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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

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.]
      - 394549 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. Are you seriously claiming there would be a military coup in the US over something like that? The US has very strong taboos against military intervention in politics, much stronger than exist in many other countries. That you would make such a claim calls into question much that you've said about the US.
        true_religion 8y ago
        From the US point of view, accepting the ICJ is giving up soverigty to its old colonial masters, and wartime enemies. It is not a palatable position.
        deleted 8y ago
        [deleted]
        wahern 8y ago
        I made a hyperbolic statement to emphasis that it's not politically viable. No, I don't think there'd be a coup. But I also think acceptance of ICC jurisdiction in the near future is about as likely as there being a coup. The military institutionally--the people that embody the military at the Pentagon, in Congress, in the White House, and elsewhere--would never allow it even if a majority of Americans were okay with it. ICJ (which I confused with the ICC earlier) is a little different because technically the U.S. has a veto as a member of the security council. Nonetheless, we only submit to ICJ jurisdiction on a case-by-case basis; which is to say, when we know we'll win or when we don't care one way or the other.
  - nl 8y ago
    Trump wants an excuse to pull out of the WTO.
    - wahern 8y ago
      What Trump wants is "a win", which is an extremely subjective assessment on his part and doesn't even necessarily require any material change in position. Everything else is a means to that end, including the endless posturing and 1980s Wall Street-style hardball tactics.
      - nl 8y ago
        This is true. But additionally his inclination is against any kind of treaty or multinational body which doesn't involve immediate tribute paid to the US.
  - 394549 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. It probably can last that long. It will take years for a WTO tribunal to do its work, and even after the tribunal makes its ruling, there can be years more of foot-dragging. I can see all of that taking at least a decade.
- JPKab 8y ago
  China has deliberately manipulated the yuan for decades now. I first studied and modeled the manipulation while an undergrad in economics 15 years ago. It has helped them remain an export-driven economy, for good and bad. It's not a good move at this point in time. China needs desperately to increase domestic consumption. Manipulating the Yuan further will only lead to more wealth flight out of the country as citizens try to protect their wealth from devaluation.
toasterlovin 8y ago
I haven't fully through this through, but at a naive level it seems to me like the U.S. has the upper hand. Less trade between the two countries means U.S. consumers pay higher prices on non-essential items. But the impact on the Chinese is much more significant: people will lose jobs.
- janekm 8y ago
  Thinking it through: The vast majority of goods imported from China are sold to US consumers by American companies, employing Americans. A 25% increase in cost of goods sold for these companies requires severe cost cutting, leading to the lay-offs of those American employees.
  - toasterlovin 8y ago
    But, again, a disproportionate impact. It takes way less people to administer buying and selling goods than it does to staff the factory floor.
joefranklinsrs 8y ago
I would argue time is (and always has been) on US's side. US has the more powerful economy, and the consumer market that China desperately needs to keep afloat. In addition, time will allow US companies to move its supply lines out of China without triggering volatility in its stock prices.
- ElBarto 8y ago
  China is approx. the same size as the USA but with 4 times the population. The US have the more powerful economy today. But given the above, once China is on a development path then it is simply inevitable that it will overtake the US. When I say 'time' I'm not looking at the next quarter or next year. That's shortsighted. I'm looking at 20, 50, 100 years. In fact, I would argue that the US government knows that and that's why they are increasingly alarmed.
  - gonvaled 8y ago
    Not only that: the trade dispute is also consequence of the rising vulnerability of the US in the capital markets. Once it is discarded as the "one and only option", once real alternatives emerge, once the US loses its dominance, the US could end up being subjected to the same financial constraints that all countries are used to operate in. That has the powers that be trying to delay the inevitable.
  - mac01021 8y ago
    You think the Trump administration and the US congress are looking 50-100 years in the future?

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.]
    - 394549 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. Are you seriously claiming there would be a military coup in the US over something like that? The US has very strong taboos against military intervention in politics, much stronger than exist in many other countries. That you would make such a claim calls into question much that you've said about the US.
      - true_religion 8y ago
        From the US point of view, accepting the ICJ is giving up soverigty to its old colonial masters, and wartime enemies. It is not a palatable position.
      - deleted 8y ago
        [deleted]
      - wahern 8y ago
        I made a hyperbolic statement to emphasis that it's not politically viable. No, I don't think there'd be a coup. But I also think acceptance of ICC jurisdiction in the near future is about as likely as there being a coup. The military institutionally--the people that embody the military at the Pentagon, in Congress, in the White House, and elsewhere--would never allow it even if a majority of Americans were okay with it. ICJ (which I confused with the ICC earlier) is a little different because technically the U.S. has a veto as a member of the security council. Nonetheless, we only submit to ICJ jurisdiction on a case-by-case basis; which is to say, when we know we'll win or when we don't care one way or the other.
- nl 8y ago
  Trump wants an excuse to pull out of the WTO.
  - wahern 8y ago
    What Trump wants is "a win", which is an extremely subjective assessment on his part and doesn't even necessarily require any material change in position. Everything else is a means to that end, including the endless posturing and 1980s Wall Street-style hardball tactics.
    - nl 8y ago
      This is true. But additionally his inclination is against any kind of treaty or multinational body which doesn't involve immediate tribute paid to the US.
- 394549 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. It probably can last that long. It will take years for a WTO tribunal to do its work, and even after the tribunal makes its ruling, there can be years more of foot-dragging. I can see all of that taking at least a decade.
JPKab 8y ago
China has deliberately manipulated the yuan for decades now. I first studied and modeled the manipulation while an undergrad in economics 15 years ago. It has helped them remain an export-driven economy, for good and bad. It's not a good move at this point in time. China needs desperately to increase domestic consumption. Manipulating the Yuan further will only lead to more wealth flight out of the country as citizens try to protect their wealth from devaluation.

toasterlovin 8y ago

I haven't fully through this through, but at a naive level it seems to me like the U.S. has the upper hand. Less trade between the two countries means U.S. consumers pay higher prices on non-essential items. But the impact on the Chinese is much more significant: people will lose jobs.

janekm 8y ago
Thinking it through: The vast majority of goods imported from China are sold to US consumers by American companies, employing Americans. A 25% increase in cost of goods sold for these companies requires severe cost cutting, leading to the lay-offs of those American employees.
- toasterlovin 8y ago
  But, again, a disproportionate impact. It takes way less people to administer buying and selling goods than it does to staff the factory floor.

joefranklinsrs 8y ago

I would argue time is (and always has been) on US's side. US has the more powerful economy, and the consumer market that China desperately needs to keep afloat. In addition, time will allow US companies to move its supply lines out of China without triggering volatility in its stock prices.

ElBarto 8y ago
China is approx. the same size as the USA but with 4 times the population. The US have the more powerful economy today. But given the above, once China is on a development path then it is simply inevitable that it will overtake the US. When I say 'time' I'm not looking at the next quarter or next year. That's shortsighted. I'm looking at 20, 50, 100 years. In fact, I would argue that the US government knows that and that's why they are increasingly alarmed.
- gonvaled 8y ago
  Not only that: the trade dispute is also consequence of the rising vulnerability of the US in the capital markets. Once it is discarded as the "one and only option", once real alternatives emerge, once the US loses its dominance, the US could end up being subjected to the same financial constraints that all countries are used to operate in. That has the powers that be trying to delay the inevitable.
- mac01021 8y ago
  You think the Trump administration and the US congress are looking 50-100 years in the future?