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The Trump tariffs have little to no theoretical pathway to immediate economic success, in my estimation. Some analysts think that they're overall a good idea to wrest power from the ascendant Chinese. China is going to replace any foreign investment with Keynesian stimulus, and we'll see if that messes them up at all.
Interestingly: https://www.scmp.com/news/china/arti...ewest-aircraft
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Trade tensions with the United States blow hole in budget for China*s newest aircraft carrier. Cuts and rising fighter jet development costs have slowed progress on the Type 002, military insiders say
Now, I agree the tariffs have little immediate economic success - they are in place to deal with older, established things like China's trade deficit, adjustment of the Yuan, and related. This is a 20 years of market manipulation, and actually kept the population of China poor so that the rest of the world would be dependent on their workers. So it would take a bit to sort out, and is a long term strategy.
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China has been manipulating the global markets through their cheap currency policy for the better part of the past 25 years. In pinning down their currency, they cornered the world's export market. And in the process, they emerged as the second largest economy in the world. They also accumulated the world's largest reserve of foreign currencies, which they plowed into global credit markets (mainly our Treasurys) to fuel cheap credit, which ultimately led to the global credit bubble and bust (the global financial crisis). We buy their cheap stuff. They take our dollars and buy Treasurys, supplying more credit to us to buy more of their cheap stuff. And so the cycle goes.
Currencies are the natural balancing mechanism to prevent this bubble/global imbalance from forming. When freely traded in an open economy, the market demand for yuan, given the aggressive growth in the economy, would have driven the value of China's currency higher, making its exports less attractive, and therefore slowing their breakneck growth and wealth accumulation in China, and its ability to fuel global credit. But of course, the government determines the value of the yuan, and keeping the currency cheap is part of the economic model in China (still).
For those that fear retaliation (a historic response to protectionism), this is retaliation... for 20 years of wealth transfer.
The tariff threats address metals, but the currency is a key tool that makes it all happen. For those that like to play it as a political football, Trump is not the architect of the plan. A staunch democratic Senator from New York, Charles Schumer, led the push in Congress for a bill in 2005 to impose a 35% tariff on China. That's what ultimately led to the agreement by the Chinese to allow their currency to weaken (somewhat).
https://www.forbes.com/sites/bryanri.../#5a98de906dd0
We are 20 years behind. We didn't start it, and our last couple of presidents didn't do much about it. That includes Bush.
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The trade war is necessarily one of attrition, and I think any honest analysis is that it places national (cynically, American corporate) interests above those of constituents. This is a case where the fear of the other (racism) is probably being wielded as a club, but I'm not totally sure it's wrong.
I think getting into motive with corporations and especially using race are both flawed, though not even close to equally. What was China's motive? They did start and create this situation with almost no push back from the US. Anything we do now doesn't need a motive any more than self defense, even Schumer saw that. I can see corporatism to a point, but I think corporations should be alert to this level of manipulation by China and our government should respond to them or lose their revenue. If they were not looking out for their interests in relation to China, I think that would be very stupid.
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Obama is often criticized for his penchant for "getting out of the way of history". From my perspective, a Sinocentric global economy is the most likely endpoint of nonaction. So, if you care about the concept of American exceptionalism, I can see the argument for a trade war.
Just by sheer population Sinocentricity is inevitable. I hazard the position is not if, but when? Even Africa has both a larger population than America and it is the only area with a significantly rising population. Eventually it will be Asia and Africa with 70% of the population at the end of this century, nearing 4 billion in each Asia and Africa, and less than 1 billion on any other continent. We had an advantage by being first to pull out of rampant poverty, but in the end I don't think we have the numbers.
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I think the correct alternative tack (aggressive automation investment) also isn't great for the American blue collar worker.
Automation was bad for the Farmer. 50% of the population in the late 1800's were farmers. Now it is 2%. We also output significantly more food than ever.... which released us to take more Blue Collar jobs. Automation of the Blue Collar jobs releases us to produce more middle class. Right now we have just 1/10th the number of people directly working in manufacturing - about 10 million US vs China's 100 million. We have about the same trade output. 10 times more productive per person.
What we should be thinking about is how to augment the BC worker so they can do MC level of work - or even as I see it, put more tools to be creative in the individuals hands, so they can manufacture independently. Owner/Operators. I suspect that is where we will be going in the near future.
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With the changes in the Yuan, due to tariffs and related, we can upset the Yuan enough to win back some of this deficit. The counter move is the large amount of US Currency China holds, and that is a $20 Trillion hammer.
I wouldn't have done it, I am not a fan of tariffs mostly due to Bastiat's razor on them - but I can see that benefit of the tariffs as they are being used now.