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U.S. Moves Forward on $200B China Tariff (bloomberg.com)
30 points by samspenc 9 months ago | hide | past | web | favorite | 36 comments

The tariffs against Europe and Canada are stupid. The tariffs against China, an emerging dictatorship, make sense. Their admission into the WTO was a mistake [1].

[1] https://www.economist.com/leaders/2018/03/01/how-the-west-go...

I suspect that one of the intentions of the tariffs is to spur domestic (American) production of goods that would otherwise be imported.[1] That said, I think they are having the add'l effect of pushing Europe (and others) toward China.

In response to Economist article's premise, what I generally hear is that the issue is not about whether they adopt democracy, but whether they accept a subservient role to the U.S. The term often used here (D.C.) is "little brother." Japan and S. Korea-- which started off as a pretty brutal dictatorship and today doesn't function as a free market/liberal economy) are cited as ideals.[2]

The funny thing is, while most people hype a coming military conflict w/China, a lot of folks here openly acknowledge that the Chinese are not interested in that. It's said that they aim to essentially secure themselves, but also depend on the U.S. that maintain much of its current role in the int'l order. The Chinese are not thought to be interested in becoming a global hegemon / world police.[3]

Anyway, I just came here to recommend a book, The Grand Chessboard: American Primacy and Its Geostrategic Imperatives.[4] Reading it now and find that it puts a lot of things in perspective.

[1] Fox Business News w/ Trump: https://youtu.be/K1qt6nQLoHI

[2] Chaebol: https://en.wikipedia.org/wiki/Chaebol

[3] Military Challenges in the Asia Pacific (AEI): https://youtu.be/hp768euAi-E

[4] https://en.wikipedia.org/wiki/The_Grand_Chessboard

This terms like a strategic decision: Trump now has a bargaining chip with Europe/Canada that he can use to pressure them into ganging up on China. Without that pressure Europe/Canada would not be eager to take on China.

Or you know...he could just ask them to cooperate, as they have been our allies for a very long time. No reason to use coercion.

I was making an assessment of the strategic reasoning, not making a normative judgement. In discussions about Trump people seem to have difficulty separating the two.

They would have helped regardless because it was in their interests anyways. Especially in the case of Canada the PM's popularity now comes from standing up to the "mean Americans". Where before compromise was possible its a lot harder now that nationalism has been stoked.

Bingo. Also, unlike the US we like stable relationships a lot more than maximizing profitability.

The US has now proven to be unreliable and any further deal with the US will not be considered in the long term which clearly doesn't exist. So if it's not immediately in our interest we are unlike to make any deal about anything with the US as it now. No more loyalty. No more trust. Just aggressive animals trying every chance they get to steal each others food. Yuck.

I'm not seeing loyalty from your side. From here, it looks like you are about maximizing profitability at our expense, and the "stable relationship" is an abusive one.

Consider NATO. The USA spends 3.6% of the world's largest GDP on military. You agreed to spend only 2% of your smaller GDP, but only 3 countries (UK, Poland, Estonia) bother to do so. Overall the EU is a slacker, with some countries spending less than 1% of their GDP. NATO is really about defending Europe, but the military budget of all of Europe is less than half of the US military budget.

Meanwhile, you are imposing your own huge tariffs on US products and flat out banning us from selling you stuff like Swiss cheese. You're even trying to get us to agree to ban making Swiss cheese in our own country, forcing us to import it from Switzerland. I'm guessing you don't see how absurd that is; you have a financial motivation to believe that your rules make sense. You've even screwed up the web, with your silly cookie warnings, and now again with some GDPR thing.

You've had a great deal, and you don't want it to end. I get that. It's understandable. The deal was made in the ruins of WWII, to our disadvantage, when Europe was in ruins. You're better now. It's time to have a fair deal for this modern world.

Europe underspending was a logical response to the ridiculous overspending of the US. And most of that money isn't actually spend on anything that keeps anyone safe.

We make more milk than anyone needs and then we subsidize it and throw half of it out. You guys make more tanks than anyone ever needs. You subsizide it and it collects either dust or you sell it to a small town police station for crowd control.

The world really didn't need us spending more money on war. Instead we spend our money on education for example. The shortage of highly skilled individuals in the west is filled by Europe.

None of this was ever a deal. We just do our part. Do what America lacks. And investing in murder machinery just isn't something our team needed.

But that's the thing, right? We are not one team anymore. You have to admit: that is what changed. I don't have an opinion about Swiss cheese.

The underspending is short-term thinking. You see how well that worked out for the Ukraine. Some countries have no choice because they are tiny, like Georgia, and they also suffer greatly. You might not be interested in violent combat, but violent combatants are interested in you.

You certainly shouldn't rely on the USA for your protection. We had promised to protect the Ukraine. Even when you do get the promised help, as Poland did from the UK in WWII, it typically comes rather late. By the time help arrives you may be starving, homeless, raped, injured, orphaned, or widowed. Pushing that stuff out of your thoughts does not make the possibility go away.

European here: that's not how you negotiate with friends. That would show a dangerous lack of cultural understanding.

We have long memories and don't care about money as much as Americans do. We will prefer to be proud and poor.

This goes beyond Trump. It will take 30 years to repair the trust.

Smart move IF we weren’t doing the same to Europe and Canada at the same time. Europe is completely unreliable in terms of a united front against China, everyone has failed on that. They delay, delay, empty promises almost as bad as China so we don’t need them per say but we don’t want to get retaliation from them either.

And Canada is awesome.

Well, the US leadership has made it quite clear that US is only in for themselfes and not a reliable partner anymore, at least in the current presidency.

China already is a very important trading partner for the EU, so it makes sense to look east if relationships to the west deteriorate.

Apart from practical reasons, I actually think facing off China on their extremely anti-comptetitive and protectionist behaviour is long overdue and something the EU should do as well.

"the US leadership has made it quite clear that US is only in for themselves" as opposed to EU always looking out for US :)?

The old world order was the US would be mostly fair to its allies, and in return everyone would turn a blind eye as it pursued whatever it wanted in the third world. Because the west would never seriously challenge the US it never had to be concerned about the UN or any international body that constrains the actions of most nations. The US is the most powerful single country but alone against a united world it would not have nearly the same freedom of movement it has now.

You see the "blind eye" thing for EU is complain loudly and do nothing and thats not specifically related to US either. Russia invades a country "voice concern" Russia shoots down a plain with many EU citizens now it's "deep concern" while still laundering money for russian politicians and oligarchs etc. So at some point none cares any more if EU voices "concern", "deep concern" or "very deep concern".

The tariffs on Canada make sense. The Chinese were selling their steel to “Canadian” companies who were then selling it to the US. Canadian government is fairly toothless when it comes to managing China partly because we’re non-confrontational and partly because they are propping up our GDP growth by investing in our real estate markets.

Meanwhile... nasdaq prices were within 20 points of all time highs today. Tariff's aren't having decimating effect on the economy(yet?) that mainstream media would have us believe. Not saying they are good/bad/etc, I don't care, I'm only interested in their effects on markets.

This whole tariff brouhaha has created the best summer for day traders I've ever observed. Normally, market participants take all of summer off...because it's horrible. No volume, no volatility...etc. This summer has been gangbusters in the market.

I think the market knows how healthy the US economy is. 4% growth in Q2, low 3.7% unemployment rate, labor market near full employment, rising interest rate and lower corporate tax has encouraged money to flow from emerging markets back to US. Emerging market is experiencing capital outflow very similar to the events preceding the asian financial crisis in 1998.

As for China, In 2016, a stunning 68.0 percent of China’s overall merchandise trade surplus related to sales to the U.S. In 2017, that figure increased to 88.8 percent. Trade-surplus countries, as history shows, generally suffer more in trade wars.

Looks like Chinese stock market knows this too. Shanghai and Hang Seng down 1.5% on this news. China is the world's worst performer in first half of 2018, down 25% from january peak.

The stock market is not the economy. The two can (and often) do very different things.


Today's stock market performance shows investor views of the future. The author of that articles seems to think its the reverse which isnt true.

> Today's stock market performance shows investor views of the future.

...of returns to capital, which, again, is not the whole of the economy, or guaranteed to be representative of the whole of the economy.

Moreover, "... of returns to capital, in comparison to doing other things with the money."

Still, I would suspect tariffs to generally hurt that.

The economy was doing well before he got into office and he passed large spending bills while also passing massive tax cuts (I never thought Republicans would be the ones doing a fiscal stimulus after some of the rhetoric during the recession) so it'll take a huge amount probably to take it really off kilter. Also it's a pretty safe assumption that all media ("mainstream" and otherwise) is over hyping things

The mainstream media has become a terrible place for any sort of rational discussion. They're too busy criticizing Trump to analyze the impact of these moves.

I have zero love for the man, but it's clear that the US has the upper hand in this trade war and should be able to squeeze China for better deals.

> Tariff's aren't having decimating effect on the economy(yet?) that mainstream media would have us believe.

Many of the announced tariffs aren't in effect, and stock (and, for that matter, other capital) markets aren't the whole of the economy.

Given the tariffs only started being applied _last friday_, and the targeted amount is/was tiny, how exactly would it have a "decimating effect on the economy" so fast? Markets are lagging indicators - they'll react to whatever months or quarters from now...

What are the real world implications of this? Is stuff at Walmart suddenly going to get more expensive? Or is that not how this works?

Anything that is made of inexpensive electronics will increase in price. Then anything that uses electronics will go up in price.

It is tough to say how much, as demand will shift to equivelant products as the cost increases, but it's safe to say the any computer hardware will have some increase in price. Since computers are used in every industry it could cause any other low margin product to increase in price as there is no room for the company to eat the cost of the tariff.

The interesting part is that we don't know how the economy will respond to tech becoming more expensive as that is not the trend. Technology usually gets less expensive.

I'm only focusing on the tech side of things. There could be different affects in other industies.

Some of the stuff does, but Walmart will change what they offer. You'll see more stuff made in other countries. Walmart will not stubbornly continue buying from China.

Meanwhile, wages/salary in the USA are likely to go up a little bit, more or less compensating for any increase in costs.

Reminder: this isn't a "tariff" in the 19th century protectionist sense. It's a tool to combat bad behavior.

Smart move, literally the only thing I agree with Trump on. China has been doing the same for years harming other countries industries.

If China's retaliation harms the Trump base the most, via tariffs on US farm products and manufactured goods, then I'm all for it.

We need free trade and open borders, so let this be a lesson to the Trumpers.

It's an unequal relationship. Free trade would mean that Google and Amazon and Ford get a level playing field in China as well. But that's not the case.

The goal of the tariffs IS free trade and open borders. You think they are wanted by the administration? They are a tool to get China to play nice, which they haven't been.

> The goal of the tariffs IS free trade and open borders. You think they are wanted by the administration?

LOL this administration definitely does not want free trade and open borders.

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