The latter is the more likely outcome. There are many foreign companies, including American, manufacturing items for the US market in China. Relocate to America and there are no tariffs. We saw that impact when the US put a 25% tariff on light trucks (and SUVs) in 1964, the so-called "Chicken Tax." It is still in effect, which is why Mercedes, BMW, Toyota, Honda, etc. relocated their factories to the US to assemble these vehicles.
The problem with broad range tariffs is the message they might be sending is ‘Americans are willing to pay more’... the worst message possible.
I don't buy the Wall Street argument that Americans will be paying that much more for products due to the tariffs. That has not been the case with the steel and aluminum tariffs. The bigger question is what happens to China when it can't sell to the US? What other markets can replace the US? The US exports to China totaled $129.9 billion; goods imported from China totaled $505.5 billion. The US exports to China make up a fraction of our $20 trillion economy.
During the most prosperous periods in American history, we had high tariffs to protect our industries. The free traders have convinced many that their way is the only way. We have seen the results and they are not pretty.
you would know better than i but how big an issue is losing face in their part of the world?
The best non-technical defense of President Trump's use of tariffs against China is a short article in "MarketWatch" by Martin Feldstein, Ronald Reagan's senior economic adviser:
"Trump and other U.S. officials think a tariff war with China can be won because China exports about four times more to the U.S. than the U.S. exports to China. The U.S. can therefore impose a much larger burden on Chinese exporters than the Chinese can impose on U.S. exporters. The Chinese economy is also much more dependent on exports than the U.S. economy is.
The tariffs are indeed a tax on American consumers and firms that use Chinese products in their production processes. But the increase in prices that Americans pay for Chinese imports and the resulting loss of real income are very small. Annual imports from China total about $500 billion. If the U.S. imposes a 25% across-the-board tariff, the rise in the cost to American buyers — assuming no change in the prices charged by Chinese exporters — would be $125 billion.
With U.S. national income exceeding $20 trillion, the increased cost would be a little more than 0.5% of total U.S. spending. And, because Chinese exporters would probably reduce the prices of some of their products, the increased cost to American buyers would be less than $125 billion. Moreover, American buyers would shift some of their purchases to products produced by U.S. firms or to imports from other countries, further lowering the net cost.
In short, the cost of the imposed tariffs is not large relative to the gain that would be achieved if the U.S. succeeds in persuading China to stop illegally taking U.S. firms’ technology.
Tariffs could be worth it if Chinese were forced to stop stealing U.S. technology