Posted on 08/10/2018 6:14:32 AM PDT by pgkdan
If the US is about to engage in a trade war with China, the Middle Kingdom has just signaled that it wants that conflict to be a limited war by exempting a major US export to China, crude oil. The Wall Street Journal reported:
As China made good on its threat to impose 25% tariffs on $16 billion worth of U.S. imports, one big-ticket item originally on its hit list was conspicuously missing: crude oil.
Oil had been one of a slate of targets China listed in June for tariffs to counter those the Trump administration threatened on Chinese imports. The gambit jeopardized a budding relationship: Over the past two years China has become the biggest buyer of U.S. crude-oil exports, last year taking a fifth of the total.
But oil was off Wednesday’s final list.
The reason is quite simple: China desperately needs to import oil, and the US is the fastest-growing source of crude oil exports on world markets, including
***Snip***
Oil (and soybeans and other big US commodity exports) is traded on global markets, which means that a Chinese tariff on US commodities doesn’t destroy the market, it merely shifts supply or demand to other countries:
“The U.S.’s light crudes aren’t going to go away,” said Erik Norland, senior economist at CME Group. “If it’s not exported to China, it will be exported someplace else, and those could be other countries in this region or other parts of the world.”
The same is true for soybeans. If China buys Brazilian soybeans instead of US exports, the markets that Brazil formerly exported to will have to switch to US suppliers. Instead of the predictions of disaster for US farmers, the market price for soybeans in China is now rising, as Reuters notes:
***Snip***
(Excerpt) Read more at americanthinker.com ...
Gee, do you think it’s possible that President Trump knows more about negotiating than the nervous nellies that scream about trade wars damaging America?
Quite possible!
btt
NOBODY knows how to negotiate like the Prez.
What many don’t get, it’s not about tariff’s, it’s not cash or trade surplus, the reason DJT is being a Hard Ass is because it’s about IP, all about IP.
The Chinese have built their properity around stolen Intellectual Property. (IP)
China is about at the end of what they can put tariffs on, without hampering their own abilities.
The USA has the majority of Chinese imports still to go.
China could raise the percentage of the tariffs, but so can the USA.
China badly needs a good percentage of what it imports from the USA (like technology components), whereas the USA really needs very little of what it imports from China.
Pretty much. It’s silly to impose tariffs on US oil. It makes very little difference to American oil sales.
WINNING! It looks like Trump was right again. MAGA!
He’ll put a boot in their ass.
It’s the American way...
Not only that, Trump's business experts on his team know more about actual world trade than the Chinese.
Substitutes are more available to the USA.
Beyond the commodity products like oil and food, the stuff that is left by China without new tariffs, are mostly things they can not easily substitute. Things like the chips that go into products they export.
If they drive up the price for essential components of their products through tariffs, they would drive more manufacturers out of their country.
Beyond what they import, there is basically no substitute market for them to sell what they now export to the USA. If the US substitutes another source for those products, China will have to reduce capacity/lay off workers/ adjust to lower tax revenues.
So the slack has been taken up, as far as tit-for-tat tariffs go. Much beyond here, it is increasingly a one way ratchet of pressure on China.
If we fight, I’m going to win.
Be we don’t have to fight, and we both can win.
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