Trade deficit strategy
Whatever the administration is doing doesn’t seem to be working. This strategy might have worked decades ago before globalization of manufacturing, but now it is definitely not working. https://www.bbc.com/news/business-48196495
The tariffs might hurt in the short term but open up room for competition and new companies who otherwise wouldn’t compete with China. Isn’t that a good thing?
Europe tried this 30 years ago. They put 30% tariffs on some products to avoid bleeding manufacturers to China. At first Chinese manufacturers used proxy countries and then Europe closed those loopholes. European consumers got a price hike. European manufacturers still closed (90%) because it was impossible to compete on price. Companies lobbied for 0 taxes but they realized that even with this the products would cost twice as much. China was playing dirty (and still does) with cheap labor, subsidies and currency manipulation. Europe lost it. There is no reason history wouldn’t repeat, particularly when they have the global manufacturing under their control. The only solution is automation, but that doesn’t solve the problem of employment and requires a much more educated workforce
If I was president this is exactly what I would do. Create trade wars causing markets to tank. Then invest borrowed money. Then end tarrifs and be a hero while making a killing in the markets. Pay off debt.
And bye bye pension
Trade deficits don't matter anyway
Yup. Who cares. If there's too much debt, just declare bankruptcy and continue like nothing happened.
No, trade doesn't work like debt. It's impossible to indefinitely maintain a trade surplus with every country simultaneously. If we had a trade surplus with China, market forces would cause us to have a deficit with other trade partners
Does anyone understand how supply chain works? This isn't clothing or simple widgets where it has already moved to other countries way before. The vertical for a lot of products are long and span multiple countries and goes back and forth. A smartphone for instance (making this up) will have designs from the US sent to China, the raw materials shipped from China to Southeast Asia, individual circuit board parts built in Southeast Asia, shipped to China for finished circuit boards which goes to another company in China to assemble all of the parts from other Chinese company, firmware added and os added elsewhere, then sent to an import/export company to ship to the US. Having the major verticals from Asia moved to the US is just dumb naivete and a waste of money. You can't change your China suppliers for subcomponents elsewhere as there is no where else with relative stability and infrastructure in place to collect memory components and circuit boards in at volumes at low cost. China also doesn't care as much because it's not Chinese companies selling their products to the US (which is where tariffs in the past hurt and had the greatest impact), it's US companies that take finished components who get tariffed. Tariffing Toyota in the 70s and 80s was/would have been effective because it was a foreign company selling to the US market and most of the profits would go back to the home country so tariffs would have hurt the outflow of money. Today if you tariff cars from Japan to try to get at Toyota, you can't because they have US/other countries production. Back to tariffs on China, most of the profits are realized by the US company iphone hardware costs are 200-300 and the rest of the net goes to the US so tariffs have some effect but most of it would be dealt with by the US company.
The BBC is so biased and pro-china. And anti-US/asian allies. They even colored Kashmir as part of Pakistan! The Brits really seem to be enjoying lots of BBC these days though.
We have the advantage here since we’re the biggest buyer of products from China. The strategy has been that if we increase tariffs then they will drop theirs because they rely on us. The actual strategy is probably much more complex. The whole IP issue will never be solved since Chine does it to their own.
We are the biggest as single country, but if you sum all other up we are 18.4% of their export.
Wonder what portion of their GDP that is. They’re hitting it hard in AI. They will soon not be a manufacturing country.
I just want Trump to address technology transfer and IP theft TBH. It ruined the steel industry and I fear it will do the same to tech
Impossible. They do it to their own companies. They dgaf
Did you actually read the article ? My main conclusions from that. 1) China has already placed tarrifs on all 100B of good we export to them, they don't have any more bullets left 2) we only have tarriffs on 250B out of 540B Chinese goods, we have more leverage. 3) China stock market is down much more than ours, clearly market realizes this impacts them more. 4) US trade deficit with china just hit a 5 year low. https://www.zerohedge.com/news/2019-05-09/trump-winning-us-trade-gap-china-tumbles-5-year-low So "definitely" not working, I don't agree
China definitely has more bullets. It’s called higher tariffs. Agree that we have more bullets in terms of tariffs. But using them is going to hurt us as well as China. It’s consumers in the end who end up paying these tariffs. I think the OPs point is Trump is playing the game like it was still 1985, which is probably where his understanding still is. The TPP would have been more effective overall at fighting China and their currency manipulation than what Trump is attempting, without the global market rollercoaster. But at this point we can only watch what happens and see what lessons we learn from this experiment.
“Hey Google, how do I read charts?”