Yes, Americans Suffer from Trump’s Tariffs
National Economic Council Director Larry Kudlow appeared on “Fox News Sunday,” where Chris Wallace pressed him on Trump’s factually incorrect claims about tariffs.
“Larry, that isn’t true,” Wallace said. “It’s not China that pays tariffs; it’s the American importers.”
Kudlow responded: “Fair enough. In fact, both sides will pay. Both sides will pay in these things.”
But that wasn’t sufficient for Wallace. So he pressed again.
“But the tariff on goods coming into the country, the Chinese aren’t paying,” Wallace said.
Kudlow again conceded that what Trump was saying was wrong: “No. But the Chinese will suffer GDP losses and so forth with respect to a diminishing export market and goods that they may need for their own —”
Wallace again cut in.
“I understand that, but the president says . . . that China — it pays the tariffs. They may suffer consequences, but it’s U.S. businesses and U.S. consumers who pay, correct?” Wallace asked.
Kudlow again conceded the point, but also tried to argue that China pays a price, too, because of lost exports: “Yes, to some extent. Yes, I don’t disagree with that. Again, both sides will suffer on this.”
Meanwhile, GOP Senators are giving up:
The GOP is starting to give up on thwarting President Donald Trump’s trade agenda.
Senate Republicans acknowledge that the president’s latest tariff increase on Chinese imports are harming farm state economies, their own constituents and some of Trump’s most reliable voters. But there’s no plan to stop, or even threaten, the president’s tariff regime — just the latest example of Trump imposing his protectionist will on a party that once celebrated free trade.
As the stock market tanked on Monday following the escalating conflict with China, Republicans lamented the state of affairs. But after trying, unsuccessfully, to get the president to remove his year-old tariffs on U.S. allies, there’s little appetite for opening a new front with Trump when it comes to China.
They’re scared that Trump will chase them out of office if they criticize them, and they know their constituents, who are suffering the effects of the tariffs, still like Trump. So they’re shrugging their shoulders and waiting until said constituents figure it out. And I guess those constituents will have to figure it out with any leadership from them, whatsoever.
The irritating part is when true-believing Trump loyalists say that Trump is using tariffs as a “negotiating tool”, but the Chinese have that exact same tool. And economically, it’s kind of like saying, “I’m going to start slapping myself in the face until you give me what I want.”
Paul Montagu (7968e9) — 5/14/2019 @ 8:19 amOn this one, I’m in agreement with Milton Friedman who would say that China’s cheap labor is a subsidy of the US economy. Trade deficits are not necessarily a sign of trouble. This is especially true with our record, low unemployment.
AZ Bob (885937) — 5/14/2019 @ 8:22 amAnd I guess those constituents will have to figure it out with any leadership from them, whatsoever.
Which means that they may never figure it out, since they dismiss the arguments against tariffs as coming from Chamber of Commerce/Democrats/neverTrumps and all the other people who they think are against tariffs because they hate Trump or have a personal economic interest in low tariffs.
I am not interested in reviving dead manufacturing industries. I am interested in getting the Chinese to stop intellectual property theft and stealing trade secrets. I don’t have a magic formula to do that, but I don’t see how tariffs in general really help there. (Targeted tariffs against cheap electronics and such might work, of course.)
kishnevi (0c10d1) — 5/14/2019 @ 8:30 amChina has aspirations of world domination before mid-century. Does anyone here think that would be good for the world?
China is our enemy and it’s about time we realize that. They have more to lose in this trade war than we do.
Colonel Haiku (2601c0) — 5/14/2019 @ 8:40 amI read a column that pointed out Trump has a history of blowing up Deals at the last minute to try and get a little bit more from the other party. I wonder how much of this that is?
The really funny thing is that better IP protections would allow businesses to move more work to China. One of the reason companies keep design work in the US is due to IP concerns.
I think having more smart ppl trying to figure out how to make better/lighter/faster/cooler stuff works out well in the end.
Time123 (457a1d) — 5/14/2019 @ 8:41 amChina’s policy of forced transfer of technology doesn’t help America.
Colonel Haiku (2601c0) — 5/14/2019 @ 8:44 amCH, don’t you get it, over the long term everyone loses in a trade war. Over the long terms everyone wins with free trade.
Over the short term there will be winners and losers, and we should try to find good ways to help them through the rough patches.
Time123 (457a1d) — 5/14/2019 @ 8:44 amin support of my last comment
Time123 (daab2f) — 5/14/2019 @ 8:45 amI want to see new trade lines everywhere, companies wanting to do business with Americans need to GTFO of China.
mg (8cbc69) — 5/14/2019 @ 9:37 amI get it… and when a deal is reached, the trade war is over and “free” trade continues. China’s IP theft, forced transfer of tech, currency manipulation, etc., must be curtailed… going to the WTO is not much of a solution.
Colonel Haiku (2601c0) — 5/14/2019 @ 9:53 amOT… good news on the selection of US Attorney Durham to investigate the origins of the Russia probe. Some speculation that IG Horowitz’s report will have several referrals, so Durham will have access to a grand jury for criminal investigations and prosecutions.
Colonel Haiku (2601c0) — 5/14/2019 @ 10:09 amMore exactly: Americans will pay more for imported goods from China. However, since they mostly choose imported goods from China based on price, rather than quality, there will often be cheaper alternatives available from other countries, or domestically. In some cases, the same product is manufactured in several countries, so substitution is easy.
So, saying that Americans are paying these tariffs is not completely true. All they do is make it more difficult for China to sell to Americans. They do not force Americans to buy from China at a marked up price.
Kevin M (21ca15) — 5/14/2019 @ 10:27 am“I’m going to start slapping myself in the face until you give me what I want.”
No it isn’t. More correct is that you are slapping them in the face, but it hurts your hand every time you do it. Tariffs cause the exporter to lose sales, which ripples through their economy. It is especially painful to a country that is focused on exports. In theory, this pain is worse than the pain caused by imposing the tariffs.
Further, the loss of sales is felt more by the export-oriented economy than a similar loss would be felt by a more mixed economy.
So, yes, it’s a slap fight, but the pain is shared, and asymmetric.
Kevin M (21ca15) — 5/14/2019 @ 10:34 amThey’re scared that Trump will chase them out of office if they criticize them, and they know their constituents, who are suffering the effects of the tariffs, still like Trump.
Yup. Which is what my comments about “dissing the boss” the other day were about.
Kevin M (21ca15) — 5/14/2019 @ 10:39 amyou ignore that the Chinese have not been doing this out of altruism, but strategically,
https://www.youtube.com/watch?v=9WTKF5Q0Ebg&feature=youtu.be
narciso (d1f714) — 5/14/2019 @ 10:41 am4. Colonel Haiku (2601c0) — 5/14/2019 @ 8:40 am
Xi Jinping won’t last that long.
In fact the Chinese Communist regime won’t last that long. By abolishing term limits and naming no successor Xi Jinging has set things up for the whole system to collapse after he goes.
There is now no possible successor who will not hate or despise the regime. There could be a dictator but a different kind of one.
Their 70 years are just about up, Communism in Russia lasted 74 years.
Sammy Finkelman (ec94de) — 5/14/2019 @ 10:45 amRIP Tim Conway
Colonel Haiku (65f4ca) — 5/14/2019 @ 11:02 amHowever, since they mostly choose imported goods from China based on price, rather than quality, there will often be cheaper alternatives available from other countries, or domestically. In some cases, the same product is manufactured in several countries, so substitution is easy.
Yes, that’s the flaw in the argument that the tariffs will help our manufacturing. Both my size 10 1/2 shoe as well as my size 11 1/2 shoe will now come from Vietnam. The former Florsheim factory down the street will remain loft condos.
nk (dbc370) — 5/14/2019 @ 11:05 amTim Conway
AKA “13 Weeks”
Kevin M (21ca15) — 5/14/2019 @ 11:10 amnk, yes.
I had some sheets made circa 1990 that finally wore through last year. They were made in the USA by Cannon Mills. Now, I buy sheets from BB&B and I’m lucky if they last a year. But Cannon Mills is still dead.
Kevin M (21ca15) — 5/14/2019 @ 11:13 ameconomic Joe says China is our friend, Not everyone has a dad like economic Joe.
mg (8cbc69) — 5/14/2019 @ 11:14 amYou sleep in baseball cleats, Kevin?
mg (8cbc69) — 5/14/2019 @ 11:15 amR.I.P. TIM CONWAY
‘I’m so glad we had this time together… “Chuck.”‘
DCSCA (797bc0) — 5/14/2019 @ 11:17 amI read a column that pointed out Trump has a history of blowing up Deals at the last minute to try and get a little bit more from the other party. I wonder how much of this that is?
Uh, none, by all accounts. Our negotiators showed up, thinking they were going to put the finishing touches on a trade deal, only to find the Chinese had a “revision” that basically wiped out everything we had thought we had won. Now, maybe that’s Trump’s Karma coming back around, but it was blatant bad faith and our guys walked.
Kevin M (21ca15) — 5/14/2019 @ 11:20 amYou sleep in baseball cleats, Kevin?
Mostly they pill up.
Kevin M (21ca15) — 5/14/2019 @ 11:21 am> there will often be cheaper alternatives available from other countries, or domestically. In some cases, the same product is manufactured in several countries, so substitution is easy.
On the one hand, yes.
On the other hand, these goods will *still be more expensive than Americans are currently paying*, as otherwise Americans would be buying them instead of the Chinese ones they’re currently buying.
So Americans will pay more.
Now, maybe over time, the price Americans pay will fall back to what it is now. But that’s not historically what’s happened with tariffs.
aphrael (e0cdc9) — 5/14/2019 @ 11:24 amThe Snowman had his ears on.
DCSCA (797bc0) — 5/14/2019 @ 11:26 am18… does adjusting your camber mitigate the alignment issue, nk?
Colonel Haiku (2601c0) — 5/14/2019 @ 11:40 amBut here’s what China could do if it still wants my business. It could cut its price to match Vietnam’s notwithstanding the tariff. Tough on the PLA generals who are already being squeezed by Chinese tariffs on Maine lobsters and California champaign.
nk (dbc370) — 5/14/2019 @ 12:05 pmNo, more correct is that certain crony industries are punching China in the face using the fists of consumers, and China is wearing a steel mask. China can withstand the blows, but the key fact is that the (few) people benefiting are different from the (great number of) people getting hurt. The assumption that these are the same people is pervasive and faulty. It’s politics as usual: the little guy gets hurt, the cronies benefit, and the public misunderstoods and cheers due to its ignorance. Which is dogged and persistent and fiercely resists any argument or fact to the contrary.
In few areas does emotion so rule, at the expense of any data or logic. I’m used to seeing angry yawps from tariff supporters. Data and logic? Not so much!
Patterico (e75e6a) — 5/14/2019 @ 12:13 pmThe Dow may have ‘tanked’ yesterday but today it has already gained back half it lost w/30 minutes left to trade. The ship of state is sailing through a fog without a compass.
Keep checking your tow lines.
And yes, ‘no collusion’… don’t be surprised if our Captain orders that engraved on currency– replacing ‘In God We Trust.’
DCSCA (797bc0) — 5/14/2019 @ 12:23 pmHaiku: “China has aspirations of world domination before mid-century….China is our enemy”
I think the Joint Chiefs would characterize China as a strategic threat….especially with regards to its activities in the South China Sea…and its significant military buildup. But the JCS explicitly stated that China was not an enemy….characterizing it instead as a competitor. They certainly exercise economic leverage….and are eagerly developing partnerships across the globe to extend their influence. So threat “yes”, enemy “no”.
AJ_Liberty (ec7f74) — 5/14/2019 @ 12:32 pmAmericans have already suffered from free trade with china. Media interviews farmers who may be hurt by tariffs if trump subsidizes are not large enough. The media vermin do not interview industrial workers destroyed by free trade with china or the politicians like joe biden bought by chinese money. Americans do not have to buy chinese goods they can buy goods that don’t have tariffs which you never trumpets never mention.
lany (23180a) — 5/14/2019 @ 1:00 pm“competitor”? That would denote a measure of good health. Dangerous rival would be more to the point.
Colonel Haiku (65f4ca) — 5/14/2019 @ 1:05 pm@33. When ‘trade’ is employed as one of your “weapons” toward influencing ‘regime change’ you have to expect collateral damage. 😉
DCSCA (797bc0) — 5/14/2019 @ 1:50 pmMany of the items on the tariff list do not have uniquely US competitors. To say that it is all cronyism or rent seeking just isn’t true. There are almost no US mill products for example, and most of the things on the list have alternative foreign sources. If anything is amiss, it’s holes cut into the tariff wall to benefit companies like Apple.
The tariff list is very long, of course. Here are the headers:
Meat
Fish and seafood
Non-meat animal products such as eggs and dairy
Vegetables
Fruit and Nuts
Cereals
Mill products
Oil seeds
Sugars and candies
Breads and Pasta
Prepared vegetables and fruits
Other food items
Beverages and vinegars
Food processing waste and animal feed
Tobacco products
Salts and minerals
Ores, slag, and ash
Mineral fuels and oils
Inorganic Chemicals
Organic chemicals
Fertilizers
Tanning and drying extracts, dyes, and paints
Essential oils, perfumes
Soaps and cleaning products
Glues, adhesives, and enzymes
Cigarette lighter fluid
Photographic goods
Various chemical products
Plastics
Rubber
Raw hides and leather
Wood
Wood pulp products
Paper
Silk
Wool or animal hair products
Cotton
Flax
Man-made textiles
Other textile products, rope, twine
Fabrics
Headgear
Stone, plaster, cement, asbestos
Ceramics
Glass and glassware
Precious stones and pearls
Iron and steel and products derived from the metals
Copper
Nickel
Aluminum
Various metal products, tools, cutlery
Machinery, both industrial and retail
Electronics
Vehicles and parts
Parachutes
Ships and boats
Instruments for scientific or medical purposes
Clocks and watches
Furniture, bedding, mattresses
Assorted items
https://www.businessinsider.com/trump-china-trade-war-list-of-goods-tariffs-2018-9
Kevin M (21ca15) — 5/14/2019 @ 1:57 pmThe steel tariffs are not really part of the Chinese spat — they are actually higher on other countries and exist SOLELY to help Trump win Pennsylvania again. I denounce them.
Kevin M (21ca15) — 5/14/2019 @ 2:06 pmKudlow looked ashamed of himself for parroting Trump’s utter nonsense.
But not as much as he should’ve.
Beldar (fa637a) — 5/14/2019 @ 3:33 pmOn the general topic of the government picking winners and losers, I saw no difference in 2016 between Trump and Hillary: Both were in favor, although they differed regarding whom they would choose if they were running the government. I still see no difference. When Trump tells you he’s fighting the Chinese for the benefit of Americans, he does not mean — cannot possibly mean, and in fact means the opposite of — “all Americans.” He’s taxing all Americans to benefit a favored few under a fundamentally dishonest pretense. This is more crony capitalism, and it sucks. The fact that it’s being pushed by a supposedly Republican president, whose powers of office (as ceded to him by Congress) are gigantic, does indeed make it very hard for anyone to effectively oppose him, which is what “all Americans” actually would benefit from.
Beldar (fa637a) — 5/14/2019 @ 3:39 pm(I appreciate and commend our host’s precision in selecting the size of his brush to tar those who’re being deterred from opposing Trump’s tariffs.)
Beldar (fa637a) — 5/14/2019 @ 3:42 pm@37. They don’t really make much steel in W.Pa., anymore, K. Locals know the small, remaining mills- which are few- will never return to their glowing, 1970’s peak. The surrounding land and small towns and homes nestled in the Rustbelt region- McKeesport, Homestead and places like JoeyBee’s Scranton are tired, too. Bur they’re also ripe for development. For the young, Pgh., and vicinity has transformed itself into an education and research hub steeled to compete in the 21st century– it only took nearly two generations to chip way that rust. The young aren’t looking back to the ‘Mad Men’ days Trump babbles about.
DCSCA (797bc0) — 5/14/2019 @ 3:52 pm@ Kevin M: Do you doubt that there’s a lobbyist for American parachute makers? I don’t.
Beldar (fa637a) — 5/14/2019 @ 4:03 pmTa-da!
https://www.pia.com/member-interest/govt-systems-documents
Although a quick look at this suggests enough military uses to make the claim of a connection to national security a little more rational than otherwise.
Kishnevi (0e5eaa) — 5/14/2019 @ 4:12 pmHere’s a funny (if you’re not in the market for a washer and dryer) side effect of the tariffs:
“The new tariffs ended a yearslong decline in the price of washers in the United States, which rose about $86 per unit because of the tariffs last year, the authors calculate. But tariffs also raised prices for dryers, largely because manufacturers of laundry equipment used the tariffs as an opportunity to raise prices on things that were not, in fact, affected by the tariffs.
Consumers, Mr. Tintelnot noted in an interview, often shop for a new washer and dryer at the same time. Their costs are similar. Rather than raise prices by 20 percent on washers and throwing off that balance — no one likes an unbalanced washing machine — companies instead raised both washer and dryer prices, by 11.5 percent each.
“Given that many consumers buy these goods in a bundle, the price increases were partially hidden by raising the price of dryers,” Mr. Tintelnot said. “That’s very clearly visible.”
It is hardly surprising that the tariffs drove up the price of foreign washers. Perhaps more unexpectedly, they also prompted American manufacturers to raise their prices.
Companies that largely sell imported washers, like Samsung and LG, raised prices to compensate for the tariff costs they had to pay. But domestic manufacturers, like Whirlpool, increased prices, too, largely because they could. There aren’t a lot of upstart domestic producers of laundry equipment that could undercut Whirlpool on price if the company decided to capture more profits by raising prices at the same time its competitors were forced to do so.”
https://www.nytimes.com/2019/04/21/business/trump-tariffs-washing-machines.html
Davethulhu (fab944) — 5/14/2019 @ 4:18 pmPerhaps more unexpectedly, they also prompted American manufacturers to raise their prices.
Maybe it surprised the New York Times, but it shouldn’t surprise anyone else.
Kishnevi (0e5eaa) — 5/14/2019 @ 4:32 pmWe had an election on free trade. You free trade capitalist lost!! Trump defeated 17 free traders in the primary. Your luck it was trump who won. In 2024 AOC will put you free traders in a re-education camp. You can’t be a consumer if you have lost your job and have no money!
lany (6ad429) — 5/14/2019 @ 5:01 pm@46. But you can always flip hamburgers; Reaganomics. 😉
DCSCA (797bc0) — 5/14/2019 @ 5:17 pmI’m torn on free-trade vs protectionism. If there’s too much protectionism, you get industries that don’t progress, like the American auto industry in the 70s and 80s (so many terrible cars) or significantly overcharge because they can. They get too greedy and too complacent. OTOH, if I spend 5 dollars and all 5 dollars stay in the country, that is probably doing more economic good for the US than spending 5 dollars and having 3 of them go to China. Part of the difficulty is that we aren’t playing on an equal playing field. Our products are not (generally) made with free or near free prison labor. Our factories can’t (and shouldn’t) release excessive contaminates into the air and water table, while theirs can. We don’t use child labor, a lot of other countries do.
Is it worth it to me to spend 86 fewer dollars on an appliance if I am putting my neighbor out of business, contributing to human rights abuses, and helping create an environmental crisis in another country? Or is it that by spending less on my appliance, I am supporting the economy in another country and, indirectly over the long term empowering newly affluent people to reduce human rights abuses and environmental disasters in their own country and allowing the creation of a new industry where I am which will put my neighbor’s son in business.
I am not an economist and I kind of suspect that even the economists don’t really know.
Nic (896fdf) — 5/14/2019 @ 5:52 pmYou can go skydiving with a Chinese parachute. It’s going skydiving again that might be a problem.
nk (dbc370) — 5/14/2019 @ 6:04 pmHaving been in retail long enough, I have sold plenty of stuff made in China, the US, etc.
I’ve found that low quality goods can be handcrafted in the US by (more or less) well paid American workers…or in Italy by Italians, etc. And high quality goods can be made by factory workers in China, Thailand, Bangladesh, etc. Not always of course. But for the most part there is no longer any correlation between quality and place of origin.
Kishnevi (65f26e) — 5/14/2019 @ 6:31 pm“But for the most part there is no longer any correlation between quality and place of origin.”
Kishnevi (65f26e) — 5/14/2019 @ 6:31 pm
True, if you don’t consider higher lead content a quality concern.
Munroe (57a73f) — 5/14/2019 @ 6:44 pmIs it free trade when we import cheap running shoes that wear out one day, and pay welfare to the people who lost their jobs?
When we let suppressed wages and consumption in China undercut our workers? How’d that work out for the Romans using slave labor? What happened to their working class?
When the demand for technology and manufacturing cools, because who needs to be an engineer here, and that expertise moves abroad, leaving us with a surplus of Midieval Queer Poetry and Intersectional discipline majors?
Or when Chinese money, surpluses from the manufacturing we gave away, swamps US universities, and conditions even media and movies in thrall to the money?
“Free traders” inhaling vapors from the National Review, might want to read up on this same debate held in the UK over 100 years ago. Upstarts America and Germany were flooding the “free trading ” English market under the protection of naive free traders, who did not count the cost of the “free trade.” The US and Germany were insulated from this by———tariff barriers. The result was the near extinction of serious Brit manufacturing.
At least the Japanese were smart enough to evade tariffs by building plants here. We get some jobs out of that.
Harcourt Fenton Mudd (6b1442) — 5/14/2019 @ 6:51 pm46 hamberger flipping jobs are being automated. 39% of women work in retail stores and amazon is closing them and cities and states are losing their tax revenue. AOC say we can tax amazon out of business and keep democrat women voters jobs. She is getting ready for 2024.
lany (3b8a28) — 5/14/2019 @ 6:57 pmGet outta here, Curry!
Colonel Haiku (2601c0) — 5/14/2019 @ 7:07 pmThe baleful effects of tariffs are not a matter of opinion or doubt.
All mainstream economists agree that tariffs leave a society worse off (to enrich a tiny, politically-favored minority).
Dave (1bb933) — 5/14/2019 @ 7:30 pmOT, but a helluva story about the boom in West Texas… https://qz.com/1552685/entrepreneurs-thrive-on-us-highway-285-amid-permian-fracking-boom/
Colonel Haiku (2601c0) — 5/14/2019 @ 7:33 pm(if you’re not in the market for a washer and dryer)
Why would I be buying a Chinese appliance? The Chinese only make some of them. I have lots of other choices, and they are probably better choices.
Kevin M (21ca15) — 5/14/2019 @ 7:40 pm@ Kevin M: Do you doubt that there’s a lobbyist for American parachute makers? I don’t.
I don’t either. Do you think that parachutes are only made in the US and China? And, of all things, why would I buy a Chinese parachute?
Kevin M (21ca15) — 5/14/2019 @ 7:41 pm“But for the most part there is no longer any correlation between quality and place of origin.”
Kishnevi (65f26e) — 5/14/2019 @ 6:31 pm
Not quite true. Nearly all low-quality stuff comes from China. They also have some high-end products, but not as many as, say, South Korea or Japan. So, there is still a quality correlation, but the correlation is weaker than it was.
Kevin M (21ca15) — 5/14/2019 @ 7:48 pmMy Nikon Coolpix 41000 camera suddenly started malfunctioning, probably because of the rain. I transferred the 2 GB SD card to the camera next in line. They last about half a year – maybe longer, with rough use. You can buy replacement cameras for $20 or less now, and at least 2/3 of them work perfectly when bought.
The replacement camera has a slightly lower serial number than the one that was giving me trouble – 310xxxx rather than 312xxxx. I blame the design of the camera rather than the factory which made it in Indonesia about a dozen years ago. A lot of electronics s vulnerable to some kind of short circuit where switches no loner work, or get activated without anybody doing anything.
Sammy Finkelman (ec94de) — 5/14/2019 @ 7:48 pm@55 at an extreme level, sure, but targetted? or limited? Do we really know?
Nic (896fdf) — 5/14/2019 @ 8:01 pm52.
Yes, that’s free trade, although it may have elements of fraud.
They don’t pay welfare to people who lost their jobs because factory closed. They pay disability. (if they are too young to collect Social Security.)
Machinery must even be worse in your mind.
They didn’t have one I suppose.
There may be national defense reasons for keeping it but not economic ones, except antitrust related reasons – and antitrust should not concern only price, but also novation for which you need more sources than just to avoid price fixing.
Britain’s real vulnerability during World War I and II was not that it didn’t do its own manufacturing, if that’s true, but that it didn’t grow its own food.
Sammy Finkelman (ec94de) — 5/14/2019 @ 8:02 pmHow many mainstream economists are in the Forbes 400?
nk (dbc370) — 5/14/2019 @ 8:10 pm48. Nic (896fdf) — 5/14/2019 @ 5:52 pm
TThat kind of thinking is called mercantilism.
This is the kump of labor fallacy. If capiital is available, or banks make loans, oter jobs will be created, and the economy will have what it imports, <i< and what is made in country.
It can also work to alleviate them.
This can happen
Well, you’re not doing anything. It’s what a lot of people are doing that has an effect. It can reduce human rights abuses if the country is at least partially free.
I think what you are looking to avoid is rewarding bad companies and countries, especially at the expense of better ones.
I am not an economist and I kind of suspect that even the economists don’t really know.
Sammy Finkelman (ec94de) — 5/14/2019 @ 8:15 pm“How many mainstream economists are in the Forbes 400?”
nk (dbc370) — 5/14/2019 @ 8:10 pm
How many economists have spent their careers insulating themselves from market forces?
Munroe (46fd9c) — 5/14/2019 @ 8:23 pm63. nk (dbc370) — 5/14/2019 @ 8:10 pm
Well, let’s see, thhere’s Warren Buffett. He has a Master of Science in economics from Columbia Business School, and writes on economics periodically.
I don’t know if he’s mainstream, though.
https://www.cnbc.com/2019/05/03/buffett-no-textbook-predicted-the-strange-economy-we-have-today.html
Couple of thousand years?
Sammy Finkelman (ec94de) — 5/14/2019 @ 8:32 pm@49. Once upon a time, products stamped ‘Made In Japan’ were dismissed as inferior by western consumers. ‘The China Plan’ targets producing high end products and technologies for the new century. Golden ‘parachutes’ are more the Wall Street line-of-country; Reaganomics. 😉
DCSCA (797bc0) — 5/14/2019 @ 9:13 pm@66. Buffett’s BH been known to dip its beak into that ‘more than it takes in’ trough seeking gov’t subsidies/tax credits to construct wind farms. He’s no saint.
DCSCA (797bc0) — 5/14/2019 @ 9:22 pmHow many Trumpkins cry “Squirrel!” when confronted with facts they don’t like?
Dave (1bb933) — 5/14/2019 @ 10:09 pmOh look! A Trumpkin!!
Munroe (13e024) — 5/14/2019 @ 10:52 pmFACT | definition in the Cambridge English Dictionary
https://dictionary.cambridge.org/us/dictionary/english/fact
fact. something that is known to have happened or to exist, especially something for which proof exists, or about which there is information.
POLEMIC | definition in the Cambridge English Dictionary
https://dictionary.cambridge.org/us/dictionary/english/polemic
polemic meaning: 1. a piece of writing or a speech in which a person strongly attacks or defends a particular opinion, person, idea, or set of beliefs.
(Why Oxford all the time?)
nk (dbc370) — 5/14/2019 @ 11:03 pmDave and facts….
mg (8cbc69) — 5/14/2019 @ 11:12 pmlmao.
Free trade helps the rich and chinese slave labor it hurts american workers. Trump knows this as he is wealthy and buys politicians. AOC knows this and will put free traders into re-education camps.
lany (3b8a28) — 5/15/2019 @ 1:03 amThank you, nk.
Indeed, there is ample documentary evidence of the effect of tariffs. What they do is not a matter of opinion.
Dave (1bb933) — 5/15/2019 @ 5:47 amIndeed, there is ample documentary and real world evidence of the effect of handing over technological innovation secretes to economic, political, and military rivals. The consequences are note a matter of opinion.
PTw (cbfa7c) — 5/15/2019 @ 6:23 amMr. Mudd asked (#52):
All shoes — even iron horseshoes — wear out “one day.” I think Mr. Mudd meant “in one day.”
So assuming, then Mr. Mudd has effectively illustrated, or at least mimicked, the fundamental economic illiteracy of Trump and those who support Trump’s tariffs with the premise to his rhetorical question. What Mr. Mudd and Trump fail to understand is that consumers make choices from the options available to them. Shoes that wear out in one day will tend not to attract consumer choices over time if indeed they wear out in one day, provided that there are alternatives available which are otherwise comparable, including as to price, which do not wear out in one day.
Because they understand nothing of the wisdom of crowds, economic illiterates persist in silly paradigms like Mr. Mudd’s that have no relationship to actual economic reality (here, shoe purchases).
Free trade consists of allowing consumers, in crowds, to make their choices, using their respective evaluations as to the value of their purchases, rather than being forced to make a choice from a selection which is limited, and whose price terms are artificially distorted, by some government official who’s been writing laws that say, “All Americans shall suffer a loss of free choice and pay higher prices because we in the government have chosen a subset of them to be economic winners.”
And sadly, almost all of these people are resolutely stuck on stupid.
Beldar (fa637a) — 5/15/2019 @ 6:29 amImpoverishing American companies and consumers in response to foreign IP theft is the equivalent of “we had to destroy the economy in order to save it.”
Dave (1bb933) — 5/15/2019 @ 6:37 amThat’s what Jacob said to Esau.
nk (dbc370) — 5/15/2019 @ 6:44 amHow is that a squirrel? It’s a respectable argument as it’s a big part of the problem with China trade. I recall a minor panic a few years ago when I was working on the program that some Chinese technology go into the new F-35 fighter.
I’m not anti-free trade, however there does need to be some degree of compensation for the fact that in the US our workplaces are highly regulated such that it simply costs more to manufacture things here. Businesses aren’t outsourcing overseas simply because the labor is cheaper, though the reason for that has to do with our labor regulations as well. If there’s a squirrel here it’s the idea that this situation is permanent, that the economy will be destroyed by it, and…oh, yeah…we’re all gonna die. There’s your squirrel. I work in the IT industry and I roll my eyes every time I hear about Indians or such taking “our” jobs. First of all, they are not “our” jobs but jobs that belong to the consumers of goods, not the producers. But much more than that, in spite of all the whining and complaining that I see, I also see tons of jobs out there for IT developers. I recently was in the market and even as picky as I was about what I wanted, recruiters were falling all over themselves to get me into very good paying jobs.
Also, your analogy to “we had to destroy the economy in order to save it” (the history of the origins of that Vietnam era cliche being a lie itself) is rather lame. It’s not simply the IP theft, it’s the whole economic package, as I just expanded on.
More broadly, the economic ignorance prevalent in this thread would require a semester in economics to overcome. Presuming you could find anyone who knows the subject well enough to be bothered to teach it.
PTw (cbfa7c) — 5/15/2019 @ 6:55 am“Beijing has been enjoying the benefits of free trade with the West and the domestic political fruits of an increasingly anti-Western foreign policy. It’s time they were made to pick one.“
—- Stephen Green
Colonel Haiku (2601c0) — 5/15/2019 @ 6:58 amGod could have intervened to prevent the transaction, giving His blessing to protectionism, but He didn’t.
There’s a lesson there.
Dave (1bb933) — 5/15/2019 @ 7:00 am— Isoroku Yamamoto
nk (dbc370) — 5/15/2019 @ 7:16 am66. Warren Buffet went on to say there was a contradiction between theory and reality, but he felt it couldn’t go on much longer, and reality would have to alter itself to conform with theory.
So maybe he is amainstraeam economist.
Sammy Finkelman (ec94de) — 5/15/2019 @ 7:42 amBuffett noted that unemployment is at generation lows, yet inflation and interest rates are not rising. While at the same time the U.S. government continues to spend more money than it takes in.
So long as the economy continues to grow due to the kind of innovation that creates greater and greater efficiency in the use of its resources and/or its ability to switch to new resources and/or no longer desire certain deplenishing resources for whatever reason while making use of seemingly abundant resources newly discovered and/or desired, the economy can grow at a rate that keeps the impact of government spending at bay. That doesn’t mean that such a situation will continue, nor should it be counted on to continue, especially if political winds blow in the direction of decreasing efficiency or by abandoning viable, valuable resources. I say this as someone who does not approve of the current level of government spending.
Not sure where he’s getting economic textbooks, or significant value from similar, dated to thousands of years ago. At least not many that had much impact relative to, or relevant to, the last 200-300 years. At least not any that jump to mind. Sure the ancients and such thought about these things to some degree but pre-enlightenment they were few and too far between.
PTw (cbfa7c) — 5/15/2019 @ 7:57 amWait, so the Civil War wasn’t about slavery OR states’ rights but now it was about judgement of economic policy? Yeah…no.
PTw (cbfa7c) — 5/15/2019 @ 7:59 amWarren Buffet went on to say there was a contradiction between theory and reality, but he felt it couldn’t go on much longer, and reality would have to alter itself to conform with theory.
My friend at the Kimball 90/94 offramp to whom I occasionally drop a dollar in his cup, tells me the exact same thing.
nk (dbc370) — 5/15/2019 @ 8:03 am“No, more correct is that certain crony industries are punching China in the face using the fists of consumers, and China is wearing a steel mask.”
‘consumer’ is too wide a category to be useful, as is calling any American companies that benefit from American tarriffs ‘crony industries’. India has us forever beat in number of ‘consumers’ served, as well as oceans poisoned by adopting the ‘worse is better’ mindset countrywide.
Imagine if local American goods became too expensive to support an illegal Central American immigrant population living on cheap carbs, that would be totally tragic. They might even demand wages high enough to make them not worth hiring, a terrible result for everybody!
“China can withstand the blows”
How do you know that? How do you trust the information coming out from them?
“but the key fact is that the (few) people benefiting are different from the (great number of) people getting hurt.”
I weep every day for the unspecified and undescribed ‘many’ (are they the ones currently getting government subsidies? Getting housed in rotten boroughs and districts for various modern bureaucratic 3/5 compromises? Working farms with tools as cheap as they are? Used as an excuse not to maintain or modernize existing infrastructure? Used as political cudgels against enforcing any standards?) losing out to the ‘few’ (dirty, law-abiding, saving, probably white heritage Americans who callously reject the marketing campaigns that easily sway the many.)
“The assumption that these are the same people is pervasive and faulty. It’s politics as usual: the little guy gets hurt, the cronies benefit, and the public misunderstoods and cheers due to its ignorance. Which is dogged and persistent and fiercely resists any argument or fact to the contrary.”
“China and its consumers pay for the tarriffs.”
SO WHAT YOU’RE SAYING IS CHINA DOESN’T PAY A RED CENT OF THE TARRIFFS IT’S ALL ON US AND TRUMP IS AN IDIOT RIGHT????
“arguments” and “facts” right here.
“In few areas does emotion so rule, at the expense of any data or logic. I’m used to seeing angry yawps from tariff supporters. Data and logic? Not so much!”
Your post did not contain a single number, graph, or quantitative measurement, just a bunch of up and down arrows and highly unspecified greater than/less than signs, pardon us yawpers for yawping with our own, frankly better, arrows and symbols.
Angry Yawper (699060) — 5/15/2019 @ 8:15 amI guess, being apparently new here, you have missed my posts in recent days linking and setting forth all kinds of specific statistics on how tariffs are hurting us. Nobody ever responds to any of that. I wish they would.
Patterico (115b1f) — 5/15/2019 @ 8:23 am84… Abe Lincoln had more book learnin’ than that, he knew how to spell tariff …
Colonel Haiku (2601c0) — 5/15/2019 @ 8:24 am82… yes, too many frappuccinos and Big Macs have helped to create a situation where approximately 71% of the 34 million 17-to-24-year-olds in the U.S. would not qualify for military service…
Colonel Haiku (2601c0) — 5/15/2019 @ 8:34 amThere are shoes that don’t wear out in one day, but they can’t stand the rain, or to go into puddles or slush from half melting snow – although it takes more than one dipping to ruin them.
Sammy Finkelman (ec94de) — 5/15/2019 @ 8:40 amDo those shoes survive even one weekend in New Orleans?…that’s the true test.
urbanleftbehind (2daf4e) — 5/15/2019 @ 8:47 amSoutherners vehemently opposed tariffs because of the economic pain they would cause … Britain?
Dave (1bb933) — 5/15/2019 @ 8:48 am83. 87. By the way I should make that:
Conflict, not contradiction.
CNBC online is ot very clear. You have this:
Elements across the the political landscape? What does Bufett mean? And what otehr things is he talking about.
Incidently, I went looking for ancient Babylonian cuneiform economics textbooks, and the cloest I found easily was some refeence to a sort of textbook for scribes:
https://cdli.ucla.edu/files/publications/cdlj2014_002.pdf
What they found was two model contracts (and a lot of other writing samples for students.)
You could probably find some writing somewhere on economic issues – and of course they collected statisics, but this was probably more for purposes of prediction than anythng else.
Sammy Finkelman (ec94de) — 5/15/2019 @ 8:59 amOf course, nobody’s been writing about this kind of stuff for more than 200 or 300 years.
nk, you crack me up and stretch my mind regularly. Thank you, my friend, for your contributions to this blog community.
Beldar (fa637a) — 5/15/2019 @ 9:03 am@ Angry Yawper (#88): I’m not sure about your arrows and symbols, but your prose is impenetrable.
Beldar (fa637a) — 5/15/2019 @ 9:07 amTariffs are paid by consumers. It is known, Khaleesi.
Beldar (fa637a) — 5/15/2019 @ 9:10 ami said I agreed with it! that’s a response. But I love data and facts and evidence and charts.
😉
Kidding aside, I have two actual points.
1. Why would someone want to debate the data when the data doesn’t support their opinion?Especially why would they want to argue against data with someone that’s really good at arguing?
Also, and I’m beating this horse to death, the ends that populist wing of the trump party are after have more to do with Esteem and Belonging than with optimizing economic outcomes. Your charts have nothing to do with showing those egg head economists in the ivory tower that Trump was right, and that the people who supported Trump are smarter and better then the ‘elites’. I’m not going to pick on anyone but I’m sure you can identify people who comment here who seem more motivated by that then by a belief that protectionism will be good economically.
Isn’t there a legal joke about if the facts are on your side ague the facts, if the law is on your side argue the law, and if it’s neither just make a lot noise?
Time123 (daab2f) — 5/15/2019 @ 9:38 amWhat does Bufett mean?
Well like any good prognosticator (an oxymoron in most economic or many other domains) he’s keeping it nice and vague so that he, or more likely given his personality, his acolytes can make whatever future events that occur more easily fit the prediction. Though were I to venture a meaning, not necessarily his but whatever, someone will need to step up, take huge political risks, and act in what the mainstream will regard as an autocratic manner to cut government spending, tighten monetary policy, and deal with the debt in a serious manner or some calamity will happen (student load crisis? Renewed housing crisis? Social/political/international warfare? Others…) that will burden the economy to the extent that it cannot continue to outproduce the inefficiencies inherent in the present conditions.
PTw (cbfa7c) — 5/15/2019 @ 9:45 amAs for looking for facts in economic data, good luck with that. There is very little one can discern and even the best economic data is something of a crapshoot, SWAG, an attempt to put a quantitative value on things that contain way too many qualitative aspects. Beyond the stock market (and even there, if you want to get real specific what do you choose? Dow, S&P, Russel?) where people at least are putting their money where their gut is, you have some viable aggregate value from GDP and unemployment yet even in the US these numbers are interpretive. How people and businesses react to the millions of changes that occur in any microeconomic environment every day is beyond comprehension. There was a recent, though somewhat weak, article in The Atlantic (not a big fan) regarding experts. Though now that I look for it, it seems it’s a bit of a recurring theme there:
From 2011 – https://www.theatlantic.com/national/archive/2011/04/why-experts-get-it-wrong/73322/
The one to which I refer: https://www.theatlantic.com/magazine/archive/2019/06/how-to-predict-the-future/588040/
One thing the article missed is that even when experts do get things right, the world, especially markets, react to that new knowledge and thus mix up the conditions on which the original predictions were based to such a degree that the formula or what have you that got to the prediction in the first place is now invalid because it lacks information on the reactions to the newly discovered knowledge.
PTw (cbfa7c) — 5/15/2019 @ 10:05 amThank you!, Beldar.
nk (dbc370) — 5/15/2019 @ 10:06 am99. Re: Legal adage.
https://quoteinvestigator.com/2010/07/04/legal-adage
Maybe the best form of it is:
Sammy Finkelman (ec94de) — 5/15/2019 @ 10:12 amIf tariffs are so horrible, why are the Chinese doing it to us?
Ingot9455 (afdf95) — 5/15/2019 @ 12:58 pmThey must have a reason. They must see a benefit.
Well-connected special interests in China have coopted the government to grant them favors at the expense of society as a whole, just as they have here.
It’s not complicated.
Dave (6d7f43) — 5/15/2019 @ 1:15 pm104. Ingot9455 (afdf95) — 5/15/2019 @ 12:58 pm
1. Because Trump believes they hurt the exporting country. (China actually doesn’t import anythng eond what it needs, oor woud prefer to import)
2. Because they believe in whatever the experts in western countries believe.
Sammy Finkelman (ec94de) — 5/15/2019 @ 1:31 pmAll right Dave, so it’s obvious we have to engage in this trade war to make them stop so that everyone can get to a nearly free trade state.
Ingot9455 (0433d6) — 5/15/2019 @ 2:37 pmhttps://www.amazon.com/Free-Trade-Doesnt-Work-Replace/dp/0578079674
https://www.amazon.com/Question-Free-Trade-Economics-Discourse-ebook/dp/B01ETKDAXK
Ingot9455 (0433d6) — 5/15/2019 @ 2:59 pm62: and what happened to the Roman republic when that Middle class diminished? And what happened to Britain when it endorsed free trade while others did not ?
Harcourt Fenton Mudd (6b1442) — 5/15/2019 @ 8:00 pm76: you remind me of the economist who sees something work in practice–tariffs in the US for 150 years–and wonders if it works in theory. Sorry–there is no historical example of a country that adopted the poorly described “free trade,” while others did not, and was around in any substantial form later.
You elevate the consumer choice of cheap running shoes over a solid middle class. And assume that the loss of jobs, the balance to the country provided by manufacturing workers versus adjunct professors, and manufacturing capacity is all a benefit– until you wake up and the Chinese have the money and the jobs.
Harcourt Fenton Mudd (6b1442) — 5/15/2019 @ 8:05 pmTariffs result in a net loss of manufacturing jobs.
There are about 80 times as many workers in industries that use steel (and are harmed by tariffs) than there are steelworkers.
Dave (1bb933) — 5/15/2019 @ 8:19 pmAny discussion is meaningless if its based purely on WORDS. We need to know the following facts:
1) Dollar Amount of Chinese Imports by Product class
2) Total Size of US GNP by product class – including amounts from Non-Chinese sources
3) Tariff amount by Product class
4) Ability of US companies to pass on price increases to consumers
5) Detailed analysis by Product class showing amounts that will passed on to consumers.
The vast of people in the MSM, of course, don’t have these facts and haven’t done ANY sort of analysis of the facts. And if they’ve seen an economic analysis, they are in NO position to determine if its correct or slanted. All the MSM have is WORDS and THEORY.
And as Game of Thrones says: Words are wind.
rcocean (1a839e) — 5/16/2019 @ 10:09 amAnd here’s a question. Why are we the world’s weirdo on foreign trade? Alone among the great powers, we worship “Free Trade” and want ZERO tariffs. Why is that? Why does the EU, Japan, India, Russia, China, even little Korea have large tariffs on US goods?
I guess the whole world is just dumb, and we’re like super-smart. Because “Free trade theory”.
rcocean (1a839e) — 5/16/2019 @ 10:17 amFirst, the premise of your question is wrong. Special interests in the United States have long manipulated the government into giving them special favors in the form of tariffs, at the expense of the rest of us. The exact same thing happens in other countries too.
It is very easy for small, organized groups to use the government to steal from the rest of us. A protective tariff is extremely important to the tiny number of people who benefit from it. Their gain comes at the expense of a tax on the rest of us, but because the cost is spread over a much larger number of people, we have much less incentive to oppose the give-away than the beneficiaries have to maintain it. But it’s not just one special interest picking our collective pockets with tariffs; there are many.
Second, we are the world’s weirdo in many ways. The governments of the rest of the world consume a far larger fraction of their GDP than ours. They provide health care for their citizens. They see income inequality as an evil to be remedied by redistribution of wealth.
That is largely true. We are far more prosperous, with a much higher standard of living, and enjoy more liberty, than most of the world.
Real per capita GDP in the US has doubled since 1970. That means the average person produces, and can consume, twice as much stuff. Free trade is a very important contributor to that.
Dave (1bb933) — 5/16/2019 @ 10:49 am“Words are wind,” indeed.
This table shows how false the premise of your narrative is.
The US (1.61%) has weighted average tariff rates similar to or higher than most developed countries, including:
all EU countries (1.6%)
Japan (1.35%)
Canada (0.85%)
With the exception of Israel (2.25%), none of the countries with higher rates are places you would want to live, or in most cases even visit…
Dave (1bb933) — 5/16/2019 @ 11:27 am109. Harcourt Fenton Mudd (6b1442) — 5/15/2019 @ 8:00 pm
I need to read up to see if the Middle class diminishing in an idea behind the end of teh Roman Republic. The Roman Republi actually ded anumber f times and then it died for good with Julius Caesar and Auustus, and it was dormant so long that even when they had the chance to bring it back around afte the death of Nero, they didn’t. I suppose it was the inherent defects of the political system. Most European democracies, especially the new ones came to an end by the 1930s.
People with capital invested in foreign companies – then the government forced them to sell in 1914 to raise foreign exchange for the war. The New York Stock Exchange had to close for nearly half a year. (or 4 to 8 months depending on your definition)
https://www.businessinsider.com/new-york-stock-exchange-shut-down-1914-2014-7
(They had forgotten ho to prevent depressions by 1930)
Sammy Finkelman (3fda43) — 5/16/2019 @ 11:47 amall EU countries (1.6%)
Japan (1.35%)
Canada (0.85%)
With the exception of Israel (2.25%), none of the countries with higher rates are places you would want to live, or in most cases even visit…
Putting aside that the vast majority of countries fit the category of places I wouldn’t want to live…visit is something else, but still…whilst we cherry pick…
Higher (of 120 countries):
At #1 – Bahamas 18.56
Chile 5.89
Kuwait 2.96
Had to look elsewhere for Cayman Islands at 16.47:
https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS
Lower (of about 50 countries):
Guatemala 1.39
Bosnia 1.11
Namibia 0.96
Botswana 0.57
About the same around 1.6:
Sweden
Latvia
Ireland
France
Czech Republic
Now I favor free trade, all things being equal, but I think rocean has some valid points.
PTw (cbfa7c) — 5/16/2019 @ 12:08 pmHowever not all things are equal, and trade gets blown way out of proportion to its general economic impact. It is quite far from being as strong of an economic strength indicator as repeated in the MSM and elsewhere. Also note, China itself is at 3.54. Also note, we renegotiated a NAFTA more favorable to the US. Also note, as things sit now nothing has been seriously put into effect. Also note, markets are up (supposedly) on indications that US industry has alternate supply sources other than China that they (Cisco specifically) are prepared to switch to if necessary. Which itself should not have been very surprising. Also note, we are speaking here of trade with ONE country, granted a big one but they need us more than we need them. We buy from them in dollars, they buy from us in artificially-determined-valued Yuan. Try getting that stuff off your shoes.
Here is a list of countries ranked by how freely goods move across their borders. The top five countries:
Here is a list of countries ranked by top per capita GDP. Luxembourg is first. Singapore is #8.
Of the ten top countries by GDP listed, here is where they show up on the list of countries ranked by free trade:
TOP WORLD COUNTRIES BY GDP
1. Luxembourg (#5 on free trade list)
Patterico (115b1f) — 5/16/2019 @ 1:32 pm2. Switzerland (#11)
3. Norway (#17)
4. Iceland (#19)
5. Ireland (#20)
6. Qatar (#43)
7. U.S. (#22)
8. Singapore (#1)
9. Denmark (#12)
10. Australia (#26)
Came across some more interesting data that demolishes the TrumpWorld narrative.
Leading countries on manufacturing output, 2015
Country % of Global Manufacturing Manufacturing % of National Output % Workforce in Manufacturing
China 20% 27% 17%
US 18% 12% 10.5%
Japan 10% 19% 17%
Germany 7% 23% 19%
South Korea 4% 29% 17%
India 3% 16% 11.4%
As these numbers show, “the decline of American manufacturing” is a myth. The only “problem”, if you want to call it that, is that we’re too good at it.
China needs 129 million manufacturing workers and 27% of its economy to generate 20% of global output. We produce 18% of global output with only 16.4 million workers and 12% of our economy.
We are the Chuck Norris of manufacturing – nobody else even comes close to our level of dominance.
Hamstringing our vibrant, 21st century economy by propping up unprofitable 19th century industries is the last thing we should be doing.
Dave (1bb933) — 5/16/2019 @ 10:05 pmHere’s a thing…can we step back from silly wording like “demolishes” “Chuck Norris of x” “nobody else even comes close” “Hamstring”. I’m guilty of it as well to some degree but once we start talking numbers (Truman’s third kind of lie) perhaps a little moderation of the absolutism is in order? Our economy will not be “hamstrung” over a short term. If we get a couple years into this negotiation with China and things aren’t working out for one or either side, take it back up again. We have at times had infinity tariffs (sanctions) on countries and the world didn’t end. Hysteria simply ratchets up the defense mechanisms on opposing sides creating an environment that encourages escalation into incivility.
PTw (cbfa7c) — 5/17/2019 @ 5:31 amDepending on who you ask and when you count, trade is about 25% of US economy of which China trade is 13% of that, so basically about 3% of US economy is trade with China…and even what those numbers mean is open to interpretation. Without the design in one country, the products produced in another country would not exist in the exporting country’s inventory. There are opportunity costs that get hidden as well. The market responded to the initial trade war reaction when US companies indicated that they had suppliers in other countries lined up to pick up any slack. Such is the beauty of not having a centrally planned economy…unlike China’s. The statistics themselves are often of dubious reliability. And then those numbers can be spun in many different ways and no human being on the outside of the business of statistics has he time and energy to track down what is accurate and what is exaggeration. These are all huge guesses. It’s best to keep in mind how much of this is sausage. I’ve lived through too many economic meltdowns, end of the world environment issues, pending outbreaks of WWIII, etc. to take the hysteria too seriously. Though if one thing does concern me, it’s the rate of growth of hysteria in the aggregate.
Do you consider referring to the trade deficit as stolen money to be “hysteria”?
Also, if trade with China is only 3% of the US economy, why screw with the other 97% (which tariffs do) in order to (at best) gain a small fraction of that 3%?
Dave (1bb933) — 5/17/2019 @ 7:04 amBecause there are other issues as well, previously mentioned, that go beyond trade. There is a significant geopolitical aspect as well. The US plays a major role in the world such that even he Chinese benefit from and we deserve a little respect in regard to trade. Of course the Chinese don’t see it that way but that doesn’t mean we should just give in to them. The point in any negotiation is to get the best deal in the long run. We are might far from seeing what the long run might be. I’m not saying it isn’t important, I’m saying the situation, especially the current situation, is a long ways from requiring the use of such hysterical language to describe it. In the grand scheme of things, the markets have barely blipped over it and markets are hysterical entities themselves. Nothing that has been decided nor even what will be decided is final. As I said…again…in general I favor free trade, and Trump has actually expressed similar preferences as well. To blow this negotiation period up into some sort of historical watershed is to not be making a serious argument.
PTw (cbfa7c) — 5/17/2019 @ 7:37 amChna recenly reversed what seemed to be concessions on trade talks.
t
There seem to be 4 theries as to why:
1. China never intende to sign such an agreement.
2. Something caused Xi to change his opinon about what Trump would agree to.
3. They didn’t realize what they were agreeing to until it was translated into Chinese.
4. Some new people in the Communist Party hierarchy were briefed and then successfuly argued to Xi that it would not be a good idea to sign such an agreement. (because it would make China look weak, or whatever.)
The main sticking point was enacting certain changes into law. U.S. negotiators felt China would not adhere to it unless it was enacted into law. But then why would they adhere to it if it was? I say because there is a crackdown on “corruption” that lasted many years, so many people would be afriad to carry out orders coming from the Communist Party if they were technically against the law. Making something illegal in China does mean something.
The best idea is that China re-evaluated whether Trump was serious on tariffs, and they made a mistake, because he is, even if his Secretary of the Treasry s telling the Federal Reserve Board and ptehrs that it could damage the economy.
They may also have thought that his negotiators would not feel that the changes made much difference, or they’d be so tired out, they’d cave.
Sammy Finkelman (3fda43) — 5/17/2019 @ 9:05 am