
China announces 25% tariffs on $16B worth US goods - craigferg501
https://www.cnbc.com/2018/08/08/china-announces-25percent-tariffs-on-16-billion-worth-of-us-goods-including.html
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deadmetheny
China's economy needs Western imports far, far more than the West needs
Chinese imports, they're likely to break first. The short-term impact could be
quite painful on both sides, but things will turn out fine for the US if they
stay the course. And someone needs to, China has played protectionist games
unchecked for far too long.

~~~
onion2k
_China 's economy needs Western imports far, far more than the West needs
Chinese imports, they're likely to break first._

I don't think so. China has a huge amount of power over the US economy[1].

 _What Happens If China Called in Its Debt Holdings_

 _China would not call in its debt all at once. If it did, the demand for the
dollar would plummet. This dollar collapse would disrupt international markets
even more than the 2008 financial crisis. China 's economy would suffer along
with everyone else's._

China could crash the American economy any time they want. It'd hurt them, but
it'd hurt America a lot more. Especially because oil exporters would
immediately switch to doing oil trade in Euros, which would make it
_exceptionally_ hard for the dollar to recover.

[1] [https://www.thebalance.com/u-s-debt-to-china-how-much-
does-i...](https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-
own-3306355)

~~~
lainga
If you owe the bank a million dollars, the bank owns you.

If you owe the bank a billion dollars, you own the bank.

~~~
philipov
That's not how that saying goes.

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yohann305
Honest question: If some Chinese goods become "too expensive" because of the
tariff, wouldn't some other country's goods become the new more affordable
one?

If so, does anyone here know who's next in line after China?

ps: i'm already looking for a potential alternative to AliExpress to buy
integrated circuits :)

~~~
mkirklions
This sounds awful, we have technology in china that costs millions to replace.

My company is seriously hurting, where last year we have our best profits in
decades, this last quarter was survival.

I hate money in politics, but I'm starting to think that big companies will be
supporting politicians that will end these tariffs.

~~~
rasz
Your company was on its way to export your job to China next, you know, to
reach another profit record.

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vbtemp
Of all the nutty, anxiety-inducing and self-destructive things administration
is doing right now, this trade war with China leaves me least concerned. In
fact I'm curious to see where it leads. Change my mind?

~~~
tpfour
This was an interesting read: [https://piie.com/blogs/trade-investment-policy-
watch/we-know...](https://piie.com/blogs/trade-investment-policy-watch/we-
know-what-causes-trade-deficits).

~~~
vbtemp
Thanks

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Improvotter
Good on China. I'm glad China is reacting to the ridiculous actions of the US.
Is everyone in these comments shortsighted in thinking that this is good for
the long term? The US does not benefit from these huge trade tariffs on China.
Protectionism is not a good idea. It'll only slow job growth in the US.

~~~
wpdev_63
Why wouldn't be good for the long term? If we correct our trade deficit with
China(it's 5:1 right now) how is that against our interests?

China has been playing by their own set of rules from the rest of the world
and it's time to end it.

~~~
jaredklewis
> If we correct our trade deficit with China(it's 5:1 right now) how is that
> against our interests?

Why is a trade deficit bad? Is there some reason the capital account surplus
needs to flow out instead of in? What negative effect do you perceive the
trade deficit as having in the economy?

Trade deficits are basically neutral. They fund the foreign investment in the
US and purchases of US bonds by foreign governments.

~~~
joebubna
There are pros and cons to any complicated issue.

The biggest worry over a trade deficit that I'd have are National Security
implications due to the dependance on trade with that county. To explain why
that would matter, consider the following:

\- Because of the much lower wages and regulatory costs, manufacturing here in
the U.S. seems to have been strangled in the last few decades and mostly moved
over to China.

\- This has caused a shift in the way the U.S. economy works, with cheap parts
/ goods from China being considered a given and a transition to businesses
that depend on those cheap imports.

\- Once our economy wholly depends on that overseas manufacturing in China,
that gives China large leverage over us because we don't have the factories
here in the U.S. anymore to pick up the slack if China stopped trading with us
and instead found another buyer for their goods.

\- MUCH more importantly though, is the affect this dependance on a foreign
nation would have on us if China decided to do things that we find
reprehensible in the world. Think about what Russia did with Crimea. Now
imagine China doing something similar. With Russia we were able to slap strong
economic sanctions on them... but if our economy is strongly intertwined that
makes taking any strong stance against that nation extremely difficult. I
don't think anyone wants their future and safety dependent on strangers from a
different society that have different cultural values.

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douglaswlance
Chinese market is down. US market is up. I don’t think this is going to end
well for China.

~~~
moorhosj
Luckily for their leaders, they don't need to worry about elections.

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awakeasleep
Elections? The least violent outlet for social unrest?

Yeah, China doesn't have to worry about elections.

~~~
moorhosj
The Tienanmen Square protests weren't very violent for the party leaders, same
can't be said for the protesters.

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lewisflude
Makes sense, a very rational response really.

~~~
deadmetheny
Not sure why you're being downvoted here, it's absolutely true. They'd be mad
not to enact their own tariffs in response. How long it can carry on before
one side backs down is the real question here.

~~~
chasingthewind
I heard a claim in a podcast the other day that I'm not able to put my hands
on (it may have been EconTalk or Vox's Weeds) where someone claimed that trade
is generally so beneficial to the recipient that even if your partner puts
tariffs on your goods that retaliation is just shooting yourself in the foot
purely for appearances. I wish I could provide a link or more details but
there does seem to be an economic case for non-retaliation.

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ipince
Can someone (or a link) explain how these tariffs actually work in practice?
As in, what does "25% tariffs on $16B" mean, exactly?

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drexlspivey
It means that if your product is affected, upon entering China a 25% levy must
be paid, effectively making it's price 25% more expensive.

~~~
seren
$16B is an estimation of the value of the imported goods in recent years that
will be affected by that tariff.

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bluthru
Good. Cargo ships are absolutely terrible for the environment:
[https://www.theguardian.com/uk-news/2017/may/18/dirty-
diesel...](https://www.theguardian.com/uk-news/2017/may/18/dirty-diesel-ships-
worst-offenders-pollutionwatch)

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baybal2
Note, it is "only" $16B. I think, China by can do by far a more painful bite
with embargoes, and export tariff, than the other way around

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qop
What is the net outcome of a trade war? Is it just money shifting around?

I'm not squeamish about putting some pain on China, but who's to say they
won't resume the same tactics later on?

~~~
gota
One consequence is the reduction of trust and perceived-value in the global
economy, which reduces our capacity for investment and growth*

As far as I can tell, as long as the economy runs super well and everybody
trusts that it'll continue to do so, we are all able to collectively defer
debt among ourselves to invest in augmenting our production capacity right
now. In practice this means people trust that the work (or product) that they
are doing (or delivering) now can be payed later, so they can wait to be paid.
Meanwhile that work (or product) can be put to use _right now_ to increase
production as a whole.

I'm certain someone with a more formal grasp of macroeconomics can explain
this better.(Maybe even yourself, if that was a rhetorical question)

* many caps apply, and IMO foremost the accelerated consumption of natural resources is the most critical one. Eternally growing economies mean eternally accelerating change of the natural environment.

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microdrum
This isn't a "trade war." It's a national security negotiation. But you know?
I think maybe trade wars _are_ "easy to win," as Trump said.

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Roland0ull
So dropshipping GGWP?

