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Utopia Talk / Politics / CHINA WIL WIN TEH TRADES WAR!
Thu May 16 11:38:02


Why you should never start a trade war with an autocracy

Unlike the EU, China seems willing to pay any price to punish Donald Trump’s voters

Print edition | Graphic detail
Apr 27th 2019

ECONOMISTS OFTEN argue that trade wars cannot be won. Yet they will be among the few beneficiaries from America’s barrage of tariffs. For decades, rich countries’ sound trade policies denied academics cases of tit-for-tat protectionism to study. But new American taxes on many goods from China and metals from everywhere have produced the data set of their dreams.

America’s government seems unfazed by the damage its tariffs do to the economy. One study by scholars at the Federal Reserve and Princeton and Columbia Universities found that the new levies have raised costs for consumers by $1.4bn per month.

However, Donald Trump is devoted to his voters. And his trading rivals have retaliated where it hurts. A paper by Joseph Parilla and Max Bouchet of the Brookings Institution, a think-tank, estimated that 61% of jobs affected by retaliatory tariffs are in counties that voted for Mr Trump.

Is this a coincidence? If a country’s imports from America already come from mostly Republican areas, those regions will bear the brunt of a trade war. However, a new paper by Thiemo Fetzer and Carlo Schwarz of the University of Warwick finds that America’s rivals probably did consider politics when crafting their policies.

To test if recent tariffs were politically motivated, the authors needed to compare them with alternatives that were not. They devised this benchmark by creating at random 1,000 hypothetical bundles of targeted goods for each trading partner, all worth the same as the actual trade facing tariffs.

The authors then compared real-world policies with these alternatives. First, they assessed the political impact of each plan, by measuring how closely its targeted areas matched Republican gains when Mr Trump was elected. Next, they estimated how much each policy would harm a retaliating bloc’s own economy, by counting the share of its imports of the chosen goods that come from America. The more a country relies on one supplier, the more switching to a less efficient source is likely to hurt.

The study found that the EU prioritised minimising such damage. Its tariffs deftly protected domestic consumers, causing less disruption than 99% of alternatives. The bloc targeted Trump voters as well—its tariffs matched the election of 2016 more closely than in 87% of simulations—but not at the cost of upsetting its own citizens.

In contrast, China focused on punishing Trump voters. Its tariffs tracked the election better than 99% of alternatives. They also disrupted China’s own economy more than in 99% of simulations. Even among plans including soyabeans—one of China’s main imports, grown mostly in Republican areas—China’s policy was just slightly more politically targeted than similar options, but far worse for its economy.

China’s choice of tariffs seems designed to deter escalation at any cost. Only regimes with no voters to satisfy can run that risk. The lesson is clear: if you start a trade war, fight a democracy, not an autocracy.
Thu May 16 11:41:56
One and a half billion Chinamen have no freedom, democracy or liberty, and have zero ability to deter their government from engaging in a pissing match with the US that harms their own interests. OWNED OWJED OWNED OWNED
the wanderer
Thu May 16 13:00:08
the tariffs are the greatest thing to ever happen to our farmers... according to Trump

also... 'many countries' are scared by what Trump is doing with China & begging to make deals with us... according to Trump
Fri May 17 08:21:46
"One and a half billion Chinamen have no freedom, democracy or liberty"

Why did you include democracy there, rugian? Chinese model should be preferable to you, I would think, over the the hordes of plebs, brown ppl, women and swjs voting. They got 25 man politburo and 7 man standing commitee, deciding things. With Xi, who is supposedly the first among equals. But even with a semi dictator on top, wouldn't this arrangement be your choice over democracy? You'd have old white men, not old chinese man, of course, but the structure would be the same
Tue May 21 13:11:21


Xi Jinping says China is embarking on a ‘new Long March,’ signaling no end to trade war soon
Published 5 hours ago Updated 2 hours ago

Chinese President Xi Jinping ramped up his rhetoric by saying China is embarking on a “new Long March, and we must start all over again!”
Although he didn’t mention the U.S. or the ongoing trade war, the remarks are interpreted as a clear sign that China is not going to cave in anytime soon.
Chinese Vice premier Liu He, a top trade negotiator, was in company with Xi during his tour, according to the report.
Tue May 21 13:42:42
China doesn't have much more they can put tariffs on. The last round of announced tariffs China wasn't able to come close to the amount in dollars that the US did.
China does have a weapon in the trade war that would be very effective though. They can devalue the Renminbi and upset the entire world market. China exports much more than it imports so devaluing their own currency isn't going to hurt them like it would some countries. It will play hell with the markets though across the globe and that is something President Trump would have to deal with.
large member
Tue May 21 14:18:34
China could certainly do things that would put pressure on its currency. Like selling down US treasuries to expand consumer spending domestically.

Or sell down US treasuries to increase FDI in other countries.

Or back track on intellectual property protection legislation to enhance the quality and affordability of domestic production.

Its not terribly important. We all know Trump wants to see the US economy improve dramatically in step with the next election.

And most importantly - the Chinese know that too.
large member
Tue May 21 14:19:18

Not very much drama really.
Tue May 21 14:47:24
The issue of china forcing companies to share intellectual property when they open joint venture in china is a legit complaint tbs. But I never understood how it would help US workers. Lets say China backtracks and scraps these demands, no more demands to share IP. Isn't it going to make opening joint ventures in china easier? Great win for american corporations, but for workers?
Tue May 21 17:35:04
Most the business articles I've read say China will not sell off US treasuries because it will hurt China more than other methods of accomplishing the same thing. Back tracking on intellectual property protection only gives President Trump an I told you so moment in his comments about China. Both sides will saber rattle for a while then an agreement will be reached that will allow both sides to claim a victory.

Oh another weapon China has that the US does not is China can place artificial requirements on US ships with goods. Random inspections and all kinds of things so the goods are never off loaded. Doing this would cause CEO's to bombard President Trump with lobbyists.
large member
Tue May 21 19:21:13
Reduced treasury holdings follows from boosting Chinese consumer and public spending.

Business journalists might do well to remember that treasury purchases are simply a way of recycling a trade surplus.

A hiatus on German intellectual property rights after world war two gave the United States and USSR a significant technological boost in quite a wide array of fields.

A similar hiatus on US prooperty rights in China would have effects far more profound than a Trump tweet.

What US ships?


The US can just slap down a national security decree stipulating that containers with chinese stuff have to be inspected.

Or target individual Chinese companies directly with the same kind of presidential decree.

So can China of course. Since the US decided we are not playing by WTO rules any more.
large member
Tue May 21 19:28:48
Intellectual property rights*
large member
Wed May 22 10:23:43
Since WTO rulings are no longer relevant, then China could always revisit rare earth mineral exports (it dropped an export quota system due to a WTO ruling in 2015).

It should not be a big deal. Rare earth minerals are only used in advanced technological production and China only has 90% of global production.
Wed May 22 15:33:03
I may have misspoke when I said US ships but you know what I meant. Ships with US goods.

China can decide to inspect random ships any time and they do. They can also claim contamination of goods with no real investigation and they do.

The US can't play that game on the same level China can.

The US can target individual companies as demonstrated with Huawei but again not near on the level China can.

My point was and is China can't match the US on tariffs as they have put a tariff on about everything they can. They do have other weapons available though so people thinking the US easily outlasts China could be very wrong.

The OP also mentions China targeted specific demographics with tariffs to hurt areas known to support President Trump. That is just a happy coincidence for them as that was all they had to put tariffs on.
large member
Wed May 22 18:45:03
You are placing pretty arbitrary limits on executive orders.The president can most certainly play the game at the same level China can.

We should be clear that it is not the US that is in a trade war with China. It is the president who is in a trade war with China.

So of course the president cannot outlast China. He needs a solution before the next presidential election.

The only question is if China will give it to him.

Thu May 23 04:39:08
Where is the 45% tariff on all Chinese products. Trump needs to expand the trade war
Thu May 23 16:01:30
"You are placing pretty arbitrary limits on executive orders.The president can most certainly play the game at the same level China can."

The courts and congress would jump on that so quick I would expect to hear a sonic boom.

And yes it is the US. Don't pretend otherwise.
large member
Thu May 23 18:24:23
The courts and congress are jumping on many things. There is quite the backlog of sonic sounds.

It is the president. Absolutely everything began and can be rolled back with executive orders.

He is making absolutely no headway with things that actually require Congressional approval (such as ratifying trade agreements).

Thu May 23 18:56:41
yep all because Democrats are still butt hurt about Hillary not winning.

Ideas that the Democrats thought were great just four year ago are now the most evil ideas ever conjured by mankind and all that has changed is who sits in the White House.

I don't like executive orders and I think they are often abused. Setting tariffs comes from a different presidential power because of the Smoot–Hawley Tariff Act. President Trump is pushing that power farther than previous presidents though.

You can't honestly believe the US government has anywhere near the power the Chinese government has when it comes to targeting certain ships heading to port. I'm beginning to think you are simply addicted to arguing and that is why you keep going off on tangents and arguing silly stances.
the wanderer
Thu May 23 19:00:22
"yep all because Democrats are still butt hurt about Hillary not winning. "

the non-Trump defender parroting the Trump defender line again

because clearly there is no legitimate reason to find fault with Trump...
large member
Fri May 24 03:15:54
The US president could target certain ships heading to port with a swipe of his magic marker.

"The legal basis cited in Trump's tariff order is Section 232 of the Trade Expansion Act of 1962 which under certain circumstances allows the president to impose tariffs based on the recommendation from the U.S. Secretary of Commerce if "an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security."[51] This section is rarely used,[51] and has never been invoked since the World Trade Organization was established in 1995"

The tariffs are by executive order.

Trump is also seriously overstepping by not allowing Congress to pursue its constitutional duties.


China does have means that the US president does not have. Its calls for a popular boycott would for example be many times more efficient that Trump's calls for the same thing.
Average Ameriacn
Fri May 24 04:32:35
"Its calls for a popular boycott would for example be many times more efficient that Trump's calls for the same thing. "

Nonsense! If Trump would ask us to boycott rice then I promise you no true American patriot would eat a single grain of rice any longer! All the rice would rot on Chinese fields and rats would eat it and China would be totally destroyed by a rat plague^^
large member
Fri May 24 05:46:47

The US is a much larger rice exporter than China.


As you can see, imports far more rice than it exports.
large member
Fri May 24 05:47:19
China imports*

Feel free to try again.
The Children
Fri May 24 14:50:07
"thats the wrong question andrew!"

hahahaha KAPOWEND!!!!

Sat May 25 04:20:00
"because clearly there is no legitimate reason to find fault with Trump..."

There is plenty to fault President Trump for. Trying to reel China in a bit isn't one of them, though would be much better if congress would back him on this.

jergul read the Reciprocal Tariff Act of 1934. I got the wrong one when I said it was the Smoot–Hawley Tariff Act. The 1962 act is basically an extension of the 1934 act. Until 1962 the act had to be extended every few years.
large member
Sat May 25 04:55:40
Interesting trivia. But Trump referred to the 1962 act as the legal basis for his use of executive orders on tariffs.

Trump can most definitely be faulted for introducing tariffs and selectively targetting a Chinese company as negotiating ploys.

He may be doing other stuff to reel in China that he should not be faulted for and that Congress may back him on.

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