make a small change to the price of their currency and ride it out. An article today has a quote from Jack Ma that he thinks this trade war will last 20 years. https://markets.businessinsider.com/news/stocks/alibaba-stock-price-jack-ma-trade-war-could-last-20-years-2018-9-1027543478 https://markets.businessinsider.com/news/stocks/alibaba-stoc...
- wahern 8y ago
  It can't last that long. Eventually the disputes will reach a WTO tribunal, at which point both sides will either need to acquiesce, or risk going it alone outside the WTO system, or perhaps destroy the WTO altogether. U.S. conservatives love bilateral trade deals, but that's only because most trade occurs through the WTO system, making bilateral negotiations tractable. If either the U.S. or China lost the benefit of the WTO system, they would be indisputably worse off. So would everybody else. But in any event the end game will be resolved, for better or worse, long before 20 years is up. If there's still a dispute raging in 20 years then the next 20 years will be filled with economic and political strife much like those of the 20th century.
  - bhouston 8y ago
    Trump could easily destory the wto or declare it irrelevant to the us. Similar to his reaction to the icj.
    - wahern 8y ago
      Every president has declared the ICJ irrelevant. The Pentagon would send tanks to the White House if a President so much as hinted at accepting ICJ jurisdiction. And in any event, the U.S. doesn't dispute the usefulness of the ICJ or its jurisdiction over other countries, it just disputes the usefulness of the U.S. being subject to ICJ jurisdiction. By contrast, the WTO deeply matters to the wealth and security of the U.S. economy. But much like NATO, Congress is willing to call Trump's bluff. [EDIT: I confused ICJ with ICC. My bad.]

spectrum1234 8y ago

Seems like a more game theory correct response for China is to not copy Trump dollar for dollar, but maybe 50% of that, dollar for 50 cents. Game theory has much more merit for a country like China given the (lack of) election cycle.

spectrum1234 8y ago

The value of imports and exports seems like the wrong thinking. What does matter is the utility for each country. Considering Chinas much lower PPP/capita all tariffs hurt them more.

1024core 8y ago

China should just levy heavy duties on goods from states Trump won big, and the states where Republicans are in peril; while at the same time offering concessions to goods from states where Trump lost and Democrats are doing well. Then it should start an advertising blitz to highlight how workers/farmers in the former states are suffering.

jcriddle4 8y ago
Advertising would be considered influencing elections, like Russia is claimed to have done. Trying to split the American people that openly would almost certainly backfire and push undecided voters to Trump. China is already, in some ways, doing some targeting specific voters like the soy bean tariffs. What are you proposing to get the middle class growing again?

lacker 8y ago

One of the things that seems the most unfair to me about global trade is that for many American internet companies, China just totally bans them. Everything from Facebook and Google to smaller players gets hit by the great firewall. That is way more impactful than a tariff of 5% or 25%. With all of the talk of how China is or is not playing fair, I feel like their internet bans get taken for granted, and I wish there was more pressure to play fairly there.

robszumski 8y ago
I agree, but it starts to get awfully close to the subject of encryption backdoors, more censorship/lockdown of political ads and other topics that are more convenient for the government to be handled separately, without the comparison to China, hence they don't bring it up.
dis-sys 8y ago
> With all of the talk of how China is or is not playing fair, I feel like their internet bans get taken for granted, and I wish there was more pressure to play fairly there. In a fair environment, you'd be seeing Facebook/Google/Twitter used by hundreds of millions Chinese when most Americans paying their bills using Alipay and talk to their friends using WeChat. US dominance in tech is _NOT_ something called fair.
- abandonliberty 8y ago
  what's blocking WeChat?
  - dis-sys 8y ago
    WeChat is not blocked, just like a long list of US internet services not blocked in China - Amazon, NH, booking.com, ebay, uber, airbnb, expedia and many more. That being said, Huawei and Alipay's expansion into the US has been repeatedly blocked by the US federal government [1]. By citing the same national security concerns, using such logic, Cisco and Microsoft should have long been banned in China - but they are not, both are making good $ in China. [1] https://www.reuters.com/article/us-moneygram-intl-m-a-ant-financial/u-s-blocks-moneygram-sale-to-chinas-ant-financial-on-national-security-concerns-idUSKBN1ER1R7 https://www.reuters.com/article/us-moneygram-intl-m-a-ant-fi...

Bucephalus355 8y ago

A couple of points I’d like to add to your post. Japan was able to endure a lost decade(s) due to immense social solidarity that few countries, perhaps even the US, possess. China is known as an unusually fragile country in some ways due to its tendency to break up or devolve into Afghanistan-like warlordism. A collapse of their economy, which seems probable at some point after 40 years of malinvestment, will crush any cohesion the CCP has built. To maintain it, they will of course try more authoritarian measures as they are doing now. The bigger picture though is that they will shift this internal “civil war” outside the country in the form of a war against someone else. This solves the lack of manufacturing demand issue, deals with population issues (perhaps unloyal ethnic groups can be put on the front-lines), and would draw on a reservoir of nationalistic fever not really touched since WWII. Steve Bannon has been clear that he believes WWIII will be a global, non-nuclear war between China and US. I used to think this would only be the case if Trump remained president, but now no matter who is elected, it still seems like a considerable chance.

statguy 8y ago
> Japan was able to endure a lost decade(s) due to immense social solidarity that few countries, perhaps even the US, possess. Your points make no sense. Civil war, countries breaking up etc. almost always happen only when people's basic needs (food, water, clothing, heat, electricity) are not being met. Even during its lost decade, Japan has been a top 25 country by per-capita income.

browsercoin 8y ago

My opinion is not a popular one but I'll reiterate-China will not overtake US at least for the next 100 years. I think this trade war has been very telling, it showed the underlying fragility of China's boasting as a superpower. All in all, I see USA recovering from the Trump blunder, and I believe that it will come out stronger than ever. If anti-fragile by Taleb holds true, the US Gov is relatively anti-fragile to Russian or Chinese ones. Note that anti-fragility refers to the recoverability when exposed to unforseen circumstances. We see the US democratic system evolving and we will see a much stronger democratic process as a result. On the other hand, things don't look good for Russia's economy along with China now facing an exodus of foreign investors and corporations nervous with China's new dictator.

FruityFarm 8y ago
Can you explain why?
rgbrenner 8y ago
China will not overtake US at least for the next 100 years. On what metric? By GDP PPP, they've already passed us: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) They are a much larger country. At about 15k gdp per capita, they'll match our gdp... and that's just a solid middle-income country... not exceptional. As they start to exceed that, certainly that economic power will start to show itself globally. For comparison, Taiwan and South Korea are at ~$30k. That would result in a gdp 2x as large as the US (about 40T).

bitxbit 8y ago

I am not a big fan of what’s happening in China but what do you expect them to do at this point? If they let the SV firms come and do business as usual, China is not going to last. Sure, it really doesn’t help that the govt is “investing” in questionable areas and aiding in tech “transfer”. But this whole notion of opening its doors wide open is never going to happen. A billion people effectively slaved through the past two decades and you expect them to just give that away? I think China has all the advantages against Trump. All that said, what this administration is doing to confront China is amateurish at best.

cromwellian 8y ago

What would happen if say, Foxconn no longer assembled phones? How would Apple, for example, recover their supply in any reasonable time? You can't just spin up that capability overnight. Seemed to me that if China wanted to amp this up and play hardball, they could just give Tim Cook a phone call and tell him they won't be making iPhones anymore. Estimates I've seen is that about 40% of Foxconn is Apple products. They could probably replace this demand with more Japanese/Korean/Domestic IHVs, combined with banning domestic sale of iPhones and accelerating the marketshare loss that's been ongoing.

samcheng 8y ago
Foxconn is a Taiwanese company. Even though many of their factories are in China, the company also has factories across the world, with headquarters located free from Chinese government control. It's also apparently the largest private employer in China. It seems like it's really easy to shoot yourself in the foot with this trade war stuff...
sidstling 8y ago
In what world would you close a billion dollar income stream to “win”?
- cromwellian 8y ago
  A billion is small potatoes to the tariffs being thrown around, and Foxconn could probably fill much of that demand from other IHVs as one of Apples common strategies is fighting competitors by locking down parts of the manufacturing and supply chain.

Proven 8y ago

They should have never been accepted to the WTO in the first place. But thanks to crooked Bill Clinton and Wall Street scammers they mercantilized the world for two decades.

phobosdeimos 8y ago

We are running into a problem here: how do you kill a parasite without killing the host? The US is not an export economy, it produces very little tangible goods. Its a very insular economy that because of its superpower history has deeply spread its cancer cells across the global economy. How do you fight it?

peter303 8y ago

I have been asking around if anyone has seen tariff effects yet. So far very little. I have noticed that can soda pop prices have increased about ten cents a can after being stable most of this century. An acquaintance who owns a family farm said the bottom fell out of soybeans- one of the Big Three crops in the US. No one is buying so farmers are putting into storage. My guess is the traditional Black Friday bargains wont look that good this year due to the tax-everything-from-China policy. Then maybe the US consumer could wake up. The rightwing fake news will blame it on Democrats of course.

ksec 8y ago

I don't mind this trade wars to continue, after all there will always be dispute between two largest nation. What I am worried is that this may turn into an actual war. And from what I can tell, China is not ruling out this possibility, it may not happen within next 2 - 3 years, but they are investing heavily into their military. And if you look into the reporting from US media and Chinese media, they are both extremely one sided. ( But I guess that is... how it suppose to work ? ) Most US citizen do not realise how the USD works, and how currency works today. Most Chinese do not realise how closed their market are and their nation's unfair tactics. If tension continues.....

enitihas 8y ago
Well this certainly looks to set start another cold war. The US was not going be the only power for too long. And I think China is in a much better position than the USSR, at least economically. Let's see how this goes.
- Judgmentality 8y ago
  I'd have to go digging for the article, but one of the more interesting arguments I've heard for why the US won the Cold War is because of our superior manufacturing in-house. Similarly, think of China's advantage today in producing electronics and goods, and how they're so entrenched it's difficult for high security government projects to find parts that are considered safe. I think our slow decline in manufacturing over the previous decades would be what would cause the US to lose.
  - ksec 8y ago
    I am not entirely convinced. At first I thought robotics were still a little far off in all industry ( Apart from Cars ), for many task, they are not as fast as a human worker, at least those in Foxconn who are now trained themselves to muscle memory speed. But now I believe Apple's Dasiy, the disassemble machine, are basically the testing phase of how to do iPhone assembly all by machines, and doing so quickly. Dasiy is already 4x faster than the original Liam, and I believe the threshold os robotics replacing manufacturing may reach a critical point where it makes sense to move back to US, and with ease. I don't know when will we reach that critical points, as with everything in life, the last 20% always takes the same amount of time as the first 80%. But once it does, China is looking at a potential job lost of 5 - 50M or more.

En_gr_Student 8y ago

Irony: In trying to win, the Chinese leaders are enforcing a death spiral. History judges with brutal honesty, and not on intentions. Play it through: - they can't back down --> means they can't not lose half a trillion per year in current revenue --> means they don't get to spend that money on "Chinese advancement", but they might foolishly think they look "tough". I can think of five ways out of this where they win. If they are too stupid to do so, then they don't really deserve to be in power, do they. One of the big arguments for the authoritarian structure is that they get fewer pretty faces, and 3/4 the way up the chain of command they should get higher levels of actual capability.