Posted on 09/24/2018 10:27:23 PM PDT by Olog-hai
The United States cannot win its tariff war with China, regardless of what President Donald Trump says or does in the coming months.
Trump believes he has the upper hand in this conflict because the US economy is so strong, and also because politicians of both parties support the strategic objective of thwarting China’s rise and preserving US global dominance. But, ironically, this apparent strength is Trump’s fatal weakness. By applying the martial arts principle of turning an opponent’s strength against him, China should easily win the tariff contest, or at least fight Trump to a draw. […]
In handicapping the US-China conflict, another economic principle — rarely used to explain the futility of Trump’s tariff threats — is much more important than Ricardo’s concept of comparative advantage: Keynesian demand management. […]
With little spare capacity available, the new investment and hiring required to replace Chinese goods would be at the cost of other business decisions that were more profitable before the tariff war with China. So, unless US businesses are sure the tariffs will continue for many years, they will neither invest nor hire new workers to compete with China.
Assuming that well-informed Chinese businesses know this, they will not cut their export prices to absorb the cost of US tariffs. That will leave US importers to pay the tariffs and pass on the cost to US consumers (further fueling inflation) or to US shareholders through lower profits.
Thus, the tariffs will not be “punitive” for China, as Trump seems to believe. Instead, the main effect will be to hurt US consumers and businesses, just like an increase in sales tax. …
(Excerpt) Read more at irishexaminer.com ...
Kaletsky is full of BS.....
We surely will if they let Grassley anywhere near it.
Sorry, but the good thing about Trade with China, is that China backed itself into a massive corner.
The U. S. has much less to lose than China does.
Unraveling is the key word in China these days.
The EU is complaining about us. Last night, the BBC also spoke of a “trade mechanism” that will be used for Europe to continue trade with Iran.
It was described as some sort of high tech barter system involving trading goods without using American dollars. An Italian woman leader of the EU announced it. I was guessing about the “Italian” part by her name (sounded Italian).
The EU can’t feasibly stop trade with us, by the way, and won’t be joining China against us to any meaningful extent. The EU is being cheated by China, too.
We can only gain, if we’re tough enough to pay slightly higher prices for some things for a short time. That has already begun, and we’re doing better than before. We need more manufacturing just to get what we need here, and we will have access to far more than enough natural resources.
I’m older, mind you, and I’m not complaining. ...perfectly willing to do it and work a little more through the end of my life for the sake of my grandchildren and their children.
Think of it as another adventure. :-)
On Senator Grassley, Iowa is spending nearly $8 billion more than it’s taking in so far this year. With his state joining the debt regime to that extent, he’d best get on the Trump program. If we don’t get much more manufacturing going post haste, we’ll be racing towards a bond collapse and the vicious cycle that will follow it.
http://www.usdebtclock.org/state-debt-clocks/state-of-iowa-debt-clock.html
We’re all in it. One sign on the post says, “Prosperity.” The other says, “Default, repudiations and collapse.”
We each need to be more self-sufficient. Our country needs to be more self-sufficient. Our forefathers were right about work, savings and domestic business competition (healthy).
The inflation was already happening and outrageously so. I know that we will probably pay a little more for some things and *how much.* Even though I’m older than many who are retired, that’s fine. I’m an American, not some coveting European who regulates against his neighbors. We’re supposed to be “indivisible,” remember?
The US consumer will have other choices. Countries like India, Indonesia, Philippines, Thailand, Vietnam have the capacity to make all the low tech manufactured products that China made. South Korea, Japan, Taiwan can replace Chines high tech goods.
Isn’t it better geopolitically to strengthen out allies via trade? Sure, tensions will increase, but that also means that the Pacific rim nations will buy more US military products.
The premise is wrong
If the tariffs actually decrease the import of Chinese goods, it is not only not necessary but impossible for American companies to pick up all the slack. The manufacturing willl be shifted out of China to a more favorable country or countries.
China will lose not only the revenue but the jobs. The loss of jobs on a large scale will be devistating to the chinese economy. There is presently not adequate domestic demand to pick up the slack
Then there are other countries with trade imbalances with China. If they join the Trump gambit, the situation will get truly dangerous.
Except investment IS flowing back into the US. Manufacturing jobs ARE increasing at a steady rate. And of course, China is not the only place in the world from which to source goods. The P&Gs and Wak-Mary’s and Targets of the world can diversify their suppliers to offset the risk. They’d be foolish if they haven’t already started doing so.
China meanwhile has a tanking bond market and a declining stock market due to their massive real estate bubble. It is they who will be forced to cave in.
Ah, yes, Keynesian economics. Like socialism, loved by liberals even though it never works.
Actually, Trump did not start any trade war. China and the EU were waging trade war on us for a long time; Trump is the first to fight back.
Keynesian economics has a perfect fecord. Of failing. See Paul Krugman for his amazing Keynesian predictions.
So right. A friend has 27 free tape measures, lots of free screw driver sets, and other free things from Harbor Freight, and gets free batteries all the time, free with any purchase. He has coupons in his truck and goes there (40 miles each way) several times a week.
Keynes was a moron. You’re more likely to find a smashed watch with one broken hand being accurate more often than a Keynesian economist. Krugman is one. And he’s so wrong so often that his spin should be enough to power a small city for a few months.
I find broken digital clocks more accurate than Keynesians.
Your friend has an addiction habit! To Harbor Freight, of all things. I shop there sometimes, about 40 miles away also, but only about once a year. When I went, I bought lots of stuff on impulse because it was dirt cheap. Some of it broke, but so what because it was cheap and I'd just buy another. For instance, a hand-held finishing router for about $15. Lasted a couple months, bought another. Most expensive thing, a 3-in-one sheet metal bender cutter roller for about $300. Would cost me twice as much if not made in China. A lot of the things I bought there were impulse buys and not necessities, and I can afford paying more somewhere else if I really wanted it.
A couple years ago I went to Home Depot to buy quality finished plywood for a furniture project. I had expected to pay $45 to $55 a sheet for it, because I had paid that much in the past. Nope, it was about $24 a sheet. I told the clerk that can't be right. He said they were now buying it from China, instead of the northwest USA. Of course I bought it for my vintage bookcase project, but I was shocked that even wood items are coming from China. As I said, I was prepared to pay more, but everyone looks for a bargain.
With the tariffs on China, so what if the prices go up; they'll only be getting parity against other countries' goods including our own, and people will buy regardless while shopping for best deal.
From your simplistic writing, clearly you’ve never studied economics.
I don’t have time to explain it to you further.
From your simplistic writing, clearly you’ve never studied economics.
Did you ever learn about basic concepts of pricing models are influenced by supply and demand?
I don’t have time to explain it to you further, but I will say one thing:
You’re ignoring the fact that markets are dynamic. If you think Vietnam and other cheap manufacturers will keep their prices low if we divert our massive buying power from Chinese products, I’ve got a bridge to Mars to sell to you.
It would be like turning a fire hose of demand on these smaller countries’ markets. Of course their prices won’t stay cheap.
You owe me a note of appreciation for schooling you on this topic.
Who said what qualifies as a win? As long as our comparative situation is improved, it is a positive outcome.
Of course, Liberals cannot allow this possibility into any conversation.
Competition is bad, huh? That's about the dumbest thing I've read today.
As for the idiotic notion that nobody produces cheaper than China, you might want to note that their extended success has changed that status. Labor is cheaper in MANY nations today, and they are simply following China's example now.
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