Trade war with China a big, fat zero ... or worse

Although Trump predicted that the U.S. would win any trade war with China hands down, he has managed to prove just the opposite ... the maxim that no one wins a trade war has become true once again.

That is why Trump's party is the free trade party, but, just like everything else Trump does, the Republican Congress did nothing to rein him in. As a consequence, the result of Trump's trade wars and his harsh protectionist tariffs has been serious damage to the two largest economies in the world.

Trump lauded praises upon himself when China purchased another 300,000 metric tons of U.S. soybeans on the heels of another sale of 1.13 million tons of soybeans to China earlier this week. This was China's first major purchase of U.S. soybeans since Trump began imposing duties on Chinese goods to pressure Beijing to change its trade and intellectual property rights practices.

For the year, sale of soybeans to China after these purchases is a minus 90%.

In slightly positive news for trade tensions, the Chinese government also announced that it was lowering its tariff on U.S. autos to the pre-trade war level of 15 percent, from 40 percent currently. However, the reduction is only for three months, beginning on Jan. 1, reflecting the uncertain prospects for the two countries to reach a long-term deal.

As part of the 90-day cease-fire, Trump agreed not to raise tariffs to 25 percent on $200 billion worth of Chinese goods, from 10 percent currently.

This is a sign that a trade war cease-fire between the two countries is returning commerce somewhat to normal, at least temporarily, but what exactly happened? We are right back to square one, temporarily, back where we started before Trump began the trade war.

Both economies lost. The Dow lost another 497 points today. Every bit of the gains in the stock market since the beginning of the year have been wiped out. Every American who has an IRA or a mutual fund has lost money. Yes, there are other factors, but trade jitters ranks right up there as a cause of the decline. Why? Tariffs causes prices to rise, ergo, inflation. Inflation causes recession. Recession causes job loss. That's Economics 101.

New Chinese economic data released on Friday indicated the bilateral trade war is causing the Chinese economy to slow from the 6.5 percent annual growth rate posted in the third quarter. Although 6.5 percent is high by U.S. standards, it's significantly slower than rates China enjoyed earlier in the decade. The slower growth report was partly responsible for the drop in the U.S. markets.

No one wins a trade war, Economics 101.

Our President didn't know what a college freshman knows.

Once again, thank you, Mr. President.

 

We are now celebrating a 15% tariff on imported cars into China effective January 1 2019, which is EXACTLY what it was earlier this year before Dirty Donalds tariff war on them??

 

Trump is exactly correct in his trade war. China has been abusing our kindness and flat out stealing from us (corporate, educational, military secrets). Past presidents were too chicken or were probably bribed to do anything about it. The stock market daily movements are meaningless. It goes up long term but it won't continue to do so if we don't get tough on China. We import far more junk from China than they do from us so a trade war is easy to win. Just like Trump

 

Exactly my point. But one thing is not the same. Because of concerns about trade with China for the past year, millions of Americans have lost part of their retirement savings.

That is directly related to the trade wars Trump started. Let us not forget the 25% steel tariff and 10% aluminum tariff placed on our friends, Canada, Mexico, Japan, Australia, and the 28 countries of the EU.

 

You appear to have little knowledge of the tariffs imposed by other countries on US products. What is particularly amusing is all you lefties were screeching about all the American jobs lost to foreign countries just before President Trump was elected.
Another sleepless night?

 

That was some powerful scholarship, it was long and intriguing. Although unlike Trump it appears your analysis here might not have accounted for, reverb, like the example you read here:



CHINA WILL LOSE TRADE WAR WITH THE US, THEN THINGS WILL GET REALLY NASTY

Beijing might be the biggest loser, but both the American and Chinese economies will take a hit – especially when this war goes beyond trade.

By Cary Huang

Ever Since David Ricardo, mainstream economists have believed restricting trade reduces consumer welfare and impedes productivity growth as it dampens economic activity, pushes up consumer inflation, distorts prices and creates inefficiencies, raises uncertainty, and erodes demand and investment.

With Washington’s punitive tariffs on US$200 billion worth of Chinese imports and Beijing’s reciprocal tariffs on US$60 billion in American goods taking effect on Monday, on top of duties imposed on each other’s US$50 billion worth of imports, a full-blown trade war between the world’s largest and second-largest economies has begun, which will severely hit both countries and elsewhere, and thus slow global growth. However, China will suffer much more pain than the United States because of its over-reliance on trade and on core US technology in the supply chain, among other things.

A textile factory in Wuxi, Jiangsu province. Photo: EPA-EFE

First, China will not inflict as much pain on its rival as it is unable to match US tariffs on a dollar-for-dollar basis, because it exports far more to, than it imports from, the US. Last year, China exported more than US$500 billion worth of goods to the US. In contrast, the US sold just US$130 billion worth of goods to China.

Second, the Chinese economy relies more on mutual trade than America’s. China’s exports to the US accounted for 19 per cent of its total exports, while US exports to China represented 8 per cent of total US exports, according to a White Paper released by China’s State Council, its cabinet, on Monday. Currently, trade represents nearly 20 per cent of China’s gross domestic product (GDP) while it makes up about 14 per cent of US economic output. And US value-added exports to China were equivalent to 0.7 per cent of its GDP, while such Chinese exports to the US were equivalent to roughly 3 per cent of its economic output. Economic theory suggests a trade war will hurt an exporter more than an importer.

Why Trump’s trade war is a blessing in disguise for Chinese leaders
Third, one consequence of the trade war will be the restructuring of the well-established global supply chain, which has served China’s best interests. China’s economic boom in the past four decades has been built on its role as the world’s manufacturing hub. A lasting trade war will force foreign companies to diversify or shift supply away from China and to relocate their production lines to safer countries like Vietnam, Malaysia, Indonesia and Mexico, in an effort to bypass increased costs.

Likewise, Chinese firms that buy American hi-tech industrial products will also seek to move to “safe” countries to avoid the punitive tariffs...



Read more here: https://www.scmp.com/week-asia/opin...rade-war-us-then-things-will-get-really-nasty

 

Apparently Trump is obsessed with the "DOW" and has asked his advisers if they think his Trade war might be causing the recent stock market drop.

"No Sht Sherlock" ??

 

The Trade war has already taken Trillions out of the stock market - and things are just getting started. If this thing really heats up it will get much worse.

Then you have the unintended consequences of alienating pretty much every significant nation in the world - including our allies - especially when you factor in the sanctions. That is - the world is expediting the process of creating a competitor to the US dollar as the "Sole" world reserve currency. If/when such a competitor becomes reality - a valid alternative to the US system of international payments .. Historians will mark that day as the defacto end of the US economic empire .. Full Stop.

 

but thanks to Bush's two needless 10+ year wars is our debt to high to absorb the shock

 

I thought democrats loved themselves some taxes?

You should be ecstatic, what gives?

 

Not really.

That expediting has been going on since, pre-2007, within efforts of the BRICs nations. In 11yrs, they have managed to coerce only < 40 nations into abandoning the US Dollar as their standard for trade and commodities.


So hopefully Trump remains unintimidated by this decade-old reality.

 

Trade war hurts both the US and China, but hurts China a little bit more. Trump and fans: Winning.

I guess they take the non-zero sum principle of economic transactions to a new level: Negative sum.

 

Blah, blah, blah - and you have the nerve to accuse the President of cherry picking and selective truths!

China blinked - On Friday, 12/14/18:
"China said it will temporarily reduce tariffs on imports of American-made cars as it tries to negotiate a trade deal with the United States."...."the Chinese Finance Ministry said in a statement that it will remove the additional 25% tariffs on car imports from the United States for three months starting January 1. This will bring China's tariffs on American-made cars to 15%, in line with those for cars made in other countries....China also said it would suspend its 5% tariff on 67 other auto parts."

You shouldn't let your Trump Derangement Syndrome corrupt the facts.

 

Quantum Nerd,

Be careful now. You might be mischaracterizing regular, normal, processes for every type of War, in the history of Mankind so far; all opponents will suffer loses, until one side gets tired of losing then gives up!

 

That's why I am a pacifist. I don't like actual wars AND trade wars. Because the world is better off when people build each other up instead of tearing each other down.

 

The expediting has not being going on since pre-2007. This is the point.

While it is true that the world in general has been wanting a competitor - there had not been a whole lot of movement and not much support (as you say).

Like in most things - people will not change until it becomes too uncomfortable to keep things the same.

The second issue with your post is that this is not about "abandoning" the US dollar - it is about having an alternative.

The previous "talk" in relation to development of an alternative system of payments has turned into action over the last few years..
I would have completely agreed with you if we were having this conversation 5 years ago or even 3 years ago. Something started to change.

The IMF introduced "Special Drawing Rights" (SDRs) This is only for nations and can not be used by corporations or individuals however, it is the first step. In March 2018 the Chinese introduced the Petro Yuan. Even while these actions represented a major ramping up of rhetoric into action - they were a far cry from a serious/authentic competitor.

Using the US system of international payments as a cudgel (the so called "Nuclear Option") in order to force nations to comply with sanctions appears to be the straw that has broken the camels back.

We have major allies such as France and Germany using strong language - "usurping sovereignty" kind of language - which is exactly what using the nuclear option does.

Keep in mind that in the background these nations have been waiting for, and some even looking for, an excuse to develop an alternative. No one likes to be under the thumb of another .. nations are no different. Using the "Nuclear Option" brought to the forefront how much power the US has over a nation due to having "SOLE" world reserve currency status.

There is a reason for the adage - "walk softly but carry a big stick". For many decades the US had this stick but they rarely used it, and if so only minimally and in a reserved fashion.

Something changed and all of a sudden the stick is flailing around thrashing and beating like some crazed maniac. Using the nuclear option has consequences ... and we are seeing the fruit of that rash decision ripen.

 

Starting another thread about Donald Trump and trade protections being bad, Sandy?

Wasn't it the Democrats who were against free trade before the early 1990s? What happened to the WTO mass protests in Seattle?
Didn't the Left go bezerk saying how bad it was?

 

Which would explain why we have, by far, the largest economy in the world, nearly twice that of our nearest competitor, China.

Trump's tariffs are a solution in search of a problem.

I realize China has been guilty of excesses, but in any war, trade or actual, one has to balance what one gains versus what one loses. Our economy is not as strong as it was at the end of 2017, and, while there are other factors, Trump's trade war with China is a huge one.

You seem to minimize the stock market losses and the losses in retirement savings caused by Trump's trade war, but I think that is important.You are much like Trump. You don't care if Americans are hurt by all this. Farmers, a huge part of Trump's base, are being hurt especially bad. Do you care? Hell, no. You think some time in the future this will all work out for the better. Have you noticed that about Trump's policies? Benefits are always sometime in the future. In the meantime, Americans or our government are being negatively affected.

Maybe you will care about this. The stock market is the canary in the coal mine. It detects problems with our economy long before American workers are affected.

 

"Trump's tariffs are a solution in search of a problem."

Isn't that called forward thinking?

If the idiot Obama or the airhead BushII had been nearly so proactive, Trump would never have become President

 

the perfect example of a true trumpian win. Bigly.

 

Prior to Trump's trade war, they were in line with our tariffs on their products. Want proof? Prior to Trump's harsh tariffs, no one was talking about a trade war, and we had the largest economy in the world, by far. Prior to Trump's harsh tariffs, what exactly was the problem?

If you support Trump's harsh tariffs on China and steel and aluminum tariffs on our friends, answer that question.

Also, his tariffs were intended to be punitive, to make other countries do what he wanted them to do. There was no sense of fairness, no leveling the playing field. Trump used his tariffs as a weapon.

I am not a lefty. I am a conservative, and, as a conservative, I agree with the Republican Party. I strongly endorse free trade as does the GOP. Liberals support protectionist tariffs. They are a liberal concept.

You were wrong a second time in that sentence. Most Democrats were quite pleased with the progress Obama was making in fighting the Great Recession that began under a Republican administration. For example. under Obama, there were 76 straight months of job growth.

Trump has a way to go before matching that.

You just sorta make things up, huh. That's okay. Our President does the same thing ... several times a day.

 

I would expect a Trump fan to say something like that.

 

Understand this, I support Trump in his attempt to even the playing field with other countries. Don't give me your leftie BS about things were just fine before Trump took office. Every leftie radio talking head has been bitching since NAFTA was signed and trying to blame the republican congress for "forcing" Bill Clinton to sign it into law.
The only one who had a grasp of the damage NAFTA caused was this guy and he was proven to be correct. Lefties screech about losing jobs to foreign countries while scouring Walmart for a $2 tee shirt. You guys are the very definition of hypocrites.



BTW, I am about as far left as you are right so trying to selling me that crap as it will not fly. The conservative I know do not act like children posting hate every hour on the hour.

 

When I consider all of the choices for candidates that both parties have given me over the past four decades, I consider President Trump to be the most accomplished and supporting to his constituents.

Look at the losers since 1988 - Mike Dukakis, Bush Sr, Bob Dole, Al Gore, John Kerry, John McCain and Mitt Romney. A few nice guys, a few crooks - but, at best, not a capable brain in the bunch - and the winners were just as bad.

Trump has done his his best to give his constituents what he has promised them. He is now getting ready to go to war to get his constituents what he diplomatically failed to get them in the past two years - and he has been diplomatic up to this point.

What you fail to recognize is that President Trump is a good American and NOT a good party man - his fealty is to the American people and not to the Republican or Democrat Parties. I thank God President Trump is restructuring the Republican Party into the "American" Party - I pray he succeeds.

 

That is my point exactly. Trump's trade wars are a threat to our economy, keeping in my mind the stock market acts as a canary in the coal mine where our economy is concerned.

Trump and his fans think bringing China down will be a great victory. That's B.S. It is our economy Americans are concerned about. Misery does not like company in this case, but Trump is too stupid to realize that. He is out for revenge and everything else can go to hell.