Skip to comments.Lighthizer Says China 'Reneging' on Trade-Talk Commitments
Posted on 05/06/2019 2:29:39 PM PDT by billorites
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What a great thread from last year!
Has it all.
That was a very prescient analysis, which you posted from last year. (https://twitter.com/Trinhnomics/status/1014791235452588032)
I didn’t really see a logical stopping rule for tariffs in there - seems like 25% could profitably be extended to all Chinese imports, if I follow it correctly. Back then we were trading tariffs tit for tat, but now substantially, China has done their worst, and it will be much more a one-sided imposition of US tariffs on Chinese products.
The gist of her analysis, for those who don’t want to read through it, is that first the Trump Admin made it cheaper to invest here and freed up enough capital (through tax reform), and then tariffs make it more expensive to invest in China (if you plan to sell the product here).
The tax reform freed up $2 trillion dollars that was held overseas to come back to the US, and the new full expensing makes it much more attractive to invest in plant and equipment in the USA. Now that businesses have been well warned, and given the time and money to prepare, the tariffs are going to make it much more expensive to manufacture in China.
I would add that all the re-negotiated trade deals plugged the back doors of trans-shipping products through third countries, or using partial content to disguise them. The conditions are very well set to now place the tariffs on China. The supply chain for the US market is likely to come out of there much quicker than it went in, if that 25% across the board is levied.
If that happens, the party is truly over for the Chinese communists their economy will be the bill payer, and everyone else will be eating a piece of their pie for the next few years. Behind the economic drawdown, comes the debt defaults.
Maybe they will lash out Militarily, when their disappointment becomes acute. It will be a difficult adjustment, from their high expectations. Young professionals there have never known anything other than boom times.
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