13 votes

China announces retaliatory tariffs on $60 billion in US goods

8 comments

  1. [8]
    enso
    Link
    In the most recent event in the US-China trade war, China has announced that they would be increasing tariffs on $60B of unspecified US goods. This comes after the US publicly considered raising...

    In the most recent event in the US-China trade war, China has announced that they would be increasing tariffs on $60B of unspecified US goods. This comes after the US publicly considered raising tariffs on $200B worth of Chinese goods from 10% to 25%.

    4 votes
    1. [7]
      EscReality
      Link Parent
      I see no way this ends productively for the US.

      I see no way this ends productively for the US.

      6 votes
      1. [6]
        Algernon_Asimov
        Link Parent
        Or for the rest of us. Australia has significant trade relationships with both China and the U.S (China is #1 and the U.S. is #3 in terms of total trade). We're caught in the middle. One...

        I see no way this ends productively for the US.

        Or for the rest of us. Australia has significant trade relationships with both China and the U.S (China is #1 and the U.S. is #3 in terms of total trade). We're caught in the middle. One "economics team estimates that three years after trade barriers go up, the Australian economy would be $21 billion smaller than it would have been".

        2 votes
        1. [5]
          vakieh
          Link Parent
          Only if we play it dumb. There's no reason for us to place tariffs on US or Chinese products, and there's therefore no reason for the US or China to raise tariffs against us. Which puts us in a...

          Only if we play it dumb. There's no reason for us to place tariffs on US or Chinese products, and there's therefore no reason for the US or China to raise tariffs against us.

          Which puts us in a REALLY good position if we want it for importing materials from one, doing enough manufacture here (hello jobs) to soothe the tariff clowns on either side, and then export the finished products. Middlemen generally do great in restricted trade scenarios, it was how the East Indian Companies got so powerful (that and regular old killing everybody) and how drug cartels roll in the cash (that and regular old killing everybody).

          2 votes
          1. [4]
            Algernon_Asimov
            Link Parent
            If you read that article, and others like it, you'll see that it's not about our imports or exports with these countries being directly subject to tariffs. It's about knock-on effects of the...

            If you read that article, and others like it, you'll see that it's not about our imports or exports with these countries being directly subject to tariffs. It's about knock-on effects of the tariffs between these two countries. For example, if the U.S. has a tariff on Chinese steel, China will sell less steel to the U.S. - and will therefore buy less iron from Australia.

            3 votes
            1. [3]
              vakieh
              Link Parent
              Except at some point, somebody will end up the middleman - because demand for steel is not likely to decrease all that much (some slight decrease due to overall GDP decrease as the tariffs slow US...

              Except at some point, somebody will end up the middleman - because demand for steel is not likely to decrease all that much (some slight decrease due to overall GDP decrease as the tariffs slow US and China's economies).

              That means that the iron will still be in demand, and furthermore as a result of China's prices being pushed up, others can raise their prices by a slightly lesser amount and remain equally as competitive as they were originally. That means we start manufacturing steel here (unlikely, given our labour costs and associated safety legislation) or start exporting more to other or new trade partners - India has been massively increasing its steel production recently, or the US themselves if they want to play protectionist.

              It is a well understood economic fact that selective tariffs, while negative for the party subjected to them and negative for the party that implements them, provide windfalls for anyone else. This can be observed at pretty much every scale they have been implemented, from 'contractor blacklists' on up. The problem is the net effect on the economy works out to be negative, which causes big problems if everyone goes tariff crazy (aka the Great Depression). So long as it stays just the US v China, and the Australian government and businesses don't do anything particularly stupid, this could work out nicely for us. Big ifs, but still...

              1. [2]
                Algernon_Asimov
                Link Parent
                Well, you'd better get out there and start educating all those economists who keep writing articles like the one I quoted (and others I saw while searching) that predict reduced trade and a slower...

                It is a well understood economic fact that selective tariffs, while negative for the party subjected to them and negative for the party that implements them, provide windfalls for anyone else.

                Well, you'd better get out there and start educating all those economists who keep writing articles like the one I quoted (and others I saw while searching) that predict reduced trade and a slower economy even for countries not directly affected by tariffs.

                selective tariffs [...] provide windfalls for anyone else. This can be observed at pretty much every scale they have been implemented, from 'contractor blacklists' on up. The problem is the net effect on the economy works out to be negative

                Did you just contradict yourself by saying everyone else gets a windfall but the net effect is negative?

                1. vakieh
                  Link Parent
                  The net effect on the global economy is negative, which is the combination of the negative effect on the party implementing the (selective) tariff and the party it is implemented against with the...

                  The net effect on the global economy is negative, which is the combination of the negative effect on the party implementing the (selective) tariff and the party it is implemented against with the positive (but proportionally smaller) effect on other parties in the market.

                  As for going against the media narrative... I would be very interested to hear of a practicing economist arguing this case. The article you linked for example, while written by someone with an economics background, cites Smoot–Hawley as a historical example. The problem there is Smoot–Hawley was NOT a selective tariff, it applied to every single country exporting to the US. The reaction to it was pretty much every single country retaliating with their own tariffs, which meant there were no free trade entities around to reap the benefits. Though you could consider the rise in smuggling activity to be the free trade entities who benefited. It also highlights existing value chains as being immutable, which they quite simply aren't - it's one of the fantastic things about the global economy, there's always someone else to sell to.

                  1 vote