Posted on 09/22/2018 8:55:44 AM PDT by SleeperCatcher
While the Chinese make good on a pledge to refuse negotiations while under threat, President Trump is making good on his campaign pledge to improve trade conditions for the United States with countries he believes have long taken advantage of the American market, the largest in the world.
Its hard to fault the president. Chinas trade imbalances with the U.S. have been massive in the hundreds of billions for years. Now, much of that is due to the fact that U.S. manufacturing capacity had fallen off over the past few decades (not altogether caused by, but accelerated after, the passage of NAFTA in the early 1990s). But also the imbalance is also due, in large part, to Chinas epic protectionism; that is, government policies that aim to promote Chinese industries and products over imports.
But there is more to the Trump tariffs taxes on imports than meets the eye.
Where did I make that argument?
The other countries do it to protect entrenched economic interests in their own countries. It’s called rent-seeking behavior.
You do not know much about currencies, also. Let me know if you want to explain that to you. I can’t even address what you wrote because it’s literally gibberish.
Import duties and tariffs are levied by US customs on the importer. The importer in the US pays these, not the exporter - in this case a Chinese company.
If it is a small amount, the importer in the US might be able to absorb the cost of the tariff or duty. For example, a 10% duty might be something that can be absorbed and NOT be passed on to the end-user / retail buyer.
Once you get up to 25%, that has almost certainly has to be passed on to the end user / retail buyer.
The reason this is used, is that when one country’s exports become 25% more expensive, then the US importer will source their items from some other country where the tariffs / duties are NOT imposed.
So the function of tariffs / duties is to shift the competitive price point from the country exporting to the country importing, for the domestic manufacturers.
So whether the tariff is 10% or 25%, and whether it is imposed by China or Germany on US goods, it makes US goods higher in price to the buyer, thus shifting the market to less imports of US goods and more sales for the domestic manufacturer, in China, Germany or wherever. Tariffs and duties are protectionist.
Thus in the case of China, with a 25% import duty, China loses the sales / market. It either goes internal to the US if US manufacturers can beat the new China+25% price - or it may go to some other country than China - S Korea, Vietnam, India etc. for example - which does not have the 25% duty levied on their imports into the US.
Another possibility - The Chinese manufacturer CUTS their price by 20%. This plus 25% import duty equals the same net price into the US.
This obviously also causes problems in China. To be “low-cost” a lot of Chinese stuff has a thin margin. If they have to take a 20% cut to export into the US, the margin (profit) will almost disappear. Some stuff may not even have a net 20% margin and so would be sold at a loss into the US if they cut price to keep the same net import price.
So the function ultimately cuts into China, one way or another. It is obviously not instantaneous or even “quick”, but it is inexorable and unavoidable.
The US can source stuff worldwide. Multinational companies can move production back to the US. But there is no substitute for the US market. China’s trade surplus of $500B can drop a lot, leading to lost jobs in China, and even financial collapse of China companies with big loans for growing their exports (and thus the banks?), and they don’t have the resilience of the US.
This is the long game. Trump’s Tariffs on China are a strong effort to chang this to the benefit of the US if given the time and resolve to work.
Here is why I like the Tariffs on China.
America can source from many different countries. So we should source from those who are good actors.
China manipulates its currency to make their goods less expensive. If America raises tariffs and China lowers their Yuan. America benefits with tax revenue, not China.
China is trying to control certain industries, taking control of the resources and the market place. This is market power on a global scale. Tariffs combat this.
China is a huge polluter. Products built in China cause massive pollution. And China is also a very inefficient resource user. Their quality control is horrible. China throws away lots of raw materials. Which is a huge waste.
China needs more competition and a good recession to improve their quality and wastefulness.
For all these reasons and their military spending growth. Chinese products should carry large tariffs.
You are correct on the short term only. Most free traitors use the short version to sell their poison.
I used to have a manufacturing business as a second tier supplier to Boeing. Our manufacturing base can return in a very short time, it merely needs the market place level to do so. The profit margins are there once you remove Chinas ability to pay slave wages to their workers while ignoring the pollution and safety standards we must comply with.
Yes, there will be short term pain. But the jobs created wont be asking did you want fries with that?.
Deal with it.
BS. You are a Free Traitor and anything you say should be be disregard. NO OTHER COUNTRY HAS FREE TRAITORS ONLY THE USA HAS YOU POS RUNNING OUR TRADE POLICY.
In the 1930’s a paltry 2% of the US economy was trade. WE MADE OUR OWN GOODS.
What Free Traitors won’t tell you is an import tariff on coolie imports LOWERS DEMAND. This causes massive layoffs and political problems IN CHINA!
I say import quotas and maybe an embargo.
What? You got a problem? LOL
Excellent analysis.
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