Staff members set up Chinese and U.S. flags for a meeting between Chinese Transport Minister Li Xiaopeng and U.S. Secretary of Transportation Elaine Chao at the Ministry of Transport of China in Beijing, China April 27, 2018. REUTERS/Jason Lee/Pool/File Photo
Ryan Woo, Reuters: What can Beijing do if China-U.S. trade row worsens?
BEIJING (Reuters) - China and the United States sank into a deepening trade conflict that roiled financial markets Tuesday after U.S. President Donald Trump threatened to impose tariffs on an additional $200 billion of Chinese products, prompting Beijing to accuse Washington of starting a trade war.
Trump said Monday his threat was retaliation for China’s decision to raise tariffs on $50 billion of U.S. goods over the weekend, a move that itself was in response to additional U.S. tariffs on Chinese products announced Friday.
The sheer size of Trump’s latest threat makes it impossible for an in-kind response from China since the value of the goods involved exceeds by $70 billion the total value of U.S. imports to China last year, U.S. data shows.
China could be prompted to react in other ways. Here are some possible scenarios.
Read more ....
WNU Editor: These are the numbers ....
.... China imported $129.89 billion of U.S. goods last year, compared with U.S. purchases of $505.47 billion of Chinese products, according to U.S. data. The figures differ from those provided by Chinese customs, which showed China imported $153.9 billion of U.S. goods and the U.S. purchased $429.8 billion of Chinese products.
What this tells me is that China is enjoying a massive trade surplus with the U.S. .... and one where they can lose a great deal if tariffs and trade restrictions are implemented to the extreme. But their lost will not only be limited to losing a trading partner. China's growth projections are based on the expectation that they will having greater and freer access to U.S. markets, and to earn even greater trade surpluses in the future (yes .... they actually believe this). And while some are saying that China will compensate in a trade war with the U.S. by finding other trading partners .... the problem is that China's other trading partners are just as restrictive as China is when it comes to imports (and in some cases even more so), and/or they cannot afford the products that China is selling. But the real long term damage will come in the evaporation of U.S. investments into China. Why invest in a country that is in a trade war with your country .... you will look for other options, and quite frankly .... there are now better options than China on the world scene. This investment of American capital and expertise ... and its lost .... cannot be underestimated. As one who has dealt with China for the past 35 years, I have seen that country grow and I have seen in many cases first hand the role that U.S. companies had in making that growth possible. A U.S. departure is going to hurt U.S. business interests and profits, but it is going to cripple China's growth prospects and development. And while I do understand why many do not want this trade war to occur .... one must also understand that President Trump was elected on the promise that he was going to bring U.S. capital and industry back to the U.S. .... and on this issue he is going to make sure that he delivers. My prediction .... he is going to deliver .... and the collateral damage is going to be far more severe on the other side, than on the U.S. side.
9 comments:
Editor,
I think POTUS is thinking along the lines of your editor commentary. All I can say is I hope and pray that you and he are right on this.
It did seem clear to many Trump voters that continuing the status quo was not only not workable but actually perhaps even suicidal for America. As such, a number of people took a chance on the unknown.
Now is there a "third way" other than Trump's or the status quo. I'm not sure. The Trump was does at least give us a fighting chance.
Now, if Trump really does "deliver" as you predict, that would be something. The US would then be a great manufacturing power and exporter of goods that people actually want. This really would make the US a major force to be reckoned with globally. Maybe this has some people scared. They like their Americans to be compliant and subservient.
Lets be clear, the imbalance is unsustainable for Global Strategy reasons; we simply cannot supply the cash for china's growth from now on. Having said this, once the imbalance gets back into an acceptable range (100-200 BB ??), then we will call this a success and resume normal trade.
We should not assume that Us will become a great Exported nation, it might increase for sure, but I think the net result will be less cheap stuff coming from China with more good manufactured here in the US.
Trump inherited a number of unsustainable facts.
Trade imbalances draining some $500 billion/year from the US.
Federal debt at $20 Trillion, half grown by Obama.
US military at a breaking point and suffering from a lack of investments to keep pace with military technologies.
US supporting too many allies who contribute little to American security.
A Democratic Party that had engaged in Constitutional abuses of power that threaten the existing of the Republic.
So far he's making good progress in fixing all of those issues.
Michael,
You may be correct. As an American I tend to think ambitiously for our country. You are spot on that this type of imbalance cannot be sustained indefinitely. Getting this into an acceptable range even if we don't become a great exporting nation would at least allow us some leverage when dealing with countries like China or other suppliers of goods and services. As I stated, what the editor lays out in his commentary I thing explains it to the T so to speak what POTUS is trying to accomplish and his "prediction" is probably the same as that of WNU Editor. I hope and pray they are both right.:-)
Now recognizing the status quo is unsustainable and doing something about it are different things. It seems all the opposition offers I more of the same, the status quo which was failing and was going to fail. The argument could have been made to continue the status quo would have been suicidal. The so called "rubes" who were feeling the effects of these suicidal policies long before the so called "elites" were naturally voted accordingly. Now is there a "third way" other than the path Trump has laid out that might be better? I don't know. clearly continuing doing things as they were being done was doomed to failure. Since no one seems to be suggesting a "third way" other than the path laid out by POTUS or the status quo, the Trump way it is. At least with this approach there is hope.
Anon,
You raise essentially six points. All of them are spot on. I might have a minor disagreement with you on the last one. It seems to me that both major political parties have contributed to your last point.
"US supporting too many allies who contribute little to American security." I've been pointing this out for at least 25 years, however, the problem has accelerated in the 21st century. Not only do these allies, in some cases contribute little to American security but they not only actually undermine it but appear to be treacherous to boot.
A case in point is South Korea. During the campaign South Korea was called out by name by candidate Trump. I think they were put on notice that America's days of serving as their b!tch boy and as the military arm of their foreign policy were not going to be indefinite. When confronted with this reality they have now decided to get more serious about actually making peace. I think this is a variable in this that commentators aren't properly appreciating.
I would agree with your assertion that good progress has been made. There is still much to do and still much that can go wrong.
Common everyone knows the knives are out for China. Would you accept a thieving bunch that steals from you, arms your enemies, threatens your allies with war multiple times, hacks your most sensitive data, is clearly on the road to a full blown totalitarian system and aims to conquer the world?
Every free man looks at this and thinks:we better stop it before it's too late.
That's what is happening now and China can huff and puff all it wants but not stop it. The US economy is twice as big and much stronger in its health. And together with its allies who also don't want the Chinese way of "living"(being enslaved by an authoritarian/borderline totalitarian party) they have more than 50 trillion. Enough to slap china into the next century and beyond if they don't realise that we've had enough. Which they apparently still haven't learned. They are incredibly dumb considering all the benefits of the doubt they get. Completely surrounded themselves with countries they've threatened war with.... I say good riddance
Anon (last one),
POTUS may be thinking similar to how you are thinking. At least this may be the hope.
"Which they apparently still haven't learned." Unless they "learn" it, the US is going to be very limited as to what it can actually do. Also, what will China's allies of Russia, Iran, and much of Central and South America do? This won't be easy obviously and if these "allies" don't learn there are other options we can pursue. On that notice, I did notice a report awhile back that South Korea is looking to increase their military capabilities and much has been written about Japan doing so as well.
http://growthcrossings.economist.com/article/unintended-consequences-impact-trade-wars-consumer-markets/
I agree with the previous anon - I also think countries must be looking to china and wonder when they'll be called out for all that theft and patent violations and WHO violations and so much more. Remember how they promised to the UK and Hong Kong that the latter would be treated differently and enjoy freedoms of the west? How's that working out? What actially happened: book dealers who sold Xi critical books were abducted, brought to the sleep deprivation halls and a few weeks later those who made it through alive showed up on TV and apologised for selling books full of lies and insisted on camera they were not abducted. Righhhht. This is insane. We're full on collision course with China but don't fully realise it. Until we do, we keep making them stronger for the day of conflict which will happen very very likely. So we either take care of these issues now or keep sending them hundreds of billions every year while they keep stealing hundreds of billions on top every year. Why do we keep on doing this? Why don't our politicians say enough is enough?
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