The trade war math
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    Default The trade war math

    James Mullin
    May 14, 2019


    Watch carefully now as various politicians, pundits, editors, news anchors, etc. weigh in on the U.S.-China trade war. You won't know truly who is on Beijing's payroll, but it'll be fun to guess. Watch for surprises and non-surprises (Hi, Senator Feinstein!). Get ready for a barrage of cataclysmic warnings about the U.S. economy and the financial markets.

    As a scientist, I feel it useful to occasionally engage in facts, and for me, the simpler, the better. So try this scenario: if Country A exports 20X more to Country B than Country B does to Country A, which side do you think has more to lose in a protective tariff war? Could it be the country that exports substantially more? Hmm.

    Country A in this little exercise is China. Its exports to the U.S. (Country B) dwarf U.S. exports in return. After all, over 40 years, the Chinese swallowed a big gulp of our domestic manufacturing, and it's been hard at work stealing our technology and intellectual property. If China and the U.S. now install similar tariffs, it is not quantum physics to see that a tariff war will hurt China far more than the U.S., as the cost of Chinese exports (the major factor in the equation) mushrooms. After all, the three major trading partners and markets of the U.S. are Canada, Mexico, and Europe — not China. Want to bet that the reverse is not true?

    So as your 401(k) and IRAs start sinking (for now), rest assured that "this too shall pass." In the words of the immortal Admiral Yamamoto, China has "awakened the Sleeping Giant." Things will not be the same. Americans finally elected a populist president, and Beijing is just now waking up to that fact. I think the Beijing air quality will be poorer than normal this summer.

    Oh, by the way — the major American export to China is...? Answer: food. Try making that substantially more expensive in the world's most populous country! Thank you, President Trump! Yet again!




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    "The bottom line: the rising level of U.S. debt is problematic, and to many citizens, the high percentage of Treasuries now owned by a rising economic rival seems even more troublesome. While little reason exists to expect that China will engage in any actions amounting to economic warfare, it may still be compelled to buy fewer Treasuries due to its decreasing trade surplus."

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    China could just start selling it US bonds crushing our economy as well. As to food, they now own companies like Smithfield, the largest pork company in the world
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    This is simplistic wrong-think.

    The "scientist" has a hypothesis that fails logic, math, and experience.

    If the US gets 20 more times stuff from China (a number I did not bother to vet), guess who has a dependency on China?

    Those of us who watch Shark Tank are familiar with the mantra, "But take production to China and cut costs to make better profits."

    It's true that China has an enormous appetite and gets lots of food from the US, but that is changing. China is diversifying food sources in the interest of national security.

    Europe and Africa, as well as South America, want the food business to scale their economies, so partnering with China is a win-win.

    Meanwhile, US farmers are accepting their second welfare check since the wars started and they are not happy about it.

    Prices will go up in the US. Retaliatory tariffs on stuff leaving the US heading for China will have minimal effect.

    We're talking 300 million people trading with 1,419 million people.

    The US stock market doesn't like tariff wars, as evidenced by recent news.

    Also, tariff wars, in general, are one of the best examples of, "Those who don't learn from history ..."

    Five years[Only registered and activated users can see links. ], American trading partners had raised their own tariffs by a significant degree. France raised its tariffs on automobiles from 45% to 100%, Spain raised tariffs on American goods by 40%, and Germany and Italy raised tariffs on wheat. This customs war is often cited as one of the main causes of the Great Depression.

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    “During times of universal deceit, telling the truth becomes a revolutionary act.”—George Orwell

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    Yeah I hope Trump knows what he's doing, I need the Stock market to not not crash right now
    Last edited by pistola; 05-16-2019 at 04:23 PM.

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    Quote Originally Posted by BigNastyCowboy View Post
    This is simplistic wrong-think.

    The "scientist" has a hypothesis that fails logic, math, and experience.

    If the US gets 20 more times stuff from China (a number I did not bother to vet), guess who has a dependency on China?

    Those of us who watch Shark Tank are familiar with the mantra, "But take production to China and cut costs to make better profits."

    It's true that China has an enormous appetite and gets lots of food from the US, but that is changing. China is diversifying food sources in the interest of national security.

    Europe and Africa, as well as South America, want the food business to scale their economies, so partnering with China is a win-win.

    Meanwhile, US farmers are accepting their second welfare check since the wars started and they are not happy about it.

    Prices will go up in the US. Retaliatory tariffs on stuff leaving the US heading for China will have minimal effect.

    We're talking 300 million people trading with 1,419 million people.

    The US stock market doesn't like tariff wars, as evidenced by recent news.

    Also, tariff wars, in general, are one of the best examples of, "Those who don't learn from history ..."
    Perhaps we should continue doing what Bush I, Clinton, Bush II, and Obama did; bend over and spread 'em every time China comes knocking.
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    This is :

    Fed up farmers say Trump's trade war has pushed them to the brink

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    Quote Originally Posted by BigNastyCowboy View Post
    This is simplistic wrong-think.

    The "scientist" has a hypothesis that fails logic, math, and experience.

    If the US gets 20 more times stuff from China (a number I did not bother to vet), guess who has a dependency on China?

    Those of us who watch Shark Tank are familiar with the mantra, "But take production to China and cut costs to make better profits."

    It's true that China has an enormous appetite and gets lots of food from the US, but that is changing. China is diversifying food sources in the interest of national security.

    Europe and Africa, as well as South America, want the food business to scale their economies, so partnering with China is a win-win.

    Meanwhile, US farmers are accepting their second welfare check since the wars started and they are not happy about it.

    Prices will go up in the US. Retaliatory tariffs on stuff leaving the US heading for China will have minimal effect.

    We're talking 300 million people trading with 1,419 million people.

    The US stock market doesn't like tariff wars, as evidenced by recent news.

    Also, tariff wars, in general, are one of the best examples of, "Those who don't learn from history ..."
    China's economy cannot support its population.

    Just how many times must you be screwed before you say enough is enough? Better yet, your failure to do anything today might just pass along the painful activities to your children, grandchildren and such.

    It's time we put our words into action.

    Maybe we need the companies to absorb some of the increased costs? I'll gladly do my part. What I find interesting is Shark Tank....always wanting to use China to better profits at "our" expense. Interesting. It's about time we take an interest in our family instead of supporting a communist country.
    BigNastyCowboy likes this.

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