I don’t call it a “trade war,” and neither does Trump. His actions are merely a recognition that China’s Government manages every aspect of its trade for its own advantage, and also a disengagement from 40 years of bad trade policy with a highly mercantilist China, particularly Clinton’s WTO “agreement” (surrender is a better word).
I am a farmer and I am sticking with Trump. Yes the trade war has done severe damage to our markets. But the Chinese have been cheating and manipulating this market for decades and every farmer knows it. Most of us want Trump to stick to his guns and double down on the Chinese to force them to play fair.
Here in California farmers are being regulated out of business by state and federal agencies. Have to get rid of my 2006 International diesel trucks with 40,000 miles on them because they no longer meet California Air Resources Board requirements. With Ground Water Sustainability
Act farmer can no longer use many existing wells. With Regional Water Quality Control Boards farmers can no longer have runoff originating from their land. $15 minimum wage with an 8 hour day prior to overtime. It goes on and on and has nothing to do with China.
Ractopamine is banned in 160 countries, as is the meat produced with it.
“Harmless” is certainly an exaggeration.
I don’t eat anything produced with it.
Well done article, though China has legit grounds for banning ractopamine.
What every article on these “trade wars” misses, in my opinion, is that the US sells China mostly commodities while China sells the US lots of high tech. The effect of a bilateral tariff on commodities is simply to move purchases around. By this I mean that China shifts its soy purchases to Brazil, which has only a fixed amount to sell. Thus, Brazil has less soy to sell the EU, which thereafter buys more soy from the US.
To the extent that there are dedicated US supply chains for moving these commodities through China, they atrophy short and (especially) long term. Brazil builds up its China supply chains. The real impact of a tariff war vis-a-vis agricultural commodities revolves around these supply chains. The real US aim of these trade wars (around our exports) is to reduce our country’s reliance on these supply chains; and the payoffs to the US are long term. Our long term ability to disengage from China trade revolves around the pivot we are making away from these China supply chains.
As for US imports of China high tech, these are NOT commodities of course; and China has market power. It is implausible that China would price these goods in a highly inelastic portion of the demand curve (firms with significant market power would never do so), and as such it is likely that China is bearing a disproportionate economic burden from these tariffs.
And moreover, supply chains for this high tech will move out of China long term and toward Thailand, Vietnam, Taiwan etc, even Mexico. In this case there is a double payoff to the US. First, the US becomes less reliant over time on China high tech. Second, China forfeits is hegemony over Asian supply chains that has given it so much profit in recent years.
This is all basic economics, taught with great confidence in undergraduate economics classes everywhere. I’m not sure why it does not make it into mainstream media discussions of the topic.
Why Farmers Aren’t Going To Abandon Trump Over The Trade War Despite China’s Threats
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Because Farmers are typically patriotic people of high moral character. That automatically disqualifies them from being Democrats.
Excellent article. Thanks for posting.