Fascinating. I've always wanted something to be done about China's trade abuses, particularly dumping, but also the human rights issues. I really don't know enough about trading tariffs but I am very curious: do these tariffs have any chance of improving China's behavior?
Xi Jing Ping is running scared. The stock market has fallen 25% this year. Yuan has fallen 10%. There's a 400 billion tariff coming his way, and because of 'saving face', there's no way he will back down. He has to also unwind China's 12-18T shadow banking, China's version of subprime loans similar to 2008 crisis (but way bigger). He has to figure out how to steal IP to move up the chain when US and the rest of the world has upped their defense, restricting Chinese tech investments and resisting hacking attempts. He also needs to deal with the tariffs encouraging manufacturers to leave China and go to southeast asia or back home via reshoring or automation. There is also the matter of a lack of consumer market in China, after it gets shut out of US and europe. Not much Chinese consumers can buy after $800/month income, after paying most of it to mortgage and inflated food prices.
He also has to prop up the real estate bubble:
"price rose 31 percent to nearly $202 per square foot. That's 38 percent higher than the median price per square foot in the U.S., where per-capita income is more than 700 percent higher than in China." https://www.bloomberg.com/view/articles/2018-06-24/why-china...
This is a nice case study in misleading with statistics.
The measured prices of Chinese real estate is based on something called a 100 cities index (based on your linked article) which is presumably specific to Chinese urban real estate.
It goes on to compare that to the median US prices (instead of the mean US prices) and compounds that error by comparing with different populations (top urban population centers in China vs all real estate in US).
Finally, it compares the 100 cities index price/sq ft rate to median US income - comparing a mean to a median - in a population with a long tailed income distribution.
RE speculation in China and the debt used to finance it are a big problem with serious contagion risks, and deserve a much higher quality discussion that that.
edit: if someone were to want to analyze this honestly, compare that real estate sq. footage figure to its US counterpart, then compare to it to mean urban income in both countries. for extra credit, see if the degree of leverage is appropriate by looking at respective debt levels, growth of debt levels, and income growth.
Maybe when the Chinese bubble crashes the present crop of neo-totalitarians and anti-democracy reactionaries will shut up. I am referring to those elements of both the alt-right and the totalitarian left who look to China (and similarly to Singapore) and pine for the miraculous efficiency of central planning and authoritarian rule by strong men. If only we had a king (or a one-party state or similar) we too could build infrastructure at breakneck speed and prop up the economy forever instead of dealing with the messy inefficiencies of democracy and consensus.
People were just as psyched out by the USSR. It looked miraculous until the 1980s. The Nazis psyched people out too. We didn't get to see how that one would have turned out long term because they blew themselves off the map with an insane war on two fronts but my guess would be similar to the USSR: a little period of apparently miraculous progress followed by rapid stagnation, being eaten alive by cancerous corruption, and collapse transitioning to something like Russia's present-day mafia state.
It's easier to go from zero to one than from one to N. Totalitarian regimes are very good at copying and rapidly implementing things they already know how to do, so they tend to go from zero to one with breathtaking speed. Then they hit a wall because their totalitarianism prohibits innovation (either cultural or technological) and is very fragile. The economic miracle ends when they run out of stuff to copy and usually their politics goes to hell when the Great Leader and/or revolutionary generation dies.
Social democracy sucks at rapid execution on the known. I get frustrated with it just like the next person. But it's the only system with a demonstrated track record of continuously marching into the unknown and of defending itself for long periods of time against extreme corruption.
There is perhaps a pragmatic argument for being a dictatorship if your goal is to climb from backwater to "developed" nation very quickly and then to transition to a democracy, but the authoritarians in charge have a history of nixing the second part of that plan.
We thought this was what China was going to do until their new emperor emerged and made himself president for life.
> Underlying all this is the simple fact that China can't allow real-estate prices to decline significantly. Politically, homeowners have come to expect their property values to rise continually in a one-way bet. [...] Rather than run those risks, China is simply ramping up development.
Isn't ramping up development to increase housing supply exactly the way NOT to keep housing prices high?
China export will decline significantly after companies finish their move out of China due to the tariffs. no one is going to stay when tariff rates starts at 10% and may end up way higher (50%?) depending on how the trade war goes
You're a new account and you've only ever commented on this post, so I don't think you're really communicating with goodwill. But people reading you should understand that companies don't locate production in China for low cost reasons, they do it as to gain access to the consumer market. If a company has to choose between the next 25 years of the US consumer market or the Chinese consumer market, then you will be disappointed to see their decisions if you are assuming tariffs will have the desired effect.
>But people reading you should understand that companies don't locate production in China for low cost reasons, they do it as to gain access to the consumer market.
"the share of Nike shoes made in China fell off a cliff, going from 32 percent in 2012 to 19 percent in 2017."
Did you read your own link? It undercuts all the points you're making. They make a bunch of shoes there still (it's not clear if they've even reduced Chinese production or moved new capacity to Vietnam) and they are moving further up the value chain to luxury shoe production. And the reason for the move (increasing wages) means more consumption and more capacity for consumer deleveraging.
Clothing/shoes are right at the bottom of the value chain. China was losing them already to Bangladesh and Vietnam and doesn't care. All you need for that is dirt cheap labor and a container port. It's not a strategic industry.
The higher value stuff is not going to move though. If America severs the tech supply chain we're not going to see manufacturing suddenly move to the US, we're going to see skyrocketing inflation in hi tech goods.
That is, until such time the US can build up a manufacturing ecosystem equivalent to the pearl river delta, which will take years.
IIRC Foxconn built the Wisconsin factory was symbolic and kind of built almost as a favor. They even changed the ground-breaking date to accommodate Trump being there.
Point being that no, I don't think one $10 billion plant is indicative of any real kind of economic shift, any more than $5 billion spent by Apple on factories is turning the tide of manufacturing offshoring.
The Pearl River Delta has an enormous ecosystem of factories, companies and deeply interconnected supply chains valued in the trillions and both this factory and anything Apple build will be heavily reliant upon it for components, whereas vice versa is not the case.
None of those are mutually exclusive. The US has a great deal of heavily-automated manufacturing facilities. That's not expected to change. But nor does anybody expect the US to try and recreate the electronics supply chain domestically.
The parent comment's phrase "higher value stuff" is referring to higher-value Chinese exports. Focusing on electronics, for example, the majority of hard drives are produced in China and Thailand. And while Foxconn is building a $10bn display panel factory in Wisconsin, that's basically a drop in the bucket compared to electronics components manufactured in China and other Asian nations. More importantly, that display facility relies on a supply chain that's heavily dependent on Chinese (and Asian in general) components and raw materials. As are many of the components in the robots and hardware used by automated American factories.
It'd take a truly mind-boggling level of investment to recreate the industry supporting that supply chain in the United States with very little hope of being competitive if that's what someone is hoping for. And while protectionist policy could be used to help shift that analysis, it'd need to be draconian enough that the Smoot-Hawley Tariff Act of 1930 would look positively minor. Because building new factories (and the factories to support those factories) can take years, you wind up with a multi-year transition period at best (more realistically, decades). That's a multi-year period where electronic component costs skyrocket and affect every single aspect of the American economy. All so that, in the end, we can pay significantly higher prices for those components. In terms of economic policy, it'd be less damaging to take the equivalent investment, printing it out as cash, and using it for the world's largest bonfire.
As for the clothing industry, that's a transition that economists fully expected. The thing about developing countries is that--at first--you've got lots of cheap, unskilled labor. Clothing and textiles are two of the industries that are all but tailor-made for a comparative advantage in that scenario. You use that cheap labor and foreign investment to industrialize, build up infrastructure, and pour every dollar you can into education programs. Eventually, that means you're going to lose your comparative advantage in certain industries. This is a bit of a simplistic overview, but the point is that losing certain clothing exports isn't necessarily a bad thing in itself for China.
Yes. The Chinese establishment is much more organized and organizationally intelligent than the US government right now. They peg the renmindbi, so the proper way to analyze this is while is to assume it has a goal and is intentional.
The idea that Xi is "running scared" is too ridiculous to be funny. I'm not pro-China, but one has to have some frightening bias to say that. He's the most powerful person in the world right now.
If true, I'm not sure if that means anything. Isn't the Chinese stock market notoriously volatile? I'm also under the impression that there's a much greater proportion of speculative investing going on in it compared to the US market.
I just saw on the Financial Times front page that he is loosing reserve requirements of the banks. Globally, this trade battle might trigger something much worse than what is happening in China as you describe.
Yes because by buying and holding our debt they both keep our dollar strong and allow us to keep over spending. Without them (buying our debt) we are screwed.
In a world at that scale that much debt held by one single entity is massive. Activist investors have taken over large companies on such a small amount.
I'd be careful undervaluing the influence that a single debt holder of that size could have. Plus you are further assuming that that's the totality of their influence and it's likely 2-3* that if you include influence.
I'd definitely be wary if I was going to war (trade is the new war) with another nation.
From the same article: “As of April 30, 2018, debt held by the public was $15.3 trillion and intragovernmental holdings were $5.7 trillion, for a total or "National Debt" of $21 trillion.[5] Debt held by the public was approximately 77% of GDP in 2017, ranked 43rd highest out of 207 countries.[6] The Congressional Budget Office forecast in April 2018 that the ratio will rise to nearly 100% by 2028, perhaps higher if current policies are extended beyond their scheduled expiration date.[7] As of December 2017, $6.3 trillion or approximately 45% of the debt held by the public was owned by foreign investors, the largest being China (about $1.18 trillion) then Japan (about $1.06 trillion).[8]” of the 6 trillion held by foreigners China has a sixth of it. Followed closely by japan. The point is that if an entity owning 1/12th of your debt decided to start selling it that entities’ borrowing costs would rise a lot which could lead to inflation. Inflation hurts our ability to buy aka purchasing power.
I know probably as little about tariffs and international trade as you, but my guess is that it might, but only if there's no viable customers left to export their steel to.
My guess is that Canada's action here, along with the EU, will be pretty influential, as China won't just be able to dump all their US-bound steel on those markets.
I don't necessarily disagree with the Trump administration's moves against Chinese economic behaviour here, but I do think that exemptions should have been made for Mexico, Canada and the EU at a minimum.
If this had been about getting China to play fair, and co-ordinated well with other major economies, I think this could have worked out pretty well. But it seems Trump's main goal here is domestic protectionism at any cost.
I’m under the understanding the steel tariffs against Mexico and Canada are to avoid having China dump their steel via those countries where a co imports into MX and CA and turns around and exports same to the US.
That is already disallowed and policed well enough. For example, there was that Chinese aluminum company that was stockpiling in Mexico with the idea of importing into the USA tariff free. They were found out easily enough. See http://www.businessinsider.com/a-chinese-billionaire-may-hav....
"Co-ordinated well with other major economies" was almost certainly not going to happen. The EU can't even come to agreement internally on this; that's the whole reason they hadn't imposed similar steel tariffs on China themselves.
Taken the lead on what? What is their plan? Here is the Sec. of Agriculture Sonny Perdue talking about soybean tariffs [1] yesterday.
Q: You said the president has a plan. Even in broad strokes, what is that plan?
A: That’s in the president’s mind and in his negotiating strategy. He is a different type of negotiator. I don’t think any foreign country has ever gone up against a president like President Trump before. That’s his style. Frankly, it’s been pretty effective so far in other areas. I think he and President Xi (Jinping) in China have a great relationship. I think it will be dealt with on a personal basis. The goal is, obviously, to get China to change its ways so we can resume trade between our countries. The president, however, does not intend to tolerate a $350 billion to $400 billion trade deficit going forward.
That's a terribly flagrant non-answer. If they could seriously form a coherent and rational explanation for what they're doing, people just might understand better. As it stands, everyone just projects their current thinking onto the circumstances to find some explanation all because they won't answer a simple question.
The reasons why are what I think you've pointed out— there really isn't much of a plan on their part. It's just reactionary and rabble-rousing (with a hefty price tag for those who get hit by the outcomes).
To that point, the EU (along with the US obviously) has taken note of China's 2025/2050 type plans to accumulate technology in a roach motel style (tech goes in, they try to buy up the world, but you can't buy their companies or get level access to their market).
China has noticed: they've ordered Xinhua to entirely stop talking about 2025 [1]. After 140 mentions of 2025 in the first five months of the year, there have been zero since June 5th. Having violated Deng's hide your strength (and bide your time) premise, they're clearly looking to be more clever about their plans again.
Trump's trade war with China would work extraordinarily well, if he'd just coordinate properly with allies on it. As you say, he's pursuing a broad brush trade conflict with numerous fronts simultaneously, difficult to manage to say the least.
The overall positive of what's going on, is China's scheme is over. There's no going back to the free ride approach that has allowed China to play by entirely different rules than every other major economy.
China has a thing for 5 year plans, they’ll talk up the next deadline and talk about how great it will be. For example, a few years ago, 2020 was all the rage (see http://reddit.com/r/china2020). Then 2025, but I guess we are getting too close to those year deadlines and they stop talking about the promises they will obviously not be able to deliver on. So maybe now we are in 2030 territory?
From my perspective, he is not completely wrong on China for sure.
But I'm honestly not sure why his administration seems to also be targeting allies such as the EU, Canada, and Mexico. I'm sure there are "quibbles" with trade on trade with these countries, but my impression was there were no major problems there.
The other problem with Trump's tariffs IMHO is what you point out: there is a lack of coordination with allies, and a general chaotic nature.
Overall, uncertainty on this front probably isn't the best for business planning, given that the tariffs have more of a whiff of generic isolationism than punishing any misdeed.
"The United States currently imposes a 2.5 percent tariff on imported passenger cars from the EU and a 25 percent tariff on imported pickup trucks. The EU imposes a 10 percent tariff on imported U.S. cars."
Seems like this should be more fair all the way around. What we have with this isn't free trade.
Yes, as I said, you can cherry-pick various trade issues. Heck I can even find long-running trade disputes on certain products -- one that immediately comes to mind is the long-running dispute between Canada and the US over lumber (https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_s...). What's "fair" in these type of disputes of course depends on which side you are on, of course.
I just wasn't aware of any major outstanding issue that required a "trade war" type scenario with these countries (EU/Canada/Mexico) now.
The issue with trade wars is that the tariffs that result can end up lasting far longer than one might expect, and from what I see most economists consider the overall impact negative. The 25 percent tariff on light trucks in the US for instance comes as a direct result of a minor "trade war" between West Germany and France on chickens from approx. 1961-1964. (https://en.wikipedia.org/wiki/Chicken_tax)
Generally speaking, if a tariff another nation imposes is bothersome, removing tariffs in a negotiated deal is what has tended to work over the last several decades. That 10 percent auto tariff was recently negotiated away in Japan, for instance, with Japan likewise removing some tariffs they applied on EU products. (http://europe.autonews.com/article/20171208/ANE/171209797/eu...)
In the case of China, where they are more prone to violating WTO rules, that approach might not work, and a more aggressive stance might be justified. But the EU, Mexico, and Canada? Not so sure there.
US imposes a 2.5 percent tariff on European autos. The EU imposes a 10 percent tariff on US autos. How is that fair? Why should the US not impose tariffs and just accept that?
And the US charges 88% tariffs on sugar imports over quota, while the EU has no sugar quota.
It's very easy to cherry-pick particular tariffs, but the truth of the matter is that maximum tariffs are generally constrained by international agreements that have lots and lots of horse-trading over what is accepted. When you look at all products, the US doesn't look particularly generous compared to the EU. Source: https://www.economist.com/finance-and-economics/2018/06/14/h...
Arm chair economist here as well. Historically trade abuses are resolved throught the WTO.
That's what happened when the US had a dispute with Brazil over cotton tarifs protection [0], or countless other trade disputes countries have with each other. Even recently there was a chicken dispute case with China [1].
That's not perfect in any way, and that's crazy slow, but doesn't seems worse than playing chicken run through twitter announcements. If the point was really to do something about China's trading behavior, I think it would be done through the WTO, and in particular it would need more buying from the other main countries.
It’s also a rules-based organisation. China breaks the WTO’s state-owned entity rules, its access around domestic market rules, its freedom of navigation rules, its IP protection rules, et cetera.
China was admitted when it was non-compliant, with the belief that admission would drive opening and compliance [1]. That hypothesis is not sustained by evidence.
My layman understanding is that the WTO is not an executive organisation, but an independant arbitor that decides on basically who’s right and who’s wrong.
From the decision, each party can discuss a settlement, and if no agreement is reached the wronged party is free to apply whatever retaliation it judges fair to the wrongdoing party.
The WTO’s decision would serve as a backing of the retaliation, to prove they are not just arbitrary.
In that sense China breaking the rules is a issue with the “victim” country who needs to retaliate if no other means is available, with eventually help from ally countries if they want to make an example.
> China breaking the rules is a issue with the “victim” country who needs to retaliate if no other means is available, with eventually help from ally countries if they want to make an example
That’s what is happening. China repeatedly broke rules and ignored international arbitration orders (see: UNCLOS tribunal brought forth by the Philippines). They were given the benefit of doubt (a) under Obama and (b) before they became a dictatorship.
How many rules does the US break? Is causing havoc in the global and regional economy of the Middle East / Europe not relevant for international trade?
The rules of the World Trade Organization must be set by the world trading countries, not by the US. Maybe China violates so many rules because they are tailored to (made for and by) the US.
Said another way: who says that the western way is the only or the best way? Is our system working so well? We need rules which allow for different economic systems to trade with each other.
Once you have world-wide acceptable rules, you enforce those rules. Breaking the rules is part of being in the system, and exactly the reason why a WTO is needed: to arbitrate.
> The rules of the World Trade Organization must be set by the world trading countries, not by the US
The rules I described are the rules of the WTO. They are a reasonable precondition for being treated as a free trading nation, a designation which comes with tremendous economic benefits but also risks to other trading nations.
> to arbitrate
The last time China was taken to international arbitration (by the Philippines) it ignored the rulings. China is presently brazenly breaking WTO rules. If you’re playing a board game with someone who continues to break the rules, the solution isn’t to talk about it while continuing play.
> Even recently there was a chicken dispute case with China [1].
> That's not perfect in any way, and that's crazy slow
You're right about how slow the WTO process is:
Per your Reuters link: China's chicken tariff was enacted in 2010. The WTO ruling against it was in 2018, 8 years later, but it's unclear if the dispute has actually been resolved:
> [China's Ministry of Commerce said] that China would assess the WTO report and carry out “follow-up work” in accordance with WTO rules.
That sounds extremely non-committal to me, and I couldn't find any more recent updates the first several pages of Google News results. However, I doubt anything has actually happened based on prior precedent:
> The United States could press its argument with the World Trade Organization, which oversees global trading rules and prohibits big loans from government-controlled banks at artificially low interest rates. But the W.T.O. requires many contracts and government documents to prove cases, evidence that can be hard to get in a tightly controlled country like China.
> Even when the W.T.O. rules against China, persuading the country to comply can be challenging. One such ruling, involving China’s restrictions on foreign electronic payment systems, was issued nearly six years ago. China is still mulling how it will comply — despite numerous complaints from the Obama administration and more recent nudges from the Trump administration.
If the current trade dispute is really about the "China 2025" program, attempting to resolve it through the WTO could take until 2032 or later, which seems a bit late.
Sometimes the best way to get a problem dealt with properly by the people who's job it is to deal with it is to do a terrible job dealing with it unilaterally without consulting them. It seems like this is one of the possible routes the tariff issue will take.
I’m not optimistic. Look at Iran, North Korea, Cuba, Russia, and pre-WWII Japan. How did, in many cases decades long, trade tariffs or embargoes work out? Well it certainly crippled the targeted economies and impoverished their citizens.
But I am not aware of any historical case where trade penalties have curbed human rights abuses.
On the other hand, if you look at south east Asia, you see a different pattern. As wealth and trade have increased, so have the lives of the people there improved. Not at all at once, and there are plenty of aberrations, but on the whole, little by little, things are getting better.
I'm an arm-chair economist but here's my take on it.
Trade is like water: it takes the path of least resistance. These tariffs aren't aimed at hitting China, they're aimed at preventing the steel that China used to sell to the US instead being sold to Canada, crashing Canada's market of steel. Essentially, if China can't sell the steel directly to the US, they'll price it such that Canadian (in this example) steel consumers purchase it instead. Then, Canadian steel producers wind up getting punished by the US tariff on Chinese steel, because their prices are driven down due to the flood of excess product.
The WTO allows this as an exclusion to the 'most favoured nation' rules of the GATT, specifically under the anti-dumping agreements [1]. That is, whilst normally a country must present the same tariff on a given product to all other countries in the world (it cannot favour or punish any particular nation), if the nation believes it is going to suffer the effects of dumping from a particular market then it is entitled to raise tariffs equivalent against that specific market to protect against that.
This whole response to Chinese steel is largely due to their significant oversupply. They really rapidly expanded their steel production well above global requirements when they entered the WTO, well above what global demand dictated. In 2000, the worldwide industry was about 800 MT. Today, China alone does more than that and accounts for a full half of total worldwide production. As a result, Western steel production has buckled under crashing prices [2].
My take is that these actions are therefore largely politically protectionist in nature. They're aimed at protecting domestic industries rather than punishing China for any human rights issues. I highly doubt that this will cause the CCP to approach their human rights differently. Instead, I suspect they will redirect their attention to some other labour-intensive industry and try to gobble that up, as it will be their best way to offset the significant job losses that'll come from a cooling Chinese steel market. Specifically for the HN crowd, I think this will be the tech industry, as China talks about wanting to move up the tech chain - see their "Made in China 2025" policy [3].
If you are interested in this stuff, there's a very good podcast called "Trade Talks" [4] which discusses precisely this - the economics of global trade. Several episodes are about the US tariffs and their likely effects. They look back to previous examples, not just from the Great Depression but also more recently agricultural tariffs and how they affected South American exporters for example. I would highly encourage anyone who is interested in this topic to listen to at least a few of the episodes about tariffs.
Why? Because, you cannot criticize others for crimes you are committing at much, much larger scale.
All roads have to lead to the USA because the US meddles into affairs of other countries, it has numerous military and intelligence installations in other countries, it finances the NGO's in other countries (absurd: non government financed by the foreign government)... and those who are resisting this meddling are its worst enemies (China, Russia, North Korea, Iran...).
Regarding: "The only countries mentioned were China and Canada." I've explained it above, it's silly to repeat myself.
> You can, actually, especially if you aren't the president of that country, and I'm fairly confident none of us are.
Following your logic: It would have been OK for morally bankrupt administrators of Nazi concentration camps to criticize what administrators of Gulag were doing.
> Whataboutism
Another word/concept used by the west to preempt/fight criticism of its crimes from the east. It is perfidious, but after one learns about it, it is transpicuous.
> China was the topic that Simulacra was writing about.
Simulacra was writing about China in the context of "human rights issues" (exact these word used). OP even asks "do these tariffs have any chance of improving China's behavior". ("behavior" being human rights behavior).
To close this thing off (I simply don't care for the USA or the west as a whole to criticize them at length from the perspective of wishing them get better)... I find it interesting that neither you nor anyone else who has responded to my comment has said anything about the core of it: The hegemon USA commits heinous crimes by itself and indirectly through its allies; until it stops doing it and does something to at least a bit mitigate the effects of the disastrous imperial politics it leads for hundreds of years it has no moral authority to criticize anyone who commits much less heinous crimes.
This evasion of the core issue is the reason why the west and its allies (Turkey, Saudi Arabia) are so hated and despised as it shows your unwillingness to be a good "citizen" of this Planet. You want to conquer, to subjugate, to enslave everyone.
It is no wonder why people in the rest of the world speak of three cities of evil: Vatican, London and Fashington. For they are responsible for millions upon millions of liters of human blood spilled, for millions maimed and abused human beings, for millions of slaves. (other western empires are not far behind: Germany, Austria, France, Spain, Portugal, Belgium, Netherlands, Italy)
> Following your logic: It would have been OK for morally bankrupt administrators of Nazi concentration camps to criticize what administrators of Gulag were doing.
In what sense would it not have been ok?
Would their points have been invalid, on account of who was making them? Do you mean to say that whether an argument holds true or not, depends on who says it? That's not how reason works.
If all you mean to say is "There's a searing irony in seeing a serious criminal morally condemn a petty criminal", then sure, but that's not very insightful.
> Another word/concept used by the west to preempt/fight criticism of its crimes from the east.
You're leaping to the defence of a logical fallacy, because you find it politically inconvenient?
Reason does not bend to one's political position.
> I find it interesting that neither you nor anyone else who has responded to my comment has said anything about the core of it
Because I'm not interested in talking about that right now, I'm interested in seeing what's going on with your idea that one is somehow logically required to always talk about the USA.
My choice of topic does not make me a bigot.
> it shows your unwillingness to be a good "citizen" of this Planet
Going a little overboard, aren't we?
I'll remind you that you have no idea about my politics.
If you stop watching the 24/7 news and actually visit America, you'll have a much different opinion. Most of the outrage is amplified by the news in order to get viewers
> The economists argued that the tariff increases would raise the cost of living, limit our exports as other countries retaliated, injure U.S. investors since the high tariffs would make it harder for foreign debtors to repay their loans, and damage our foreign relations. Unfortunately, this is what happened.
> From 1929 to 1933 American exports declined from about $5.2 billion to $1.7 billion, and the impact was concentrated on agricultural products such as wheat, cotton and tobacco. As a result, many American farmers defaulted on their loans, which in turn particularly affected small rural banks.
Though I would argue that Smoot-Hawley was a mere symptom of a new-found desire of national governments to meddle in the economy in such a way that it couldn't recover from the inflationary crash brought on by the Roaring '20s. Wage controls, price controls, production quotas, tariffs, &etc...
This comment sparked some comments citing the source of the great depression, we've got: stock speculation and tarifs.
Its interesting because I always thought the cause was central banks wanting to peg the dollar to gold, this is what I had gathered from reading Lord of Finances year ago. Perhaps I need to reread it?
This is all very complex and I'm having a hard time seeing the big picture. There's trade wars, US foreign policy on North Korea (China plays a significant role), and over the last few years a ramping up of discussions on how to avoid the Thucydides trap. It's worth noting here that China and Russia, and potentially Iran are allies. All these things are connected in complex ways and while it's important to look at an issue like the trade war in isolation, I think it's also important to view it in context. And that big picture context is something I'm having a very hard time pulling together. Can anyone recommend some reading that would illuminate this?
If anything as a Canadian I rather see Canada openly and aggressive court China, Russia, EU and Mexico+Brazil as trading partners to significantly reduce dependence on US.
Canada needs to understand need of the hour is not to engage in moral-schooling with China and not to support ire-invoking causes in China -- our priority is Canada, Canadian economy and Canadians.
For too long our courting of USA and India has resulted in both US and India becoming arrogant towards us when it comes to foreign policy and diplomatic protocols.
Finally, as a clear signal, Canada should step up border patrol and aggressively stop any intake of folks fleeing to Canada from USA - US needs to understand Canada is not a dumping ground for their unwanted folks.
> Finally, as a clear signal, Canada should step up border patrol and aggressively stop any intake of folks fleeing to Canada from USA - US needs to understand Canada is not a dumping ground for their unwanted folks.
You act as if ICE takes people it finds in the US, drives them to the Canadian border and tells them to walk north.
Agreed - and that is why I would like Canadian forces to aggressively block/restrict unwanted folks in USA to enter Canada - let US deal with the economic costs of handling them.
don’t be naive, I am not talking about US citizens moving to Canada. I am referring to unwanted folks in US - refugees, illegals who are in US and trying to seek assylum in Canada.
I sympathize with the refugees and so do most Canadians but one can’t help but get the feeling that US is more than happy with this arrangement while badmouthing our elected PM and threatening Canadian economy with tarrifs and other protectionist measures.
> If anything as a Canadian I rather see Canada openly and aggressive court China, Russia, EU and Mexico+Brazil as trading partners to significantly reduce dependence on US.
Why? This is worse than working with the U.S. even with the tariffs. Furthermore, Canada is little more than a suburb of the U.S. as far as military projection; whose navy guards the Canadian ships if Canada flips the bird to the U.S?
> Canada needs to understand need of the hour is not to engage in moral-schooling with China and not to support ire-invoking causes in China -- our priority is Canada, Canadian economy and Canadians.
China is seizing Canadian property from Chinese people for political influence, I don't think this is the time to treat China with no suspicion.
> For too long our courting of USA and India has resulted in both US and India becoming arrogant towards us when it comes to foreign policy and diplomatic protocols.
> Finally, as a clear signal, Canada should step up border patrol and aggressively stop any intake of folks fleeing to Canada from USA - US needs to understand Canada is not a dumping ground for their unwanted folks.
Canada was dumping cheap Chinese steel into the US for ever. Just look at the largest seller of Stainless Steel in NA. It's an outfit that brings Chinese Stainless Steel into Canada and Mexico and then dumps it into the US.
Canada was warned about a year ago that they need to stop this dumping but chose to continue to the last possible day they could (May 31, 2018). On June 1st the Trump administration went ahead with sanctions. The Canadians acted to late and worked with the Chinese for too long. When this was brought up to Canada's foreign minister (Chrystia Freeland) and why they didn't act sooner, she had no answer.
By far the largest source of Canadian steel imports is the US (55%). China accounts for only 10% of Canadian steel imports. Even if all the Chinese steel Canada imported (0.8 million metric tons) flowed directly into the US - highly unlikely - this would account for 2% of the steel the US imported (34.6 million metric tons). And this percentage is even smaller considering the overall US steel market. Hell - US production alone is 81.6 million metric tons and increasing. Somehow a max of 0.8 million metric tons destabilized a US steel market of approximately 81.6 mmt or more?
All numbers as of 2017 and from the US government:
Because the US applying tariffs has removed avenues for Chinese steel entering the US. That steel can be diverted to other markets (for example, Europe or Canada) and thus flood those markets as well, crashing the price there.
There is no mystery here. Europe did the same thing when the US applied their tariffs. They know the flow is going to go somewhere, and they don't want it to be dumped on their markets either.
Because now that steel from around the world can't easily enter the USA it will be looking for somewhere to go. The Trump tarrifs have massively destabilized prices.
Try getting moderate and high value MLCC caps on Digikey. Pretty much zero stock on everything. It’s affecting my electronics production. Why the hell would Trump put tariffs on parts where there aren’t even domestic manufacturers?
Think that's the point. His stated goal is to bring jobs back to the United States. Domestic production for these items don't exist now but if demand can't be satisfied through imports due trade restrictions, domestic suppliers will arise. Of course things aren't quiet that simple as many things have complex supply chains involved in their production so it would take time for such domestic producers to come online. Plus they must be assured somehow that the next administration isn't going to reverse course, opening the market to imports that will undercut the domestic market.
My guess is that Digikey will get stock again soon, just at a higher price. It's unlikely there will be anything completely unavailable as this isn't an embargo, just tariffs.
> They will just shift production to somewhere else in south east Asia.
To be honest, that might not be a bad outcome.
> Low margin manufacturing will never be in-sourced again.
I'm actually kinda surprised by some of the low-margin items that are still "Made in the USA." I just noticed that the cheapy-cheap molded-plastic laundry baskets I bought from Wal-Mart were domestically produced.
