The China-U.S. trade war thread.

originally posted by: Jay-morris

originally posted by: ufoorbhunter

originally posted by: makemap

originally posted by: ufoorbhunter
a reply to: nwtrucker

I was thinking the other day if the general economic system of Planet Earth was better before China was engaged by the west. To be honest the Chinese have destroyed so many of our jobs over here in the UK and the communities that go with them that it just makes one wonder................ would we all be better off if China didn't exist?

Your an idiot for thinking that. Who do you think supported Green tech industries. It was freaking China and Canada. The oil companies are still fracking US internally. If China wasn't there, US would not have gotten out of the coal age. It was the West that refused to change technology because they had an advantage over everyone else militarily just like China didn't change technology when they thought they had the best technology then cannons.

China balance the play field against US corrupt policies since the fall of USSR. US is as equally worst when it comes to destroying the planet, but unlike China having lots of people buying a lot of stuff. US was destroying the planet technologically through warfare and pre-planned agendas to poison our food industries.

Whole communities have been destroyed across all the western world by devious Chines economics. Around here we have had factories closing down on a regular basis that existed for hundreds of years to supply the local European market. So a few rich folk made a lot of dosh by switching production to asia................. Well good for those individuals buyt what for the average man in the street who has seen his community ripped apart by off shoring and no real hope of earning a proper living doing a proper job anymore. Whole generations of kids expecting no hope of proper work and stuck on benefits and idle times where alcohol and drugs fill their time, then the general decline in the local community. So a few businessmen can make extra dosh

China quite simply doesn't play it fair and things have gone too far their way. As a Brit I admire Trump for trying to address one of the modern day wrongs in global trade that most western leaders daren't take on. Good on him

So, you are skipping the blame on the companies that chose to move their business to China, and just blaming China. That is a complete cop out if you ask me.

Blame these money hungry companies that just care about profit!

When these companies started the move, I recall having the view that if they didn't. some other company, say a European one, would. Then they'd reap the benefits of that cheap labor. Import those products into the U.S. and undercut the domestic products anyways. That at least that way we'd be bringing those profits back to the U.S.

It's hard blaming a dog for burying a bone. It's his nature, yes? It's safe to say there aren't too many who aren't to blame...or at least hold responsibility.

At this juncture it really doesn't matter who's to blame. We're in fix it mode.

One would think this will take a deft touch by Trump and Co. to achieve this with minimal collateral damage.

It looks like an attack on our Stock Market, as well. Perhaps China's, as well. It's economic warfare, by both sides.

Who blinks first?

a reply to: RadioRobert

OK. The initial sanctions by Trump were to protect specific industries. Steel and aluminum, first and foremost.

The Chinese tariffs seem to be more 'offensive' in that they address political regions where Trump supporters are stronger-that could backfire, big time- and perhaps even intended to affect the stock market, directly.

My question is does Trump use the 100 Billion new tariffs to merely protect U.S. industry or does he also move to a more offensive mind set? Does he target industries that are critical to the Chinese economy? Ones that are weak and have a domino effect on other Chinese industries?

Do any such industries come to mind?

I'd slow roll new tariffs while talking about them openly. If I had to target an industry, I'd pick furniture or textiles. Textiles would have the added bonus that Trump would be expanding tariffs that affect his ties, etc. Both furniture and textiles are easy targets for making agreements with other countries. Neither requires technology transfer. Plenty of countries would love to add jobs in either of those industries. Furniture export world wide is growing, which makes it more attractive for expansion.

They won’t use the billions to hire Americans, boost wages or innovate new products.
Instead, the CEOs will buy yachts and tell you that Chinese or Mexicans stole your jobs.
Predatory capitalism
poor workers = poor country

I think there is no tariffs yet, just posturing.

We have a ton of leverage.

$800 bil worth.

a reply to: nwtrucker

That's not a winning strategy in the current political climate. Xi is much stronger in China than Trump is in the US. If the two countries simply trade, China winds up ahead.

This trade war is so misguided because we were already getting a very good trade deal from China, we've pissed that away, and just lost a trade war.

originally posted by: burgerbuddy
I think there is no tariffs yet, just posturing.

We have a ton of leverage.

$800 bil worth.

Wrong, we have zero leverage because of global markets. If we build base materials domestically, we can't sell at the same price point as countries elsewhere in the world who still source from China. And thanks to the tariffs, we lose the option to even purchase from them at a competitive price.

You cannot win a trade war when your currency is more valuable.

In a full blown trade war, US economy stalls and enters recession until markets realign. China's economy collapses because there is no other four trillion dollar annual consumer spending market they can tap into. Smarter countries aren't going to be willing (or able) to enter a $350,000,000,000 imbalance on top of their existing deficit. There are lots of other countries willing to expand their production to carve out a slice of that $350+ Billion. Some of them are less antagonistic, and increasingly have even cheaper labour as China builds a middle class.
It will take time. It would be painful economically. Extremely so. But it would be completely survivable, and arguabky better long term than the status quo.
China's economy is already overcapacity and stagnant. There is noone in the world who buys plastic and electronic doodads at better price points in more quantity than the US consumer. They have limited options other than cooperate or try to out-last the administration faced with the whining from the press and politicians (owned by big MNC's profiting from the status quo).

originally posted by: Aazadan
a reply to: nwtrucker

That's not a winning strategy in the current political climate. Xi is much stronger in China than Trump is in the US. If the two countries simply trade, China winds up ahead.

This trade war is so misguided because we were already getting a very good trade deal from China, we've pissed that away, and just lost a trade war.

I'd agree that Xi is politically more secure than Trump. That's about it.

a reply to: Aazadan

P.S. I would also say no 'war' is over until one side gives up.

originally posted by: RadioRobert
We are the world's largest producer of soy, and China is the biggest importer. So they have to buy beans that would have been bound somewhere else. But for every soy bean China buys that was bound to Japan, there is a shortfall in Japan's supply. It will take time to readjust, but I don't think you'll see a massive change in worldwide production, and as the lead producer, we set the market. You can't expand soy production instantly, so there will be shortfalls in the short-term to take advantage of. Long-term, we might shift away from soy.

originally posted by: RadioRobert
a reply to: nwtrucker

Again, there X numbers of pigs in the world. There isn't a huge glut or surplus of domesticated pigs/pork meat. If China stops importing it, it has to import them from somewhere else. If China buys pork from Germany (top exporter, about equal with US) instead, then other countries that were buying German pork need to get it somewhere. US pork producers now have a new market or an expansion of an old market. Status quo stays about the same. Hurts until those agreements develop, but not a lot, unless other China and other countries are going to significantly grow their pork production, which will take time. The markets are a tangle of set agreements. Despite being a major exporter of pork (2.5 million tons) with trade agreements, we still imported about a half million tons of pork last year from Canada and Denmark, mostly.
US produced about 2.5 million MT of pork last year. A little over 300,000 tons were exported to China. It's a spit in the bucket to the domestic producers even if they didn't find a new market. It'd just slow the industry. We actually imported more pork last year than we exported to China. Pork producers wouldn't love it, but it wouldn't be devastating.

We're seeing this happen with soy now, actually, which is/will be more heavily hit by this than pork.


Market s realigning

“We’re seeing a realignment of trade,” largely because the politics is driving up Brazilian soybean prices, said Jack Scoville, analyst with the Price Futures Group.

Traders and analysts said the unusual trade flows were likely to continue in the near term, benefiting U.S. Gulf Coast shippers and likely hurting exporters in the U.S. Pacific Northwest, the No. 2 bulk grain outlet that relies heavily on Chinese demand.
...
Near-term soybean shipments from Brazil peaked near 200 cents above CBOT May soybean futures SK8 before pulling back to around 170 cents over by the end of the week, traders said. U.S. Gulf Coast shipments, by comparison, were only around 90 cents a bushel above futures.

“The Brazilian beans are likely going to go to China in the short run and the U.S. beans are available. With what’s happened to the price spreads, U.S. beans are sort of on sale for these buyers,” said Jim Sutter, CEO of the U.S. Soybean Export Council.

Short term other markets snap up the surplus. Longterm, we probably shift away from soy unless we get agreements from other markets instead of one-off sales like here. But noone is immediately losing their shirt.

Meanwhile, the as Chinese buying makes prices in Brazil rise (for example) compared to US prices, making our soybeans more attractive on the market. Eventually when Brazil is basically tapped out, they'll end up buying from other markets and repeating this process or buy American beans as the prices fall to the point they are still cheaper with tariff than other markets.
Not great for the margins of soy farmers here (prices down), but clearly not instantly fatal to the industry.

a reply to: RadioRobert

In a full blown trade war,

Just for the record, what definition of "trade war" are you going by? Because by every definition I'm looking at, we're already in one.

Definition of "Trade War" from Cambridge Dictionary

a situation in which two or more countries raise import taxes and quotas (= limits on numbers of goods) to try to protect their own economies

Definition of "Trade War" on Business Dictionary

Conflict between two or more nations regarding trade tariffs on each other. This type of conflict usually arises because the nations involved are trying to improve imports or exports for its own country. Trade wars have the potential of increasing the costs of certain imports if the nations involved refuse to make a compromise.

Definition of "Trade War" on Investipedia

A negative side effect of protectionism that occurs when Country A raises tariffs on Country B's imports in retaliation for Country B raising tarrifs on Country A's imports. Trade wars may be instigated when one country perceives another country's trading practices to be unfair or when domestic trade unions pressure politicians to make imported goods less attractive to consumers. Trade wars are also a result of a misunderstanding of the widespread benefits of free trade.

a reply to: enlightenedservant

The commonly accepted one. You realize that all conflict comes in varying degrees, right? Wait until the parties talk about embargoes, and then we'll see real disruption to both economies. You're still at the spit and bluster stage. They're sizing each other up and trying to get the best deal possible for their respective sides.

I don't think it goes that far because both countries have too much to lose. Addressing the unfair practices and problems with intellectual property rights is the lesser of two evils when you're faced with potential food supply disruption and losing ever larger slices of the market to which exports represent 4-5% of your GDP. US exports to China represent less than a percent of its GDP, but will be effected mostly by consumer discretionary spending.

It's hard to see China's dependence as a strength. There are all sorts of countries who would love MFN status and a slice of China's current foothold in the US markets. Many of them less antagonistic with equally low labor costs. China does not have an untapped or under serviced market to dump excess product at similar price points and volume to replace the multi-trillion dollar US consumer market. Several industries there are already overcapacity. They don't have a lot of pleasant options.

So again, this is short term pain for the US (don't get me wrong, it could become quite unpleasant), but this is flirting with mortal danger for China's economy.

US isn't dumb enough to actually go to war with China, it will be a slaughter.

The China-U.S. trade war and following crises is just a game to make the world receptive to the new world currency.

originally posted by: RadioRobert
Renegotiating NAFTA is going pretty well for us, too.

The tariffs are a tool, not the end game. We've always been afraid to use our leverage. People are complaining that it opens us up to reciprocal tariffs and don't realize Trump's tariffs are the reciprocal ones. We've been taking loser deals because faceless corporations keep spending billions in lobbying politicians so they can continue reaping the rewards of cheap labour. Same reason we've never plugged the border.

Don't look now, but ...
China reducing tariffs; opening markets

Chinese President Xi Jinping said Tuesday China will significantly lower the import tariffs for vehicles and reduce import tariffs for some other products this year...

The country will work hard to import more products that are competitive and needed by the Chinese people, he said.

China will also seek faster progress toward joining the WTO Government Procurement Agreement, according to the president.

"China does not seek trade surplus; we have a genuine desire to increase imports and achieve greater balance of international payments under the current account," he said.

Looks like we have progress toward a new deal. Now we drop them a sop, and both sides will smile and claim win-win.

a reply to: RadioRobert

Hmmm, Xi blinked....maybe.

a reply to: nwtrucker

It's all about leveraging for a better deal. Too much to lose in an out and out trade war for both countries. And the winner is a given in that scenario, assuming we have the guts to stick it out. So when Trump shrugs and says publicly, "maybe we need a trade war", well, ... It just depends on how much pain each side is willing to take to squeeze out extra dollars long-term.
Also, we had: "President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!". That tweet was roundly mocked yesterday, but they don't see the cultural difference in saving face. He publicly offered them an out and made it easier for them to say, "yes".
They can present to their citizens strength instead of failure.
They aren't knuckling under to the US playing hardball.
They are equal partners with the US on the world stage, doing the right thing, and avoiding a trade war which would cost both. They are working together for co-prosperity.

That plays a lot better to the Chinese audience. Here, it might not make as much difference. There, leaving them a public out as partners is huge.

originally posted by: RadioRobert
Looks like we have progress toward a new deal. Now we drop them a sop, and both sides will smile and claim win-win.

Xi's speech was in regards to Asian deals with each other, not US markets. If anything it suggests they're in it for the long haul to shift away from US products.