So you're going to use tariffs to raise the costs of Chinese goods so that they cost as much as American goods. What are you going to about the very significant amount of inflation that would create?
What are you going to do when foreign countries retaliate?
Since we have a large trade deficit, a trade war can be though of as hurting them more than us to some extent, however the problem is that it's going to take a lot more money to produce a lot of those things here.
To produce them we're going to need import a lot of raw materials. We're going to need to import a LOT more oil. We're going to need to produce a lot more energy. That's not necessarily bad if it helps us grow our economy, but we're going to need to trade with other countries to get those things, and our increased demand is going to drive up prices.
We had amazing growth during the industrial revolution because we had vast natural resources that we exploited. We got used to having a lot of stuff. We now buy, use and waste more stuff than any other country in the world. To keep ourselves living in this lifestyle, we're going to have to import a lot of materials. The other option is we're going to have to learn to do without a lot of junk.
High taxes are definitely a problem, but even moves to high-efficiency manfacturing in many areas would not be enough due to the insurmountable wage/regulation/currency-value differences between the US and China. Those cost differences are what can, and should be, wiped out through the use of tariffs.
You can use tariffs to deal with small differences, not with large ones. If you use large tariffs, you're basically cutting yourselves off from the rest of the world. Eventually the rest of the world that takes advantage of the benefits of trade will pass you by.
Tariffs are also good to address short term problems. For example if a hurricane decimates a particular industry domestically, so we use tariffs to protect the industry while it rebuilds so that rebuilding is a sound investment.
And what percentage of those Honda vehicles are of foreign content?
Honda uses a higher percentage of American made parts in their car than most American car companies. If you don't believe me, just look at the stickers at the dealers. They are required to put the percentage of US parts right on the sticker.
The problem is we're barely being protectionist at all. Just look at the increasing dependence upon foreign parts for our military. If ANYPLACE we should have an absolute minimal dependence upon foreign imports it should be for the military. But within MRBM/cruise-missile range of China is enough sources that could bring practically all of our precision-guided weapons, aircraft, armored vehicle and ship combat systems manufacture to a grinding halt in 90 days or less.
I work in the military avionics industry. We export far, far more military hardware than we import.
We aren't building a lot of heavy armored vehicles or ships right now, at least not compared to the past. However, it's not because we're importing them from elsewhere. Of what we are building, a lot of it's being built for export.
Ah, but there's the problem. We're so fixated on small 3rd world nations with 4th rate militaries we're not even seeing the monster that we're growing with our own trade policies.
China isn't just growing because of our trade policies. They are growing because they are making huge investments in their future. They are building the infrastructure, and thinking long term while doing it. They are encouraging foreign investment for the purpose of long term growth. They have embraced a lot of free market attitudes while still managing to maintain tight control over their people.
It's questionable how long they can continue to embrace free market principles while still maintaining their tight control over their own people. However, in currently, one thing is obvious. The are catching us in technology. They are investing in infrastructure. They have lots of resources and an incredible number of people.
If we adopt protectionist tariffs, we can shrink their markets and slow their growth, but we hurt ourselves at the same time, so it's not obvious if there is really a net benefit to that approach, and it only delays things.
In the end, we need to learn to compete with a economic rival that's not a pitiful as the EU currently is. We are becoming more and more like the EU. Protectionist policies, too many worker "protections", to high of taxes, too much government interference.
The Chinese may lose control over their people as their free market policies grow a powerful and active middle class. Eventually their people are going to demand a higher standard of living. However, by then they will have built up an infrastructure that will rival or surpass or own. They will have the military might to truly be a super power militarily as well as economically.
Right now we face two big threats. We have the Islamic radicals which would likely lead us to a new dark age in their efforts to bend the world to their will. The second threat we face is China dominating us economically and militarily.
Tariffs aren't going to stop the Chinese. They are doing too many things right. They are doing the right things to invest long term. The only way to compete with the Chinese is to improve productivity, to invest in our future, and to continue to innovate.
"So you're going to use tariffs to raise the costs of Chinese goods so that they cost as much as American goods. What are you going to about the very significant amount of inflation that would create?"
The raising of tariffs would have to be gradual, to give time for companies to re-invest the massive profits they're currently earning into manufacturing and support here in the US. I don't believe the inflation would be much more significant that one is already occuring.
"What are you going to do when foreign countries retaliate?"
That'll depend on how much balls our own govt has. Since we'd have to withdraw from most, if not all, of the trade treaties first a lot of retaliation threats by foreign nations would consist of nothing more than bluff. They know damn well we could damage them far more than they can damage us, and if they were convinced we'd push it that far they wouldn't even try.
"To produce them we're going to need import a lot of raw materials. We're going to need to import a LOT more oil. We're going to need to produce a lot more energy. That's not necessarily bad if it helps us grow our economy, but we're going to need to trade with other countries to get those things, and our increased demand is going to drive up prices."
With the American trade dollar fueled increases in demand from China that'll happen anyway, it might as well be us with the long-term benefits of the industry and infrastructure improvements that'll come with it. Especially if a lot of it is investment in nuclear power and coal gasification/liquefaction, shale, etc....
"To keep ourselves living in this lifestyle, we're going to have to import a lot of materials."
Which is what trade treaties directly and individually with source countries is for. Also, it could spur more interest in space exploration with the goal of determining what resources the moon has, and how to exploit them where it would be more cost-effective than dealing with other nations (as a long-term goal).
"You can use tariffs to deal with small differences, not with large ones."
Yes you can, especially if it's done gradually. If it's done too large and too suddenly, it's like switching a car into reverse on the freeway instead of slowing down, getting off, and then back onto the lanes going the other direction.
"If you use large tariffs, you're basically cutting yourselves off from the rest of the world."
Didn't happen before, won't happen this time either. You mainly will be switching around where people will be investing.
"I work in the military avionics industry. We export far, far more military hardware than we import."
Most of that avionics contains components that are only made overseas within Chinese MRBM/cruise-missile range. Without them there is nothing to export.
"Honda uses a higher percentage of American made parts in their car than most American car companies."
Now that's a quick way to send a shudder up my spine! The last part of the sentence, not the first.
"China isn't just growing because of our trade policies."
Just because, no. Mostly yes. I'd say no less than 75%.
"We are becoming more and more like the EU. Protectionist policies, too many worker "protections", to high of taxes, too much government interference."
Yes, but not due to protectionist policies, but definitely due to the last three.
"It's questionable how long they can continue to embrace free market principles while still maintaining their tight control over their own people."
That's why they make sure they keep control of who has the guns. And that's another advantage of a large population. You can kill a lot of people and still have lots left over to run your economy.