China tariffs...
- Thread starter EERs 3:16
- Start date
As a fed gov employee, you might not be seeing much. People in the private sector are missing out on revenues that are now going to the federal government instead of them. Costs are causing capital projects to be put on hold. Input supply lines are shifting, becoming more expensive.
I'd only worry about you tho. No need to critically think about things.
China is not our only trading partner. China accounts for about 20% of our total imports and 16% of our total trade. One thing that I have learned in business is that it's easier to find a new supplier than it is to find a new customer.
Playing tuff with a supplier that accounts for less than 20% of our purchases (mostly computers and cell phones) is not armageddon, the US will survive. Not sure China can do the same. The US is the largest consumer in the world. Other countries are lining up to supplant China as our #2 vendor.
I keep reading about our farmers and I stated yesterday and I posted an article from the NIKKEI (Asian WSJ) and they went into depth about how the US farmers are already finding new markets for their soy beans. The other thing about soy beans is that China was was not going to purchase as much soybeans due to the virus outbreak that is wiping out their pig population.
The epidemic is massive and they don't think that China will be able to recover in the near future, if at all. China is forced to buy pork form other countries and the US is already in discussions with them. That market dynamic was already in place and has nothing to do with tariffs. It might end up being a blessing in disguise as it forced us to cultivate new markets which most likely will replace China's pig industry anyways.
More on the Tariffs....(from the main board) but a pretty good article that talks about why the US doing what it is doing.
Read the full article (link below) to understand that the trade deal is not about tariffs it's about fair trade...
In May last year, President Xi Jinping unexpectedly called his American counterpart Donald Trump to plead with him to ease up on crippling sanctions against ZTE Corporation, one of China’s largest telecoms equipment makers, which is accused of selling goods containing US parts to Iran and North Korea.
Initially, the ZTE reprieve was believed to be a sterling example of Xi using personal diplomacy to prevent the bankruptcy of a major Chinese company and heavy job losses
But the initial optimism in Beijing’s corridors of power quickly evaporated as Chinese officials realised the reprieve had turned out to be a poisoned chalice. It emboldened the Trump administration to take a much more aggressive and harder stance in subsequent trade talks and has complicated Beijing’s efforts to reach a deal.
According to the original terms of the draft Beijing rejected, Washington reportedly insisted on having the right to punish Beijing in the event it violated the deal, and Beijing should not oppose or retaliate.
There were even suggestions Washington intended to set up a compliance office in Beijing to monitor how the deal was enforced.
The Chinese officials believe the Americans are now basically asking for similar treatment in enforcing the much larger and much more important trade agreement, which they find totally unacceptable.
Obviously, Beijing now regrets agreeing to the ZTE deal. Officials conclude that the Chinese government should have allowed ZTE to declare bankruptcy after the start of the seven-year ban imposed by the US. Its assets should have been stripped apart and sold to different Chinese companies, and workers retrained or redeployed.
https://www.scmp.com/week-asia/opin...-concession-donald-trump-still-haunts-chinese
Unless both the Chinese and American negotiators can compromise to remove this key stumbling block over the enforcement issue, the year-long trade talks are unlikely to break free of their on-off cycle, despite the renewed optimism.
Still no deal. Still ridiculous to have ever started a trade war. Damage is done. I'm not sure what I was supposed to gather from that article that would make me think tariffs work? They don't and they aren't. Manufacturing jobs, goods producing jobs, mining jobs...all flat under tariffs. Because technology killed those jobs, not China/NAFTA. The main reason behind the corporate tax cuts (capital investment in the US) is non existent - because of the tariffs. And yet, even with all the blue collar jobs not coming back, we have the longest growth period in history, high labor participation rate and amazingly low unemployment. Brought on by technologies, freer trade, efficiencies and adjusting to our new service economy.
Come join the us in the 21st Century.
Unless we shift the means of production and long term investment into the US, creating a jobs market here for those industries, it’s just kicking ourselves in the balls. Given a high enough tariff where it becomes cheaper on industry to do that vs staying in China, then sure. Otherwise, everyone is just going to hoard cash and ride this out while slowing everything to crawl so they don’t have to be impacted by the higher prices from the tariffs.
Well said. Basically wiping out the the tax cuts and setting them up as a fall guy..
I'd add a point, shifting means of production out of China does not mean they will come here. Far from it. They will move to Vietnam. Korea. Mexico.Complete government controlled protection of our economy is the only way. Is that really the long term goal?
Another article from Asia...China is hurting and the status quo is helping China and hurting the US. Tariffs have always been a part of international trade. Using them a lever to get a better trade deal is Trumps way to negotiate. Like I said, he might be wrong and the ballot box will determine his fate.
https://www.scmp.com/week-asia/econ...redirect-its-state-led-capitalism-reverse-its
Sure, it’s hurting China as well. No one wins in a trade war. It’s just like a labor strike. No one actually wins. Workers might get concessions to their demands but if they’re unpaid during their strike, they quickly pass the break even point of not recouping what they lost in time off with increased salaries.
Again, can a trade war be won? Sure, but it’s like trench warfare or even Napoleonic warfare. The losses aren’t worth the victory. Could we go to the extreme on China? Yes. Those jobs will go to Vietnam, which, if that’s the strategy, cool.
Now, this is just me, but I’m personally ok with companies shifting to other Asian countries and crippling Chinas economy. I’d love to see some Southeast Asian war flare up over it. Vietnam, Taiwan, Korea, Singapore, Thailand, etc. Light that candle up and let them fight it out. That would be awesome for us. And if that’s the end game, then awesomesauce.
But just a basic tradewar, it’s just not good for either side.
China's economy was weakening much faster, pre tariffs. China has a one party government, America does not. The status quo was not hurting the USA. Where in the hell can you come up with that? How was it hurting us?
I don't know how you see that as a negotiating from a position of strength (without allies), but best of luck.
Fair trade and access to China's markets is what this is all about. China has promised access to their markets for over 50 years, and to date, little has been granted. The real economic boom is selling more goods to China, not making goods that China now sells.
China manipulates our currency and forces US companies to share intellectual property rights if they want to sell products in China. The US (and US corporations) thinks that's bad business. They were caught selling US products to Iran, Russia and other enemies of the US. In effect, they do what they want but demand open access to our market.
Shifting production out of China to other countries is a good thing, Correct? If fair trade is the goal, trading with countries that are not our geo-political enemies, does not trade with Iran and Russia and abide by the trade agreements then we are in a better place. If some production comes back to the US as a result, it a huge bonus.
It's interesting to read trade journals from Asia as they have an entirely different spin than the US media has. They know that Trump is using tariffs to force China to the table and they know that China's economy is struggling and that it is having an impact and China is being pushed into a corner.
This article discusses it:
https://www.scmp.com/week-asia/econ...redirect-its-state-led-capitalism-reverse-its
When negotiating, if you are not at full strength, you cannot negotiate better terms. A perfect example of that is interest rates on a home mortgage, The best rates go to those who are financially more stable. The same is true for international trade. The best time to cut a trade deal with China is when their economy is at a 20 year low. They are at their weakest point and Asian economists think they have not hit bottom yet.
The status quo is hurting the US. We have full employment, but that does not mean that we are at full strength. I posted an article about Germany recently, Germany sells China complex communications parts used in the iPhone. China puts the iPhone together and sells to the US. If the US were to supplant Germany for that component, would that not be a skilled labor job that pays more than working in the service industry? Would that create more wealth for a US company? We might not be able to compete with China on the assembly, but we can compete with Germany on the complex components they put together. That is one of the main reasons China wants (and steals) intellectual property from us, they want to be able to invent and build those complex parts without having to buy them from Germany and other more advanced countries.
Germany's economy is based off of skilled labor, they produce complex parts and ship them around the world, China being a huge importer of these parts. China buys components from everyone but us. Why is that? Can we do better? I think we can!
This is a grown up discussion, go back to the children's table to finish your mac and cheese.