Diagram below clearly shows who has the leverage in a trade war.
Posted on 08/10/2018 9:22:56 AM PDT by entropy12
Xu Yimiao writes that China is running out of retaliatory tariffs against the US and has watched other major parties like the EU and Japan close ranks against it. Before the trade war gets more severe, Beijing’s leaders should seek direct talks with Trump, and may have to swallow their pride
(Excerpt) Read more at scmp.com ...
They gave us the tools and thought we would never be smart or tough enough to use them.
This
If you owe the bank $100 million, the bank owns you
If you owe the bank $600 billion, you own the bank
Trump is a master at this game
Ping.
Think they rather eat American soybeans than “The Good Earth”
My thought was that this has reached the point where all Trump needs to do is offer Xi a face-saving way out. But my buddy who lived in China for 10 years sees it as Trump’s opportunity to break Xi by denying him that and forcing the crisis to a breaking point. Xi has set himself up to be the next Mao, being written into the constitution and all, maybe that’s a step too far - we’ll see. But the inescapable fact is that China cannot do without US exports, including soybeans, and especially without ongoing US consumption of China-made goods which has bee the key to their economic growth for the past 20 year. And Trump knows it.
Pride is a difficult meal to digest, and causes great discomfort before it is reduced to humility and a new respect for rivals.
Few tools are without a second purpose, or even multiple uses and applications.
To China -You drop the tariffs and non-tariff restrictions, and all this goes away.
Look at Turkey....since Trump announced sanctions, their currency is tanking big time.
Trump knows how to use the stick, and is NOT AFRAID to use it, unlike Obama, Bushes and others.
Wait a minute - I had it on good authority that tariffs NEVER worked and that trade wars were ALWAYS suicidal.
You mean I was lied to???
Diagram below clearly shows who has the leverage in a trade war.
You been hanging with the Koch’s?
Or other globalists? Just joking.
Do not listen to the career politicians. They depend on people like the Koch’s and will talk one thing and vote another.
I think Trump tends to be a guy who builds his competitor a “ golden bridge” over which to retreat
Then they all shake hands, and arrange to meet again soon for golf and chocolate cake and take on the next strategic issue
China: Resistance is futile, think of the time you could be spending planning golf and chocolate cake.
Shoot, I heard it from folks here on FR.
(Of course, I didn’t believe it, LOL)
I concede, I have learned more about international trade in the last several months than all of my previous life. My understanding of this complex economic construct has forced me to reconsider some previously held opinions and positions.
That said, there is quite a bit more to international trade than just tariffs. Tariffs are just taxes to increase the price of goods to local consumers. This price increase is paid by the consumers, us. That is supposed to drive down demand for imported goods and drive up demand for cheaper locally manufactured goods. If our products are made cheaper over seas, our exports are in demand and we produce more here and sell more there = more jobs, better economy. But if only it were that simple.
Each country creates fiscal policy and adjusts taxes and fees and regulations beyond simple tariffs. The local population doesn't see the effects of total economic policies (foreign and domestic) in the price of goods. Here are some examples I understand.
In Mexico, there is a VAT tax. All consumers pay and extra tax on all goods at the point of sale.... except there are some products exempted, especially in manufacturing and certainly with regards to import/export manufacturing. If materials are shipped into Mexico and manufactured into parts or products and then exported, they are exempt of the VAT tax (20%). So all (or most) products in Mexico cost 20% more than they should. It balances out and works into the cost of living (and the standard). So Mexicans do not see a large price disparity overall between product options. But by exempting a product, process, etc. from the VAT, you can incentivise behavior. You lower the price and produce a situation where one industry or product can be more competitive in any market (domestic or foreign). This is just one example.
China manipulates it's currency to create competitive pricing and incentivise supply. Europe is famous for regulations (as is the USA). When all inputs are collaborated for any individual economy, the labor cost disparity is found to be only one component of the international trade disparities and drivers.
Trump's reducing the EPA emmissions and fuel economy (CAFE) standards and requirements are meant to make American cars more competitive here and in foreign markets. I now think that while Trump is using Tariffs as the general term for simplification, he is working all fronts to both make America more competitive and level the playing field in our "partners" countries.
I do still believe this hurts our economy in the short term (a little), we are in a position to absorb the short term pain. Our economy is humming and wages are going up. So we may not even notice that commodities prices are going up. However, Our competition cannot afford the hit to their economies. Trump is a President playing the long game, FOR ONCE.
Just:
1. say China now fully understands US concerns
2. change Chinese laws & regulations to make China a better trading partner, full respecter of intellectual property and trade secrets and better customer for US exporters
3. order record breaking amounts of US soybeans
4. have top Chinese drinking milk often on TV.
In addition to my post #16.... (and another thing...) ;o)
If we really want to get an advantage, after Trump solves the trade disparity issues, we could remove ALL federal business income taxes and replace them with higher personal income taxes. “WHAT!!!!???? You crazy??”
Business in the USA do not pay taxes. They collect them from consumers in the price of their goods (Embedded taxes). The price of all goods manufactured in the USA would go down domestically and internationally. We might have to import labor for all the jobs that would be needed here.
(kidding - we already do that) LOL.
I hope everyone here can figure this out. Then maybe they will relax about Mr. Sessions. Trump is a master of a number of games or perhaps he is the master of The Game, the whole game. What God seems to have given us here is a CEO who instinctively understands human motivations and reactions in everyone he deals with. He is not afraid of pushing an adversary to the edge, whether the edge of breakdown or the edge of War, because he knows exactly where that edge is. He can push a foe to the edge of the precipice then hold out his hand in friendship or to keep him from falling and always with a price the foe then ponies up.
Wow²!! Actual factual reporting, along with comments that show, bottom line, the writer gets it! We just don't see writing like this in our own country any more, maybe Victor Davis Hanson, but few and far between.
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