Here’s the conclusion of Brett Arends’s polemic against the media coverage of Trump’s tariffs on Chinese goods at MarketWatch:
Right now we export less to China than we do to Japan, South Korea and Singapore put together. That’s the point. So the effect of China’s new tariffs on the U.S. are yet another rounding error. Even if China banned all imports from the U.S., that would amount to only 0.6% of our gross domestic product. And we’d sell the stuff somewhere else.
Don’t buy the hysteria. President Trump is simply trying to pressure our biggest competitor to buy more American goods. That should be a good thing, even if you don’t like him.
I don’t think that’s quite right. $30 billion is unlikely to persuade China to do anything. What it’s just barely possible that the tariffs might do is to change the habits of American consumers and businesses. American businesses will seek sources other than Chinese ones for their products and some of those sources might just be American ones. Either one of those is a benign outcome. All other things being equal we should prefer buying from other than Chinese sources if for no other reason than that the Chinese authorities are not good people. They are building out China’ military for other than benign reasons, are imprisoning millions of their own people for political reasons, and generally imposing Orwellian conditions on China. Do we really want to subsidize that?
Christopher Balding has posted the first in a series of pieces on trade war with China. To summarize the first piece: China won’t make a deal, and China can’t make a deal.
https://www.baldingsworld.com/
An interesting frame on the debate.
Are the tariffs (a) a tax on American consumers as stated by the New York Times editorial board or are the tariffs (b) a removal of subsidies to the Chinese government?
That’s what I believe to be the case. I posted on it recently. China needs dollars because their loans are denominated in dollars. They get dollars by selling goods to the U. S. and receiving dollars in exchange. Buying more from us is counter to that process. They need to increase the number of dollars they have not reduce them.
Additionally, some of what we are asking for requires legal infrastructure China simply does not have. They can agree to all sorts of things they are incapable of delivering.
Buying non-Chinese as an expression of conscience is laudable, but will never happen. Too many people buy on price, despite what they say. However…
“the tariffs might do is to change the habits of American consumers and businesses. American businesses will seek sources other than Chinese ones for their products and some of those sources might just be American ones.â€
American businesses already are. Consumers will, or redirect purchase types. How much benefitting American companies? An open question.
and prices will rise due to the tax.
Avoiding buying Chinese is terribly, terribly difficult. For example, if you purchase foodstuffs that are artificially colored, artificially flavored, texturized, or vitamin enriched, they very likely contain Chinese ingredients because China is the primary supplier of all of those additives.
The problem with that is that we know with a confidence based on experience that Chinese vendors cannot be trusted not to adulterate the additives and American companies who purchase them cannot be trusted to test the additives before using to ensure they’re what they think they bought.
By redirect I mean they will buy different things.