They’re an excellent answer for what the president is using them for. The problem is the trade imbalance. We’re importing a lot more than we’re exporting.
President Trump’s solution is to ask foreign countries to drop their tariffs and make regulations fair so we can have balanced trade. But most countries say no, we like charging tariffs so the balance of trade favors us, not the US. So President Trump levies ever increasing tariffs until they decide to play fair.
Tariffs were never intended to be the final solution. They’re the stick part of his carrot and stick diplomacy. If he needs to go to 400% to get someone to be reasonable, he may just do that.
Wow. You correctly identify the debt that increases as we constantly buy more than we sell. But you say “that’s not a problem.”
I’ve suspected before that you just argue for the sake of arguing, but it’s pretty clear here. “Sociological cycles”? So? That would go to motive, not effect.
Tariffs typically make imported products more expensive, driving import volume down which drives the imbalance down. But in China’s case, they manipulate their currency so the price, and thus sales volume, remains simlar. As a result, China is effectively pouring money into our treasury to buy the right to sell us stuff. We’ll take it.
In the normal case, with no currency manipulation, the increased cost of import goods plus tariff would allow local producers to make a competitive product.
The other country can turn around and levy tariffs on products they import from us, but with our trade imbalance, they don’t have as many targets to work with.
Sooner or later, they’ll hopefully come to their senses and realize there’s more profit to be made by agreeing to remove all tariffs in both directions.
What’s clear is that you haven’t gone end to end on this topic. You should read more from Thomas Sowell.
It doesn’t matter, because it’s the result of cycles that need to run their course, and it creates a net surplus of capital.
Which is a better place for us to be in.
Debt is bad, but no economist thinks a net surplus of capital is a bad thing.
Cool, but they do not control the trade balance.
They are not why China is a net exporter anymore than Germany is.
They are no where as close or as consistent as the Italians were in the 1980s. In fact, until last year, they hadn’t done out and out manipulation in over a decade. As it stands, it’s just noise on the whole process.
China subsidizing its industries does far more work than anything it does with it’s currency.
And of course we’re not stopping that, because we also do it.
To the American consumer, yes, a form of social engineering.
Not necessary. You presume that if a product isn’t made in China, the only other cost-effective alternative is, to make it here in the US. Remember cost is the driving factor here. Even if you drive the imbalance down with China, it’s likely, in the long run, to increase the imbalance in other places.
I think AS has pointed out, rightly so, that in many cases placing tariffs on China, will increase the cost of Chinses goods, but the unintended consequences is that new markets emerge in other nations that can make the same goods for slightly more than China (the reason there isn’t a large existing market) but less than here in the US.
One need only look at what happened when OPEC lead by SA tried to cut production on oil ~2006. This increased the price of oil and drove incentives to create energy in other places. It so happened that the US was in a good place as technology made it possible to exploit existing energy sources to fill the gap, so that was to our benefit as a nation as our energy production is now near/ at all-time highs. However, Id’s suggest that increases in prices on Chinese goods won’t necessarily result in large scale increases in human employment here in the US. The result is likely to be short term disruption followed by increased output by other nations with large pools of slave labor and governments/ businesses willing to exploit them. Output that comes here to the US is likely to be highly automated and will result in relatively few jobs.
Lastly, in the meantime, China has retaliated and increased the price of Soy and Pork in China, which will result in other markets clamoring to step in to fill the void. I think there is a presumption here that when the trade war is over, things will go back to the way they were, I suspect, they will not and long term exports of soy (the nations largest export) and pork, will be reduced for the long term as Chinese consumers purchase from other nations (like Brazil in the case of soy) who are taking advantage of the higher selling price of soy without having any increase in the cost of production.
But again, that works both way, they don’t have much to “target” as you put it, but the little they do have to target is crucial, Soy (and other agriculture), Aerospace, construction equipment. Other nations are happy to fill voids created by tariffs.
Mitsubishi and Hyundai (to name just 2) make construction equipment, Airbus makes aerospace products and there are lots of markets that are happy to sell agricultural products.
Everyone manipulates. The US manipulates it’s a currency all the time, we just have a different method. I’m baffled that people believe that China is special in terms of its manipulation.
What do you think is really happening when nations have a trade imbalance?
I submit what’s really being traded here is jobs for China and low prices for the US.
Think about it.
China has a massive workforce capable of creating more goods than it could ever hope to consume.
If the US stopped buying from China, its economy would meltdown because demand for Chinese goods would decrease enough to cause business failures. The result would be massive unemployment.
But what about here in the US. You’re so infatuated with the idea of making stuff here, you’ve never stopped to consider the reason that it’s more cost-effective to make stuff on the other side of the planet
and ship those goods here on a cargo ship than it is to make the same goods here (not to mention the presumption that if a good isn’t made in China it will, by default, be made here).
I suspect that automation will return manufacturing to the US in the long term, but it will have little impact on domestic employment as it will take relatively few people to operate modern automated plants (look at Tesla’s Gigafactory).
On other side, here in the US, we get the benefit of lower prices of real goods and services.
They get higher levels of employment (mostly in low skilled jobs) and US consumers get lower prices.
Turn that around and you’ll increase Chinese unemployment (unless they can find other markets to sell to) and in the US you’ll see higher prices.
In what nation’s currency do the Chinese government and Chinese businesses buy US Treasuries?
I don’t think so. It’s 10 to 30 times as deadly as the flu and much more contagious. The count of infected people in each country has been growing exponentually until they clamp down and restrict all travel and meetings.
If the worldometer’s count of 1109 infections currently in the US is correct, that will only take 18 doublings to reach the whole population of the US. Some places have been doubling every six days, so at that rate it would take three and a half months to infect the whole US.
If the fatality rate is only 1%, be prepared for two or three million Americans to be die.
with all due respect Ken, I guess we will see. I just recall all the catastrophe promised and hyped and hoped for by the media and then the utter devastation on their faces when it did not come to fruition.
We are not china, or Italy. Our health care and our personal habits not to mention eating habits and demographics are different. I think I posted in this topic that this is the Russian Collusion Virus. The media and the left are intent on destroying this president even if it means destroying this country.
Exponential growth starts off deceptively slow and goes really really fast at the end. Why do I have to defend this? It’s not something I want. The first 40 cases in Daegu, South Korea are believed to have spread from one woman at church who didn’t even know she had it.
Everyone should buy some food to sustain them during prolonged self quarantine.