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China wasn’t ready for the trade war with the United States
- julienfr112 7y agoNext time, they will...
- hsnewman 7y agoTariffs against China are actually a tax on the American citizens, and only causes increased prices and unemployment.
- teknopurge 7y agofalse. no matter how many times people say this your statement is incorrect. Consumers faced with higher prices will spend less and save more. Taxes are only applied to transactions. Higher tariffs will shift consumption to lower-priced goods - you say those goods don't exist? That's how new business and market opportunities arise. Production will shift geographies, as the tariffs are geography-specific. China's government is playing checkers, I never thought I would say this, and Trump is playing chess.
- mooreds 7y agoBoth clauses are false? "Tariffs against China are actually a tax on the American citizens" is undeniably true. "Tariffs are a tax on imports. They're typically charged as a percentage of the transaction price that a buyer pays a foreign seller. Say an American retailer buys 100 garden umbrellas from China for $5 apiece, or $500. The U.S. tariff rate for the umbrellas is 6.5 percent for umbrellas. The retailer would have to pay a $32.50 tariff on the shipment, raising the total price from $500 to $532.50." - https://www.cbsnews.com/news/what-are-tariffs-and-how-would-they-work-trump-2018-06-02/ https://www.cbsnews.com/news/what-are-tariffs-and-how-would-... The latter clause is a matter of second order effects that people can disagree with.
- teknopurge 7y agoYou proved my point. Umbrella seller will sell fewer of those China-imported umbrellas. In comes African umbrella maker for $4 apiece.
- mooreds 7y agoActually, if the African umbrella maker could make a profit at $4, they would already be doing that, pre-tariff. So they are more likely selling at $5.15 (or some other higher number), which means that the US consumer pays an extra 15 cents per umbrella. That 15 cents is additional and what people refer to as a "tax", though it isn't a traditionally levied tax.
- teknopurge 7y agoMarkets are not perfectly efficient - this is why arbitrage exists. It likely will take some event, some slack, some inelegance for a business or entrepreneur to notice that the delta between that $5/umbrella and where they can figure out how to deliver it for $4 is worth spending time and attention on. Markets are not perfectly efficient. Markets are perfectly imperfect.
- inflatableDodo 7y ago>Markets are perfectly imperfect. You should start writing speeches for Theresa May. This is the kind of guff she regularly comes out with.
- dang 7y agoPlease don't break the site guidelines like this, regardless of how annoying another comment is or feels. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- inflatableDodo 7y ago
- cmurf 7y agoYou ignore the degree of price inelasticity for the products China produces and exports to the U.S. If we were still in the TPP, the U.S. could still come out ahead, but once the U.S. withdrew, the remaining countries have been cutting deals with China. The question is whether those deals make up for the U.S. losses enough for China to weather the economic storm in the short term for a longer term gain. Global free trade benefited the American consumer by letting them keep more money in their pocket for other things through cheaper products. And these fake tariffs which China does not pay a dime of, are a regressive import tax that in that short term negatively impact the American consumer by taking money out of their pocket. It's not at all clear how the market will adjust. Or even if it can because Trump keeps changing his mind on rather important details. What he supposedly ultimately wants is "fair trade" as in no tariffs for anyone? I doubt that he's completely non-protectionist if it turns out some other country can simply out compete the U.S. But then what does 0% tariff/import tax actually translate into in terms of the geographic location for production? It definitely moves to the location with the cheapest net cost for labor and taxes. And that's not going to be the U.S. Which is fine, the American consumer still comes out ahead, but that is not at all compatible with the claims Trump makes about his notion of protectionism creating high paying American jobs. That is a fantasy on the face of it.
- mc32 7y agoOr, this represents the real price of goods including externalities which are ordinarily absorbed by Chinese citizens...
- NotPaidToPost 7y agoThose tax duties are arbitrary. Chinese citizens have become dramatically richer through exports and the price of Chinese goods simply reflects that costs are lower in China (though the difference is narrowing).
- vonmoltke 7y ago> Those tax duties are arbitrary. Most taxes associated with externalities are arbitrary (in amount), because externalities are much easier to see than to quantify.
- howard941 7y agoIn $DAY_JOB we've not upped prices, the massive tax cuts easily made up for the cost of sending the work elsewhere or incurring the expenses/realizing the benefits of doing the work over here. I realize not everyone has that luxury.
- ThomPete 7y agoSo is not allowing American companies to compete on Chinese markets, not having your intellectual property rights upheld and competing against a country which is still categorized as a developing nation. Before trump came in 4million jobs was lost to China alone, in exchange we got cheaper flatscreen televisions. I'll take more expensive flatscreen televisions to make sure that China doesn't end up running over us all any day. The chinese government (not the chinese people) is being controlled by a bunch of powerhungry men who will do everything to take over the world. This is not just about economics it's about taking a stance for a more fair market. So yes it will cost but it will be worth it.
- jf22 7y agoJust to clarify, the cost will be worth it if we get something in return. Right now we have tariffs and all the negative things in the first sentence.
- ThomPete 7y agoRight now we have the lowest unemployment ever plus a number of other amazing numbers. To claim the US economy is bad right now would be pretty out there. And thats despite us already having started the tarrif game with China. I can live with a few things being a little more expensive when the jobs are coming back even in blue collar areas as they are right now.
- amanaplanacanal 7y agoYou seem to be implying that current low unemployment is caused by tariffs on china. I rather suspect that it is caused by continuing low interest rates and has nothing to do with tariffs.
- ThomPete 7y agoNo, I am implying that despite our war with China which have already been going on (with tariffs) we still have one of the lowest unemployment and strongest economies ever. Make of that what you want.
- fredgrott 7y agoah nooo what happens is this: 1 User consumers spend less choosing other lower price non China products. 2. Factories move from China to India and other Asian locations 3. Some Tariff money does get into US Treasury 4. I do not think that really any US Politician is worried about any increase in China unemployment... The real strategy is this... China monetary system upholds Russia's Trump's real move is against Russia not China despite his shaddy collusion dealings with Russia
- NotPaidToPost 7y agoIs it Xin Jinping or China's "fault"? Despite the tone of this article, it seems to me that the current situation is a reaction by the US to China's growing power rather than a failure on China's part.
- ThomPete 7y agoChina and the Chinese party are two very different things. The amount of atrocities china commit every single day even relative to their size is insane.
- NotPaidToPost 7y agoI commented about the main point of the article: the trade war. I don't understand what is the point of your reply...
- inflatableDodo 7y agoThe United States wasn't either.
- ThomPete 7y agoWe actually are. With a strong economy that's exactly the time you do it.
- inflatableDodo 7y agoDidn't the Laffer curve on bond markets invert recently?
- piker 7y ago> Laffer curve on bond markets Yield curve, Laffer curve unrelated
- inflatableDodo 7y agoThat's the one, I screwed up my terminology (not an economist, just dated one for a while).
- ThomPete 7y agoInflation is not up even though it was supposed to be. Lots of things are changing because Trump doesn't follow the "experts" but have his own way of approaching China for better or worse. Right now mostly for the better.
- inflatableDodo 7y agoReally? Could you send a note to the soy and corn farmers? 'Trump Trade Tweets Send Grain Markets Diving to 42-Year Low' - https://www.bloomberg.com/news/articles/2019-05-06/grains-soy-trump-tariff-threat-to-china-drives-ag-prices-lower https://www.bloomberg.com/news/articles/2019-05-06/grains-so...
- wtootw 7y agoRelevant: trump is raising tariffs on $200B Chinese goods to 25% this Friday, and coming soon, 25% on additional $325B Chinese goods as well. This is the disengagement of US economy with the Chinese economy as we speak. No more IP theft, no more US factories for China, no more knowledge transfer, no more opioids from China. Perfect timing, what with US growing healthy at 3% and wage growth, and China suffering from debt overload and demographics decline
- teknopurge 7y agowhat freaks me out is it's almost as if someone planned this.
- mieseratte 7y ago> what freaks me out is that it's almost as if someone planned this. Why would prior planning freak you out? This is a bit confusing to me.
- teknopurge 7y agoI tend to not give political leadership much credit in that area...(successful planning and execution)
- mieseratte 7y agoAh, that's interesting. I tend to view political leadership as intelligent, calculating, and manipulative but in service of "greed," that is for their own gain or that of their major donors, as opposed to their voter-constituency. As such, planning doesn't surprise me but genuinely beneficial legislation does.
- all2 7y agoThe fact that the national (and international) media's narrative about Trump and company might be wrong?
- _Codemonkeyism 7y agoAbout the author: "Professor Joseph Yi-zheng Lian is a Hong Kong native. He obtained his first degree from Carleton College, Minnesota. An economist by training, his Ph.D. was earned at the University of Minnesota. Prof. Lian taught at the University of California, Riverside and the Hong Kong University of Science and Technology, and was Chief Editor and lead writer of the Hong Kong Economic Journal before serving as a Senior Policy Adviser for the Chief Executive at the Central Policy Unit of the first administration of the Hong Kong SAR government, from 1998 to 2004. He was dismissed from his advisory post after a profiled participation in a pro-democracy sit-in in Central, Hong Kong." which sounds very different to the NYT bio: "Yi-Zheng Lian, a commentator on Hong Kong and Asian affairs, is a professor of economics at Yamanashi Gakuin University, in Kofu, Japan, and a contributing opinion writer."
- sdwa 7y agoWhat's the problem?
- _Codemonkeyism 7y agoThe author is a pro-democracy activist from Hong Kong writing about China politics. It's up to you to decide if if there is a problem for you or not. It's ok if there is no problem for you. I personally want to know if someone owns stock he writes about.
- _Codemonkeyism 7y agoHere is one more comment to tank my karma.
- mercer 7y agoSuch a comment only makes it so.
- _Codemonkeyism 7y ago
- _Codemonkeyism 7y agoIt will be interesting to see what happens when China no longer eats US inflation, so hurray for an interesting future!
- _Codemonkeyism 7y agoWell it will be interesting. For the last decades the US had printed money with bonds and exporters to the US have bought those bonds to spend their dollars and not put pressure on their own currency. If China is no longer exporting to the US it will no longer need to buy bonds, so if the us is printing money with bonds where dollars are not parked, those dollars increase dollar supply and therefor increase inflation. Money 101.
- merpnderp 7y agoIf those jobs come back to the US, then less need for bonds. If those jobs go to Vietnam, won't they just buy the bonds to keep their currency stable against the dollar?
- CharlesColeman 7y agoWhy are you responding to your own comment?
- AnimalMuppet 7y agoProbably because of not knowing about the "edit" button. At least, replying to myself is what I did before I knew I could edit comments.
- ThomPete 7y agoMoney 101 would dictate inflation in us economy, we dont see that. So i guess we need to ad some more nuance to things
- _Codemonkeyism 7y agoChina hasn't stopped buying US bonds, or have I missed something?
- flywithdolp 7y agoI disagree with trump in almost every aspect, but I must say that he manage a country like a business man and he is doing some moves because of it that other countries (Like China) can't predict.
- inflatableDodo 7y agoIf he was operating like a business man, he would be a lot easier to predict. He is still operating like the guy who thinks he is a business man while bankrupting a casino. And he always has been. Sesame Street warned people years ago - https://eu.usatoday.com/story/life/entertainthis/2017/03/21/sesame-street-v-trump-shows-long-history-mocking-donald-grump/99445290/ https://eu.usatoday.com/story/life/entertainthis/2017/03/21/...
- T-A 7y ago"The Simpsons" was more explicit about it: https://www.hollywoodreporter.com/live-feed/simpsons-writer-who-predicted-trump-876295 https://www.hollywoodreporter.com/live-feed/simpsons-writer-...
- inflatableDodo 7y agoAnd for anyone who has followed Doonesbury for a while, it kinda feels like the wilder theories concerning the LHC may possibly be true. https://www.gocomics.com/doonesbury/1987/09/14 https://www.gocomics.com/doonesbury/1987/09/14
- ThomPete 7y agoAnd yet he is a billionaire, has lived an amazing life, beat the best republican lineup ever and clinton against all odds is now a president and doing things that other politicians have only talked about. He is going to be one of the most influential presidents ever. what have you done recently?
- inflatableDodo 7y ago
- andreilys 7y agoMr. Bush also shared a private exchange with Chinese President Hu Jintao in which he told the Chinese leader that the thing he worried most about and that kept him up at night was another attack on the United States. Mr. Bush said he then asked Hu, "What keeps you up at night?" Hu responded, "25 million new jobs a year." [1] I think it's clear that China has a lot more to lose in this trade war. The bargain that the Chinese people have made with the government is that they will sacrifice personal liberties for economic prosperity. Once the latter is put into jeopardy, chaos will ensue. [1] https://www.realclearpolitics.com/articles/2010/11/15/decision_points_an_interview_with_george_w_bush_1079a0.html https://www.realclearpolitics.com/articles/2010/11/15/decisi...
- spectramax 7y agoI found your statement about sacrificing personal liberties for economic prosperity a fascinating way to abstractly summarize CCP's rule. I resonate with you - I think the Chinese government is hot-pacing through economic high in the short term but there are major consequences if they overreach. The more they do so, the more they get push back from the rest of the world - Streisand effect infiltrates the general populace if they're unhappy (currently, China is pulling millions out of poverty - a good thing) and then you see real consequences of trading liberty for economic stagnancy. In game theory, "a single hawk in a population of doves" is an inherently unstable state - Hawks will lure other Doves to follow Hawk-like behavior and eventually you'll have majority of hawks struggling to survive. This behavior will oscillate between two unstable points until hawk/dov ratio equilibrium is reached. The Chinese government has employed a number of hawk-like behaviors in the global economy - cut loose IP, subsidies for local firms, state-owned enterprises bypassing law, currency manipulation, driving-out non-Chinese firms that pose threat of domination, IP theft, cloning, etc. for short-term gains. I don't see how this behavior can be tolerated for long.
- thefounder 7y agoOnce China becomes a/the leader it develops its own technology and prevent others from using/stealing it, just like the US did.
- ilamont 7y agoThis isn't a typical tit-for-tat trade war that gets worked out at the negotiating table. Several current and former Trump aides want to outright topple the Chinese Communist Party. Quoting Steve Bannon in an NPR piece published today: "I think ultimate success is regime change ... the goal is quite simply to break the back of this totalitarian mercantilist economic society." https://www.npr.org/2019/05/07/719947020/inside-the-white-houses-bitter-fight-over-china https://www.npr.org/2019/05/07/719947020/inside-the-white-ho... The other thing going on, alluded to in the same article, is attacking China is red meat to Trump's base (42% of the American population, according to a recent poll). He's built it up into one of the primary reasons behind the collapse of American manufacturing. If the China bogeyman goes away with a splashy deal, will the base be satisfied? Or will something else have to be dialed up to replace it as a political and trading punching bag?
- kermitismyhero 7y ago>"I think ultimate success is regime change ... the goal is quite simply to break the back of this totalitarian mercantilist economic society." The really funny thing is that Bernie Sanders' supporters have the exact same goal in mind.
- mlindner 7y agoIt's not a surprise that a decent number of Bernie voters voted for Trump instead of Hillary. At least I saw a lot of highly upvoted comments on Reddit from people saying they were going to do that after Bernie lost. Also good: https://www.npr.org/2017/08/24/545812242/1-in-10-sanders-primary-voters-ended-up-supporting-trump-survey-finds https://www.npr.org/2017/08/24/545812242/1-in-10-sanders-pri...
- Fjolsvith 7y agoWhy would that be funny? America broke the Soviet Union with economic power. A lot of people still remember this. I'd like to see the Chinese equivalent of the Berlin Wall falling.
- 7y ago
- righteous 7y agoI hope this represents a fundamental shift in American trade policy. American free trade agreements should only be extended to countries that have roughly symmetrical environmental policies, human/labor rights, market access, IP protection, among other things. Any trade deals less this sensibility amounts to the exploration of people, the planet or of property rights, and should be taxed extensively.
- spectramax 7y agoYep, we should have been more vigilant since 2002 as we kept on importing goods with an unfair deal. I want China to progress as any other country but under fairness and without this atrocious 1 party authoritarian regime. Imagine if they were like Japan or India with free speech and democratic government, hell I would move to Shenzhen!
- spectrum1234 7y agoExcellent article with some game theory analysis on this: https://www.economist.com/graphic-detail/2019/04/27/why-you-should-never-start-a-trade-war-with-an-autocracy https://www.economist.com/graphic-detail/2019/04/27/why-you-...
- MarkMc 7y agoI dislike almost everything about Trump, but in this particular case his policy might be better than his predecessors. If the trade agreement results in low tariffs and a more level playing field for US companies who invest in China, maybe it will be worth the pain of a temporary trade war?
- panpanna 7y agoBut this is affecting other countries too. China/US trade war have cost some Europeans their jobs. Next time they are out to buy a car, do you think they will choose American?
- spectramax 7y agoThe percentage of people losing their jobs due to China/US trade war is minuscule compared to the total European population and would have literally zero measurable impact on American car sales. It’s not like Europe all of sudden has 20% unemployment due to the trade war - the way you describe it and everyone becomes anti-American.
- panpanna 7y agoHave you been to Europe lately?
- spectramax 7y agoActually, yes. Zurich and Dusseldorf.
- ThomPete 7y agoEU impose a tax on us cars, thats one of the things trump is changing.