
China Is Paying for Most of Trump's Trade War, Research Says - mudil
https://www.bloomberg.com/news/articles/2018-11-19/china-is-paying-for-most-of-trump-s-trade-war-research-says
======
socalnate1
The actual study is here:
[http://www.econpol.eu/sites/default/files/2018-11/EconPol_Po...](http://www.econpol.eu/sites/default/files/2018-11/EconPol_Policy_Brief_11_Zoller_Felbermayr_Tariffs.pdf)

It seems that they completely omitted analyzing the impact of the retaliatory
tariff's; which is odd - as that can often be a major reason not to impose a
tariff in the first place.

~~~
thanatropism
Imports from China are rising

[https://fred.stlouisfed.org/series/IMPCH](https://fred.stlouisfed.org/series/IMPCH)

but the prices of those imports are falling.

[https://fred.stlouisfed.org/series/CHNTOT](https://fred.stlouisfed.org/series/CHNTOT)

This can mean two things: either the Chinese are cutting prices to cope with
tariffs (a benefit to the US), or Americans are displacing expensive Chinese
goods for cheaper Chinese goods -- which means the demand elasticity is high
and most of the burden goes to the Chinese producer, as explained by the
diagrams in your study.

~~~
friedman23
Imports from China are rising because importers expect prices to rise. If you
want to know if tariffs are harming China you should look at FDI.

~~~
pmart123
This is what the Maersk CEO said recently. Everyone is importing more now in
case prices and tariffs rise. He also mentioned that US exports to China has
slowed presumably because the Chinese government force the hand of Chinese
companies more easily.

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SomewhatLikely
The article seems to assume that only seeing a 5% price increase on items
tarrifed at 25% must mean the foreign manufacturer taking a 20% hit. However,
if domestic producers become profitable at the 5% higher level then we could
just buy all our goods domestically and the foreign producer can stop
manufacturing. In that scenario they aren't 'paying' anything except the lost
profits on goods they no longer make. If their profit margin is under 20% then
they aren't paying "the other 20%". Nobody is. Consumers are just paying 5%
more for goods produced domestically. If we impose a tarrif of one thousand
percent and prices go up 10%, nobody is paying for the other 990%.

~~~
writepub
> In that scenario they aren't 'paying' anything except the lost profits on
> goods they no longer make.

But they are paying a high price by losing market share. Profits are one
thing, but revenues are a whole other. Revenues support jobs, higher revenues
typically offer all sorts of "economy of scale" benefits, etc. If Chinese
manufacturers lose access to their American consumers, they have a high price
to pay

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nicodjimenez
China already has had an effective tariff on digital imports so China was sort
of asking for a trade fight. They got it.

~~~
sushid
Not just a tariff. They have essentially an embargo on web companies.

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starik36
Seeing how they had an $800 billion trading surplus with US, I'd expect that.

~~~
basementcat
I always thought that for a country with the World’s reserve currency, the USA
ought to maximize its trade deficit instead of worrying about reducing it. It
gets scarce, useful stuff (iPhones, raw materials, food) in exchange for green
bits of paper that the USA can print an unlimited supply of. The green bits of
paper are usually invested back into the USA creating jobs and other economic
opportunities (no point in hoarding it if it gets inflated).

~~~
toomuchtodo
> The green bits of paper are usually invested back into the USA creating jobs
> and other economic opportunities (no point in hoarding it if it gets
> inflated).

The "green bits" are pumped into real estate across the US (not to mention
Canada, the UK, and Auckland), inflating housing prices and making it harder
for housing consumers to acquire property (kudos Vancouver for your foreign
buyer tax!). Jobs are not created with these investment dollars.

Warren Buffet warned us of this: [https://www.youtube.com/watch?v=bGo_NL-
eclw](https://www.youtube.com/watch?v=bGo_NL-eclw) (trade imbalances lead to
serfdom)

~~~
ryan_j_naughton
While increased demand for real estate had definitely played a substantial
role, housing costs could be flat or even decrease if we simply increased
supply dramatically. There are a limited number of people but there is a cubic
amount of space if we build up. If we had policies that encouraged always
building then housing prices would collapse and we wouldn't have an affordable
housing problem at all, even with foreign investors buying speculative
property.

~~~
shard972
> housing costs could be flat or even decrease if we simply increased supply
> dramatically

I have a feeling places like SF and NY have already tried this. Considering
most of these foreign investors are most interested in these two cities over
lets say Nebraska, it's hard to see how NY just needs to "build more supply"
is a solution.

> If we had policies that encouraged always building

We have those in Australia, it's called negative gearing. We also have the
most expensive houses when compared to average income and our cities have
taken your advice and started to build up at rapid paces. Still hasn't worked.

The Aus government is now suggesting we lower our immigration cap from 1% of
total pop yearly so maybe that will help.

~~~
GlennS
Not sure negative gearing is actually intended to increase house building?

Isn't it just a strange (legal) tax loophole which enough people take
advantage of that it's difficult to get rid of politically?

~~~
goodcanadian
Well, it likely increases housing prices by reducing the effective cost of
leverage.

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tchaffee
I wonder how much it matters who is paying more? A more important factor might
be who can last longer. A president with a fickle base used to the many
comforts of a highly developed country? Who will vote again in two short
years? Or the Chinese people already used to the government deciding what's
best for them?

~~~
hummingurban
Whoever simply makes more money from the goods they export. In this case,
China has more to lose.

You forget that in China, you have a dictator who uses violence and fear to
keep people in check. They are stuck with his foreign policy abilities, which
many analysts will conclude, Xi fucking sucks, including those around him who
aren't happy about him being a dictator and praising Mao (has anything ever
good come out of ppl who idolize Mao?)

The US is on it's way to prosecuting a Russian KGB asset who has been
compromised and being blackmailed to willfully corrupt in order to launder the
billions that Putin and his buddies stole from his own fucking country.
Thankfully, the US president doesn't have absolute power, cannot stay in power
indefinitely, is not immune from the institutions that the American
forefathers have created to keep the President in check, a continuity in all
the core national security organs such as the CIA and NSA which prevents
somebody like Xi from ever pulling the same shit, and cannot just roll over
people with tanks and then make a stupid song about how much people love the
Tianmen square.

In China, the trade war is having a far more profound impact on society and
economy but you will never hear this and neither will the vast majority of
citizens in China because information cannot flow freely and it's censored.

If China seems invulnerable and powerful, it's only because they specifically
crafted their image in that manner. The fact is China is dysfunctional by and
large and anyone who had exposure to their political system knows it can't
continue no matter how many _active measures_ they take.

~~~
tchaffee
You seem to agree with me that a dictatorship can last longer in a trade war?
Your gripe seems to be with what a horrible place China is. That might be
true. Having lived there and done business there I think it's more nuanced
than you're making it out to be. But let's say it really is that bad. Does
that win a trade war before the next US elections in 2 years when US consumers
might already be frustrated with higher prices?

~~~
nine_k
Dictatorships are not very efficient economically, it seems.

China has become an industrial powerhouse when some modicum of economic
liberty was admitted by Deng Xiaoping. Dictatorship stifles internal economic
competition, and makes the economy less and less efficient.

If Mao times look too drastic a comparison, you can compare to the USSR, which
was also, well, nuanced, and had leaders stat stayed at power for decades. How
well did it fare against the US?

~~~
tchaffee
China isn't the USSR. China is increasingly capitalist, has had years of
excellent economic growth, and has a quickly growing middle class. So my
question remains: who gets unelected first when the middle class suffers? I
don't think it's the dictator.

~~~
nine_k
With more heavy-handed government involvement, I'd suppose that China is
decreasingly liberal-capitalist and increasingly state/crony-capitalist.
Government-controlled huge semi-monopolies are known for comparatively lower
efficiency.

~~~
tchaffee
Then what's confusing is why China's economy grew at something like 10% for
many years. When was the last time the US saw that kind of growth? Why aren't
corporations democracies? I'm not convinced you have a strong persuasive case,
but data is always welcome.

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askaboutit
Isn’t the GFW the biggest tariff of all?

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jdkee
The highest annual imbalance was $375 billion in 2017.

[https://www.census.gov/foreign-
trade/balance/c5700.html](https://www.census.gov/foreign-
trade/balance/c5700.html)

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bhengaij
It seems from a few comments that some people would rather US suffer than
Trump be proven right.

~~~
swebs
I've heard this phenomenon is called Trump Derangement Syndrome. It's not
nearly as bad here as it is on Reddit, thankfully.

[https://en.wikipedia.org/wiki/Trump_derangement_syndrome](https://en.wikipedia.org/wiki/Trump_derangement_syndrome)

~~~
culot
It's still pretty bad here, as you can see with many discussions the CNN-type
opinion tends to be prevalent. What is nice is that discussions here often
involve intelligent, analytical discussion around such talking points; a
degree less hivemind regurgitation here perhaps.

I'm sure there is a heck of a lot less reputation management and astroturfing
here. That is probably down to the size of this forum though.

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burtonator
Fake news... doesn't confirm my bias.

this is how it works, right Trump?

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dis-sys
Typical strawman. Trump started the trade war because the _deficit_ is huge,
not because China's exporters have higher profit margins. The mentioned
"research" concluded that the trade war is going to "lower the bilateral trade
deficit by 17 percent" after imposing tariff on $250 billion worth of imports
from China. As the deficit is increasing every month, reduce it by 17% is like
moving back to say one year ago.

~~~
shard972
Source? I know ive heard trump say they are profiting off the US unfairly many
times.

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gscott
China's swine flu is caused by trying to substitute soybeans from pigs meal
and has caused a big problem. China is certainly paying a high price for
boycotting US soybean. Chinese buyers are too afraid to buy US Soybean.. not
because the Chinese tariff makes it too expensive but because of the feared
repercussions from the government.

~~~
Gustomaximus
I don't understand the link from soybeans to swine flu. Is this because you
feel swill feeding increases the disease risk?

I read a few articles... this seems the best. None seemed to make the same
connection.

[https://www.google.com.au/amp/s/www.wired.com/story/african-...](https://www.google.com.au/amp/s/www.wired.com/story/african-
swine-fever-scientists-should-track/amp)

~~~
gscott
I was reading an article that some Russian feed was the cause and it was
substituting soybeans. It wasn't the normal feed the farmers buy.

