Posted on 08/05/2019 9:48:58 AM PDT by SeekAndFind
Yep. And they need at least 5% growth to keep them from getting riots. Eff them, hyperinflation for them, about time.
Trump is right. The devaluation of the Chinese Yuan and the Chinese companies eating the tariffs hurts China a great deal. They cannot sustain this policy for too long.
Overall, this is great news for U.S. consumers.
Wal-Mart purchasing managers have likely been telling their Chinese suppliers they “We don’t care about new or increased tariffs, we are not going to pay more for your products. If you don’t like it, we’ll buy from somewhere else.”
Other large buyers from other companies are likely telling the Chinese the same thing.
Trump is a great negotiator, but he has nothing on Wal-Mart when it comes to negotiating.
Indeed, income tax is an illegal loophole on raising export taxes, exactly what crushed England and made the colonies revolt.
Taxes on the Chinese to finance our military for sure is a win.
Original Scenario, Chinese charges US consumers (700 Billion Yuan)for goods, at exchange rate of 7 to 1 US consumers pay $100 Billion for good.
Trump enacts 25% Tariff, Chinese responds by devaluing their currency so now it’s 8.75 Yuan per Dollar
So the same goods of 700 Billion Yuan now costs the US consumers $80 Billion, with the 25% tariff, the US consumer still pays $100 Billion same as before, except now $20 Billion of that $100 goes to the US Government.
Net result, a transfer of wealth of $20 Billion from China to the US government.
Tariffs are annoying but effective and income taxes are evil.
China has a lot of debt, internal debt, so this allows them to pay that debt at a better rate. The apparatchiks are screwing over their own people over a trade war. If some stupid western bank bought Yuans ans loaned them money and are now getting burned, screw these traitors.
The dow crashing imo is some idiot pearl clutching Bloomberg reading investors... and maybe some idiot who bought Yuans and loaned China. Ha! Eff em.
I’m pretty sure any foreign banks loaning Chinese companies money are doing so based on their country’s currency or U.S. dollars.
The Chinese government has so much cash on hand, they are loaning it to companies in their own county.
Note how the Yuan used to be very low, but it is under later Bush and throughout Obama that the Yuan went way up propping Chinese standard of living and stability there. Also think tanks tried to obviously screw currency traders telling them not to short Yuan...
Frankly this is a correction from the levels whose rise up seemed to coincide with a worsening of the banks before 2008.
Fine. Peg the tariff rate to the value of the yuan. If the yuan goes down then the tariffs go up.
China is the US’s biggest foreign creditor. China’s ownership of treasury notes, bills and bonds totals $1.11 trillion, according to the Treasury Department. Japan is next, with $1.1 trillion. Overall, US Treasury holdings by foreign nations is at a new all time high: $6.54 trillion. The previous record of $6.47 trillion was hit in March.
I’ll see your currency devaluation and raise you another 10% in tariffs.
How much of that food China has to import to feed itself can a Nike sneaker assembling peasant afford with zimbabwe-yuan?
“0% can QUICKLY become 25% which can QUICKLY become 50%...”
I anticipate that come January first, the new 10% tariffs are planned to go to 25% (then it will be 25% across the board on all Chinese imports).
China will likely devalue their currency to 8 to 1, or less.
Both sides have likely war gamed this out extensively, like a chess game.
The Chinese probably want to inflict enough pain to make President Trump fail to be re-elected (maybe that’s why Chuck Schumer has been so supportive of the fight), or to concede on trade, to protect his re-election.
The Trump Administration probably wants to inflict enough pain on the Chinese economy to force concessions, or maybe they really don’t want/expect a deal - they might really be aiming for a permanent economic divorce, but not being overt about that.
What happens after we have 25% across the board, and China devalues?
The flight of manufacturing from China should become a stampede, and our monthly/quarterly trade balance will probably be challenged by the currency differences.
China will likely resort to harsher new measures, like forbidding companies from taking their capital out of the country, perhaps dictating their business decisions under penalty of forfeiting assets in China. Maybe they will boycott supplies of rare earth minerals. Maybe they will make military provocations in the South China Sea or North Korea.
On the US side, China might be designated a currency manipulator, moves might be made to sanction them, or expel them from the WTO, and as you point out, 25% could become 50%. We might see interest rate cuts to soften the currency imbalance, and minimize an economic slowdown.
In any event, the gloves are coming off, and the Chinese communists are likely to drop their smiling “Panda Mask”.
“Trump is a great negotiator, but he has nothing on Wal-Mart when it comes to negotiating.”
The sharks of the business world will be ripping off their chunks.
The President just need to align the incentives, and let the markets work.
Wal-Mart purchasing managers have likely been telling their Chinese suppliers they “We don’t care about new or increased tariffs, we are not going to pay more for your products. If you don’t like it, we’ll buy from somewhere else.”
*************************************************
If Walmart’s buyers are smart (and I think they are) they are well along on the path to non-Chinese suppliers (domestic American and/or other foreign). Anything that weakens China is good for both America and the World at large.
Gordon Chang has been predicting this “China Collapse” for almost 20 years.
I’m still waiting...
The Government may want to strike a blow against tariffs by devaluing, but it also makes a lot of people want to get their money out of China, before it is devalued further.
If they roll tanks into Hong Kong to put down demonstrators, they could have full blown capital flight, and uncontrolled currency collapse.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.