China underestimated Trump "just like the commies in Washington.
China needs US . Trump will win this battle also.
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Even that lazy campaigner, wannabe Commie Party Chairman Cackles The Evil Hag, thought her entitled coronation was in the bag..
When younger as an athlete , a few of the volunteer Coaches would call me "red" not bothering to learn or ask my name at the start of the season. I was determined for them to know it by the first game.
From that list, all I remember is my favorite one.
Nobody wins a war; economic or militarily. Yet China will patiently keep moving forward inch by inch. We in the USA need "gimme gimme now now now". We won't win a trade war with China without a change of cultural attitudes.
Europe, on the other hand, is as spoiled as we are. They will cave in and lower their tariffs.
That is my two cents
The urban Chinese have tasted the fruits of peace and affluence; the rural Chinese resent the government; the young men and women in their military are there because it provides a paycheck; none of them wants to die for foolish, unnecessary ventures caused by stupid mistakes of blind autocracy.
That doesn't say that Chinese leadership won't impetuously do something self destructive, thinking the people will back them. It simply says that the results won't be as they expect. Hopefully, there will be a D'ung Zhao Ping voice to drag them back to the reality that they will be inviting the destruction of all they have accomplished (and it is incredible the technical achievements and affluence they have managed by rejecting much of collectivist thought).
I didn't mean to imply that the masses will want to, but rather that they would be forced to. and even though they have been raised up a bit the masses are still living in poverty and have little choice but to comply.
That being said, their military positioning in the South China Sea (especially the Spratly "islands" - really coral atolls) is a danger to everyone else in the region, including Vietnam, the Phillippines, Taiwan, and even Japan. They shouldn't be taken lightly, but unless you are Russia (or to a minor degree Taiwan), you're not really worried about that ridiculously huge army they have because they have no way to move or supply it.
That is good b/c the President can play them as he wishes.
BUT, there is no gold standard, and the juan is still cheap and we are sending paper dollars over there which they have pretty much just stockpiled. That has prevented the massive inflation that SHOULD have occurred here from the chinese buying up everything in sight in the USA.
So here we are. Chinese stuff is still 1/3 the price of equivalent things made in the usa. 25% tariff will do nothing to discourage buying from china. Tariffs would have to be 100-200% to get costs of chinese stuff and USA stuff even close to equal.
In the meantime, 25% tariff on all chinese imports will do little to discourage imports, and will therefore not hurt the chinese economy and cause them to "blink" as our government thinks.
Plus, indicating that you are looking for them to "back down" isnt really a good way to get cooperation.
What Trump should do is put out an offer to get rid of ALL tariffs between usa and other countries, like is donne already in certain situations. Do it NOW. Trade will normalize and costs to consumers will drop. The huge bureaucracies involved in customs will shrink dramatically (they wont like that of course), and global shipping will accelerate.
But I dont hear that being proposed in the media or by our government (very strongly at least). Why not? Its the only solution.
Then get us back on the gold standard (never going to happen at this point however) so we never have this issue again
One, Trump is calling for zero tariffs and minimal regulatory restrictions. His methods are questionable of raising them as a means to force the other side to capitulate to zero but that is his stated goal.
Second, the $500 billion "deficit" with any one country, like China, is meaningless. All trade or exchanges are beneficial precisely because they are NOT in balance. For example, you buy from your supermarket all the time. You have a gigantic imbalance with them in that they have all of your money and you have food. …
that is a good thing. And the services you get paid for have a deficit also. So what.
Another example is the state that you live in (if you are in the US) has surpluses and deficits with the other states. So what.
The very best thing that can happen in trade is we get all the stuff, real wealth, and they get all the pieces of paper. a la China.
I agree with you about the trade imbalance with china. I do think that the problem is lack of gold standard for currencies. China made their currency weak to make their prices low to gain trade. Given all their trade, the juan should have risen in value as they have so much foreign money there. But it hasnt. Somehow, this is the basic problem. Trump's argument is tht we have negative trade imbalances with a LOT of countries. meaning we buy more in total than we sell. This is like spending more than you make, and cant go on.
We give the chinese and other countries paper, but those IOU's are ones we will have to honor at some point, as they buy up USA companies and real estate (resulting in the inflation we deserve). We do get the stuff , and that is true.
As to your supermarket point, yes, I have a negative trade balance with the supermarket, but I have a positive balance at my job, so (hopefully) I have an overall positive balance in my bank account. I dont have the ability to print money if I run negative, although I can go into debt to a degree. The US government has just printed money to cover their imbalances, which it shouldnt be permitted to do.
An overall negative trade imbalance personally results in bankruptcy. On a state level, it also means bankruptcy. On the USA level, it means they print money- and kick the problem down the road.
Interestingly enough, we buy about $200k a year from china for our business. Tariffs will add $50k a year. We also SELL to other countries (not china) about $300k a year, so our company has a positive trade balance overall. Having to raise prices to cover the tariffs will make us less competitive and we will probably lose some of our export business, which will effect negatively our trade balance. This will mean that the US will have a slightly HIGHER trade imbalance nationally (by an infinitesimal amount), because of Trump's tariffs. So he shot himself in the foot-= except that the government now gets $50 k in tax MORE from our little company.