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originally posted by: AugustusMasonicus
originally posted by: Flyingclaydisk
Whenever the tariff subject comes up someone inevitably posts something about the US debt that China holds, and how any sort of a tariff will cause a disastrous domino effect with China suddenly dumping all that debt (and crushing the US economy as a result). That is patently false and will never happen. Further, those who post similar themes must not understand global economics and/or how international banking works.
True with one caveat. They could impact short term sales of bonds as they dump them, for a loss, and the United States has to match or beat the pricing to continue to sell more bonds.
What this means is we make less money in the short term as buyers snap up reduced price bonds dumped by the Chinese versus paying a higher price for the ones the Treasury is selling. However all that does is have us make less money for a finite time while they instantly lose billions.
It's like holding a gun to your head and saying you have a hostage. Can they cut off their nose to spite their face? Of course. Will they? Highly doubtful.
How does China acquire intellectual property?
American firms have to agree to set up a partnership, or joint venture, with a Chinese company to sell their goods in China, with technology transfer thrown into the bargain. Though this type of quid pro quo is formally disallowed by the WTO, analysts say such negotiations are usually conducted in secret.
A paper by the St. Louis Federal Reserve in 2015 estimated that half of the technology possessed by Chinese companies came from foreign firms.
It’s not clear, however, if these joint venture arrangements are successful at putting Chinese firms on a level playing field with the rest of the world. Even after the advent of joint ventures, American and German automakers still outsell their Chinese competitors, although analysts say China is catching up.
originally posted by: Cauliflower
Could be a cause and effect relationship between the rising short term bond rates and the trade tariff announcements.
The simple choreography concerning the fed unwinding the quantitative easing applied after the Lehman brothers scandal may have a global trade war sequel?
The reason why it exists isn’t because the USPS wants to give a helping hand to the hardworking merchants of China, but due to what the Washington Post dubbed a “quirk in an international treaty.”
International postage rates for incoming packages are set by a U.N. agency called the United Postal Union (UPU). This is a body that was established in 1874 -- subsequently being absorbed into the U.N. -- that is currently made up of 192 countries which meets every four years to revise its policy and set new terminal fees, with each country getting one vote a piece. While the voting system of the UPU is egalitarian, the shipping rates that it sets are not. According to Nancy Sparks of FedEx Express (via eCommerceBytes.com), the rate structure of the UPU is a system where the “haves pay the have-nots.” Essentially, countries that it deems to be poorer or less developed pay less for shipping to countries that are categorized as being richer. So someone shipping from, say, China, will pay significantly less to ship to a country like the U.S. than an American shipper will pay to send that same package to China.
originally posted by: Xcathdra
a reply to: carewemust
What happened to free market capitalism?
Easy - China doesnt use that system.