
Trump Hits China With Stiff Trade Measures - Mononokay
https://www.nytimes.com/2018/03/22/us/politics/trump-will-hit-china-with-trade-measures-as-white-house-exempts-allies-from-tariffs.html
======
rrggrr
There are reports and indications that the Chinese leadership is 'okay',
possibly even inviting of this move and may respond only lightly to save face.

\- Xi knows the Chinese economy must rebalance for domestic reasons and that
excess capacity must be shed. The US move provides Xi political cover and
fallguy as the inevitable unfolds.

\- Chinese investors are eager to invest more in US assets and companies.
Through the trade negotiations to come the US is likely to open its doors to
greater Chinese investment as Chinese doors open to less or unrestricted
investment from the US. This may take the form of sole US-owned investment, an
end to technology transfers, or both.

\- Xi's power consolidation was widely reported as the product of ambition.
The alternative explanation, and the one I favor, is the inevitable
rebalancing of China's economy will necessarily cause some social and
political instability - at all levels of the Chinese body politic. Whereas
social and political pressure has forced policy retreats the past decade in
China, Xi's new power suggests he'll enjoy the authority and longevity
necessary to complete China's adjustment. Suggests only, a lot can go wrong.

\- China has much to do in supporting provincial governments, SOE, and other
systemically important institutions. I don't think China has sufficient
reserves in-place for a trade war, even if it were so inclined.

~~~
noetic_techy
Hate to say it, but if this is the case its also the best possible outcome for
Trump and a boon for his re-election.

"I took on China and negotiated a new deal. Sure, it was painful at first, but
it brought them to the table, and now we're much better off. American
factories are open again."

I have a sneaking suspicion Trump doesn't care if he wins re-election or not
and could give a crap if tariffs lead to recession. It plays into his
narrative and image well, and that's all he really cares about. If he were
smart, he would play a card that Dan Carlin over at hardcore history
hypothesized: The 1-term president. Basically, it can be summed up as: "I'm
going to shake this system so far to the core, I may only be a 1-term
president, but I don't care! It must be done." I think he much prefers the
billionaire lifestyle to a presidential one anyways. He hates living in the
"shabby" white house.

------
jeffreyrogers
Many educated people are very critical of this, but as far as I know most
countries that have developed successful industries had a period of
protectionism during which they prevented foreign competitors from bringing in
competing products in order to give their industries time to develop. This was
coupled with strong export requirements to ensure that the products these
industries produced were globally competitive and high quality. The most
recent examples I can think of are the successful Asian countries (Japan,
China, Taiwan, and South Korea). Many times these countries directly defied
World Bank recommendations that encouraged a more laissez-faire, free-market
approach.

Obviously the people critical of these policies are fairly well educated and
should know what they're talking about, but I wonder how much is born out of
academic ideas that don't hold up in practice or a projection of their
disagreement with Trump's personality and other political actions.

Edit: I'm not saying this is the right approach, but I don't see many people
arguing for these trade reforms, and I think it's unlikely that there are no
decent arguments for them.

~~~
dmode
India tried this approach for multiple years and was a catastrophic failure.
Indians had to survive on subpar cars such as Ambassador and Maruti, expensive
TVs and fridge with subpar quality, and a dwindling economy. The way many
Asian economies have succeeded is not by protectionism, but by identifying
their niche capability and focusing on them. For example, automobile in Japan,
semi-conductor in Taiwan, appliances in Korea. The equivalent approach in the
US would be to concede low end manufacturing to China and focus on improving
high end manufacturing and future industries that can sustain higher labor
costs. Not trade tariffs.

~~~
lenkite
India actually _didn't_ try this approach. Nearly all our industries were
corrupt government owned 'public sector' industries. The idea using this
approach is to develop innovative, private industry in a regulatory-friendly
environment while providing proper trade protection and financing.

Automobile Industry In Japan was heavily protected
[http://www.americanautocouncil.org/sites/aapc2016/files/Japa...](http://www.americanautocouncil.org/sites/aapc2016/files/Japans%2BProtected%2BAuto%2BMarket.pdf)

[https://www.huffingtonpost.com/ian-fletcher/japan-the-
forgot...](https://www.huffingtonpost.com/ian-fletcher/japan-the-forgotten-
prote_b_850269.html)

South Korean industry was heavily protected from 1960-90 and now is well-
protected through unique Korean mandatory standards (nice WTO loophole).

~~~
fellellor
I'm not sure about the other Asian countries mentioned, but in India we kind
of messed up when public sector companies were competing with privately owned
companies in the same sphere. The government always bailed out the public
companies whenever they messed up, but the private companies themselves have
managed to set up organized anti-competitive cartels wherever possible.

But that said, tariffs alone can't explain how some economies succeed or fail.
There are a lot of other variables which tend to be ignored in such simplistic
thesis about macroeconomic outcomes, as there always are.

------
cs702
...and from now on I will start calling it the "Echoes of Smoot-Hawley"
Tariff.

For those here who don't know, the Smooth-Hawley Tariff Act, signed into law
around a year after the Stock Market Crash of 1929, is widely considered to
have exacerbated the Great Depression of the 1930's.[a]

If I may quote George Santayana: "Those who cannot remember the past are
condemned to repeat it."[b]

Hopefully this tariff and China's retaliation will remain an isolated
incident, without significant repercussions for global trade. One can hope.

Ignorance is a scarily powerful force in world affairs.

:-(

[a]
[https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Ac...](https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act)

[b]
[https://en.wikiquote.org/wiki/George_Santayana](https://en.wikiquote.org/wiki/George_Santayana)

~~~
iooi
Not sure that's relevant right now, since we're not in a recession?

~~~
riffic
A recession started January 26, 2018. You weren't informed?

~~~
EpicEng
The word "recession" has many definitions (depends on who you ask), but in the
US we tend to defer to the NBER.

>The NBER defines an economic recession as: "a significant decline in economic
activity spread across the economy, lasting more than a few months, normally
visible in real GDP, real income, employment, industrial production, and
wholesale-retail sales."[1]

GDP was up 2.6% last quarter[2], so no, we're not in a recession. A stock
market dip does not a recession make.

[1]
[https://en.wikipedia.org/wiki/Recession#Definition](https://en.wikipedia.org/wiki/Recession#Definition)
[2] [https://www.nytimes.com/2018/01/26/business/economy/gdp-
econ...](https://www.nytimes.com/2018/01/26/business/economy/gdp-economy.html)

~~~
dragonwriter
> GDP was up 2.5% last quarter, so no, we're not in a recession

That both starts with a false premise and, more critically, is an invalid
argument.

First, the GDP grew at a 2.5% annualized rate last quarter (Q4 2017), it
wasn't up 2.5%.

Second, the definition you provide indicates that recession is _normally_
visible in a set of variables, but not that it can be conclusively ruled out
when it is not visible in one variable in that set.

Third, and most critically, the condition of the economy _last_ quarter
doesn't tell you whether we are in a recession _now_ , only, at best, whether
we were last quarter.

------
noetic_techy
Keep in mind, the US is by far the LEAST protectionist country according to
the WTO, with China being the most, and Europe somewhere in the middle.

Europe also has anti-dumping and high tariffs on China, with some steel import
tariffs as high as 71.9% in some cases to prevent dumping. Cars being shipped
from the U.S. into Europe faced a 10% import duty while European cars into the
U.S. face only a 2.5% percent duty.

China makes its immensely difficult for US based companies to enter Chinese
markets, and IP enforcement is abysmal. Fixing this access imbalance was the
only thing good the TPP had going for it, but the concessions were too much
and ultimately it was scrapped.

I sincerely hope this does bring everyone back to the negotiating table
eventually for a better deal.

~~~
mrwebmaster
The WTO uses bound tariffs, not the actual applied tariffs, as far as I know.
The applied tariffs adjusted by real trade shows that US is not the least
protectionist country, Japan and Singapore are less protectionist. Anyway, the
adjusted tariff is lower than the China tariff.
[https://ftalphaville.ft.com/2018/03/08/1520526203000/America...](https://ftalphaville.ft.com/2018/03/08/1520526203000/America-
is-not-the-least-protectionist-country-in-the-world/)

------
wilburTheDog
Could just be coincidence, but this was signed at roughly the same time that
China started selling oil futures in yuan. Some see that as a big threat to
the primacy of the dollar in international oil trading.

[http://nationalinterest.org/feature/the-end-the-
petrodollar-...](http://nationalinterest.org/feature/the-end-the-
petrodollar-25002)

------
Grovara123
Nothing I see here is a negative - China does not play fair - this is a shot
over the bow... should have been done years ago.

~~~
megablast
Really? So then China put tariff on our stuff. Then we do it again, then they
do it again. You see that as a good outcome?

~~~
Grovara123
I think that China is cheating the system and if you have a better idea on how
to fix the situation I'm all ears.

------
jorblumesea
Also known as a tax on the poor. Tariff taxes just get pushed onto the
consumer as the US doesn't have any domestic competing products anywhere close
to the price point of Chinese goods. We will continue to buy China, just at
10% more than in the past.

People will just pay yet another tax as everything will become more expensive.

The disconnect between "China is taking our jobs" and "I want a tv for cheap"
is astounding. Different sides of the same coin.

~~~
kregasaurusrex
Foxconn's investment in Wisconsin is a perfect example of this- there's simply
no US competitor in a lot of consumer product areas for the same price point.
What we're faced with is like having the choice between an American 720p TV
and a Chinese 1080p TV for the same price at a retailer: there's no incentive
to buy the American version when the foreign one's BOM\shipping\import costs
beats that of the US-made one.

~~~
jorblumesea
Also implying that American made electronics are even appealing to the
American consumer anymore. That to me is the big question. Everyone talks
about buy American, but look at the mass produced American goods and it
doesn't scream quality, even if it is at the right price point.

Everyone buys Korean washing machines, Japanese cars, and Chinese electronics.
Not simply because of the cost but also because of quality. My Toyota is a far
better deal than Ford/Chevy/etc.

~~~
myrandomcomment
LG washer/dryer (Korea). Wolf kitchen (German), German cars (soon to be
American, Tesla). All Apple everything else (designed in US). TVs are Vizio
(American HQ). AG jeans (American) but I have my suites made in Singapore.

I think the reality is more of a mix.

I would never buy an American car (traditional) because they do not appeal to
me.

BTW Toyota Civic for example is 75% US domestic parts made in the USA.

[https://www.usatoday.com/story/money/cars/2016/06/29/survey-...](https://www.usatoday.com/story/money/cars/2016/06/29/survey-
top-made--usa-cars-toyota-honda/86510052/)

All of this is way more complex.

The reality is that for an American company trying to do business in China the
playing field is far from level, and that’s the major issue. Remove the IP
transfer requirement and the 50% joint venture requirements and make the rules
equal then we can see who will win (hint, the American company).

Fair access to thier market is the requirement. No one really believes that
good old 1950s factory jobs are going to return to the USA. Heck, they are
leaving China now!

------
sorenjan
Walmart is the biggest employer in the US. Won't this affect them and their
customers, and by extension their employees, negatively?

------
baldajan
That's one way of kick starting a recession I guess...

~~~
rubicon33
Call me crazy, but I'm kinda hoping for a recession. Housing prices seem very
tightly correlated with the economy boom. I'd sure like to see a nice
correction back down to sane levels, so that some of us who've been saving for
a long time, can finally afford to buy something.

Downvote of course if you're a current home owner.

~~~
davidw
It'd be nice if we could just _build more housing_ , rather than hope for a
painful recession to drop prices.

~~~
lainga
We did build more housing, far too much, in 2005-07.

~~~
davidw
Not in the right places

[https://www.vox.com/2016/8/8/12390048/san-francisco-
housing-...](https://www.vox.com/2016/8/8/12390048/san-francisco-housing-
costs-tokyo)

[https://www.strongtowns.org/journal/2015/1/7/americas-
suburb...](https://www.strongtowns.org/journal/2015/1/7/americas-suburban-
experiment)

~~~
lainga
OK, good point...

------
lewis500
Since interest rates are positive now, The number of jobs is currently
controlled by the fed. The stronger labor demand is, the more they raise
interest rates, thereby reducing job creation. So all of these make work
programs, like the huge military spending boost, are currently just leading to
higher interest rates and prices and shifting workers from one industry to
another. Specifically it will shift workers out of export production and
construction, because higher interest rates hurt our exports and construction.
No job creation, more expensive products and homes. Thanks. Fortunately these
tariffs are pretty insignificant: 50 billion worth of stuff is not that much
for us, although it might be for certain cities in China and the precedent is
bad.

------
freejulian
Good. The Chinese government subsidizes and protects many industries within
their economy. Additionally, workers in the United State have been forced to
race to the bottom with China. I, for one, am happy to see some protectionism.

------
pishpash
Number keeps changing. Was $50 billion on Bloomberg this morning.

~~~
drak0n1c
News usually reports on rumor and calculated leaks before any official
announcement.

------
Animats
Apple may have to move iPhone production to the US.

------
HeyLaughingBoy
Wonder if this will impact buying cheap Arduinos on Aliexpress.

~~~
pishpash
I get the sense that electronics have already doubled in price from a few
years ago. There are almost no dirt cheap parts any more.

~~~
HeyLaughingBoy
As of two months ago, I could still purchase Arduinos & peripherals on
Aliexpress for less than I could buy the raw parts and assemble them myself.

------
enraged_camel
The DOW is already down almost 3%. Tomorrow should be fun.

------
tristanj
_Edit: HN Mods quickly fixed the article, which makes this comment out of
date. I really appreciate how quickly mods fix things on this site._

Article is wrong, Trump is not announcing $60B in tariffs, he's announcing
tariffs _on_ $60B of goods. Huge difference.

I've seen multiple outlets make the same mistake. NYtimes got it right here

[https://www.nytimes.com/2018/03/22/us/politics/trump-will-
hi...](https://www.nytimes.com/2018/03/22/us/politics/trump-will-hit-china-
with-trade-measures-as-white-house-exempts-allies-from-tariffs.html)

~~~
notheguyouthink
Does this affect the doom and gloom comments made here? I know nothing of
economics, hence the question.

~~~
fspeech
We will have to wait for the details. Will they really tax Nike shoes, HP/Dell
computers or Apple phones? As for what Lighthizer allegedly cares about -
"electric vehicles, high-tech shipping and aerospace technology", I am not
aware that this country buys in any significant quantity from China so not
sure how they can be targeted with tariffs.

In NYT's exact words: ... Those industries include electric vehicles, high-
tech shipping and aerospace technology. Mr. Lighthizer called them “the ones I
care about” for tariff purposes.

------
kregasaurusrex
Make America protectionist again?

~~~
toomuchtodo
Hollowed out middle America probably appreciates it versus everyone else
getting the consumer excess from cheap goods from china. Keep the globalism.

It pains me to say I agree with this action.

~~~
scarmig
How will this help "hollowed out" America? Is the promise that West Virginia
will become the next Shenzhen?

~~~
52-6F-62
Not explicitly related, but funny enough— it comes on the same day this news
came out. It seems like they're already done with the guy, anyway:

 _U.S. miners ' union to endorse two more Democrats in coal country_

[https://www.reuters.com/article/us-usa-election-coal-
endorse...](https://www.reuters.com/article/us-usa-election-coal-endorsements-
exclus/exclusive-u-s-miners-union-to-endorse-two-more-democrats-in-coal-
country-idUSKBN1GY1YM)

~~~
newfriend
How is this funny? Don't unions typically endorse Democratic candidates? Union
workers are not the same thing as union leadership.
[https://en.wikipedia.org/wiki/United_Mine_Workers#Recent_Ele...](https://en.wikipedia.org/wiki/United_Mine_Workers#Recent_Elections)

------
gesman
We should of balance the incoming flood of this crap long time ago.

