4 ms·

If you assume the US tariffs are unchangeable then you would be right but the hope of retaliatory tariffs is that they will get the US to update it's tariffs in

If you assume the US tariffs are unchangeable then you would be right but the hope of retaliatory tariffs is that they will get the US to update it's tariffs in response to the economic harm caused. It will also harm China of course but I would imagine they hope the harm caused to the US will reduce the tariffs and leave China better off in the long run. This is not totally unreasonable, the US is ostensibly more sensitive to the economic conditions of it's citizens so one could imagine China outlasting the US in this game of chicken.

UncleEntity 2y ago
I asked the google and it appears a big chunk of Chinese imports are agricultural products. Farmers not having a market to sell their products into isn't such a good thing for any administration so they seem to have a bunch of leverage on this point alone.
- bitshiftfaced 2y ago
  China can hit American farmers, but their overall trade surplus is $295 billion. The US has much more leverage.
  - n4r9 2y ago
    The USA accounts for 15% of China's exports. That's big. But the US is facing retaliatory tariffs from not just China but also Canada and the EU and others, accounting for over 35% of US exports. China is betting on the rest of the world being tough to the US, and it might well pay off.
  - UncleEntity 2y ago
    There simply isn't a whole lot of alternatives to Chinese imports to the US. So while tariffs will stop some importation of Chinese goods due to costs others are just going to cost more for consumers until the proposed US manufacturing capacity is build up. Same with auto parts, even the US car makers rely on foreign made parts and have no real alternatives.
    - bitshiftfaced 2y ago
      Until there are alternatives. When the price of a given product increases, it becomes more attractive for competitors to invest in making that product.
      - rsynnott 2y ago
        Even if companies are convinced they need to manufacture stuff locally (ie they believe these tariffs are never going away, whereas in practice you'd expect that, at absolute most, they're gone within four years, likely two, and maybe within weeks), you're talking about years to build up production capacity. China is likely taking the (reasonable) view that US consumers won't put up with years of higher prices.
      - UncleEntity 2y ago
        Sure, unless they flip-flop on tariffs and make your investment not as attractive as it initially seemed. People assume there's going to be massive investments into what is essentially an uncertain market. A reversal of the capital outflows of the previous decades or something, dunno? Why, exactly, would people from other countries chose to invest in the US when they could just keep their investments at home and/or engage with more reliable trading partners like the EU, South America or Asia?
  - morsecodist 2y ago
    Trade surplus is not sufficient to analyze the issue here. It is about commitment. What you want is something closer to the probability that the trade surplus will lead to a policy change. Even if it is true that the average Chinese citizen will be more negatively impacted than the average US citizen that negative impact doesn't equally translate to policy change. The US congress is fairly evenly split. It doesn't take that much to cause a policy shift.
bitshiftfaced 2y ago
If the US is consistent with the tariff policy that they've laid out, then I'd expect the opposite to happen. If China increases their tariffs and as a result increases their trade surplus, then that means that the US's tariffs go up as they are a function of the US's trade deficit.
- morsecodist 2y ago
  > If the US is consistent with the tariff policy This is doing a lot of heavy lifting here. The US can say it's tariff policy is whatever it wants but the administration is under constraints. If there was some extremely compelling data that the economic effects caused by the retaliatory tariffs would cause an overwhelming democratic victory at the midterms that would have a much bigger effect on policy than the formula for tariffs the administration wrote down. I am not predicting this definitely will happen but it is the kind of thing I am sure people are considering when they are imposing retaliatory tariffs.
- surgical_fire 2y ago
  Nobody is increasing anything. When China applies tariffs against the US, the result is that China imports the goods it needs from other countries. For example, now that US soy is prohibitively expensive for Chinese importers, they can buy from Brazil (who China is not applying the same tariffs against). In the case of the US, the US importers cannot switch to anyone else, since it decided to go full trade war against every single country.
  - bitshiftfaced 2y ago
    I'm not following. If China buys soy from Brazil instead of the US, and the US imports the same amount overall from China in either case, then doesn't that increase China's trade surplus with the US?

UncleEntity 2y ago

I asked the google and it appears a big chunk of Chinese imports are agricultural products. Farmers not having a market to sell their products into isn't such a good thing for any administration so they seem to have a bunch of leverage on this point alone.

bitshiftfaced 2y ago
China can hit American farmers, but their overall trade surplus is $295 billion. The US has much more leverage.
- n4r9 2y ago
  The USA accounts for 15% of China's exports. That's big. But the US is facing retaliatory tariffs from not just China but also Canada and the EU and others, accounting for over 35% of US exports. China is betting on the rest of the world being tough to the US, and it might well pay off.
- UncleEntity 2y ago
  There simply isn't a whole lot of alternatives to Chinese imports to the US. So while tariffs will stop some importation of Chinese goods due to costs others are just going to cost more for consumers until the proposed US manufacturing capacity is build up. Same with auto parts, even the US car makers rely on foreign made parts and have no real alternatives.
  - bitshiftfaced 2y ago
    Until there are alternatives. When the price of a given product increases, it becomes more attractive for competitors to invest in making that product.
    - rsynnott 2y ago
      Even if companies are convinced they need to manufacture stuff locally (ie they believe these tariffs are never going away, whereas in practice you'd expect that, at absolute most, they're gone within four years, likely two, and maybe within weeks), you're talking about years to build up production capacity. China is likely taking the (reasonable) view that US consumers won't put up with years of higher prices.
    - UncleEntity 2y ago
      Sure, unless they flip-flop on tariffs and make your investment not as attractive as it initially seemed. People assume there's going to be massive investments into what is essentially an uncertain market. A reversal of the capital outflows of the previous decades or something, dunno? Why, exactly, would people from other countries chose to invest in the US when they could just keep their investments at home and/or engage with more reliable trading partners like the EU, South America or Asia?
- morsecodist 2y ago
  Trade surplus is not sufficient to analyze the issue here. It is about commitment. What you want is something closer to the probability that the trade surplus will lead to a policy change. Even if it is true that the average Chinese citizen will be more negatively impacted than the average US citizen that negative impact doesn't equally translate to policy change. The US congress is fairly evenly split. It doesn't take that much to cause a policy shift.

bitshiftfaced 2y ago

If the US is consistent with the tariff policy that they've laid out, then I'd expect the opposite to happen. If China increases their tariffs and as a result increases their trade surplus, then that means that the US's tariffs go up as they are a function of the US's trade deficit.

morsecodist 2y ago
> If the US is consistent with the tariff policy This is doing a lot of heavy lifting here. The US can say it's tariff policy is whatever it wants but the administration is under constraints. If there was some extremely compelling data that the economic effects caused by the retaliatory tariffs would cause an overwhelming democratic victory at the midterms that would have a much bigger effect on policy than the formula for tariffs the administration wrote down. I am not predicting this definitely will happen but it is the kind of thing I am sure people are considering when they are imposing retaliatory tariffs.
surgical_fire 2y ago
Nobody is increasing anything. When China applies tariffs against the US, the result is that China imports the goods it needs from other countries. For example, now that US soy is prohibitively expensive for Chinese importers, they can buy from Brazil (who China is not applying the same tariffs against). In the case of the US, the US importers cannot switch to anyone else, since it decided to go full trade war against every single country.
- bitshiftfaced 2y ago
  I'm not following. If China buys soy from Brazil instead of the US, and the US imports the same amount overall from China in either case, then doesn't that increase China's trade surplus with the US?