How trade wars are fought. (China and the EU punish Trump states)

Discussion in 'World News, Current Events & Politics' started by notimp, May 17, 2019.

  1. notimp
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    notimp GBAtemp Addict

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    Code:
    You get what you give
    
    Why you should never start a trade war with an autocracy
    
    Economists often argue that trade wars cannot be won. Yet they will be
    among the few beneficiaries from America's barrage of tariffs. For
    decades, rich countries’ sound trade policies denied academics cases of
    tit-for-tat protectionism to study. But new American taxes on many goods
    from China and metals from everywhere have produced the data set of
    their dreams.
    
    America's government seems unfazed by the damage its tariffs do to the
    economy. One study by scholars at the Federal Reserve and Princeton and
    Columbia Universities found that the new levies have raised costs for
    consumers by $i.4bn per month.
    
    However, Donald Trump is devoted to his voters. And his trading rivals
    have retaliated where it hurts. A paper by Joseph Parilla and Max
    Bouchet of the Brookings Institution, a think-tank, estimated that 6i%
    of jobs affected by retaliatory tariffs are in counties that voted for
    Mr Trump.
    
    Is this a coincidence? If a country’s imports from America already come
    from mostly Republican areas, those regions will bear the brunt of a
    trade war. However, a new paper by Thiemo Fetzer and Carlo Schwarz of
    the University of Warwick finds that America's rivals probably did
    consider politics when crafting their policies.
    
    To test if recent tariffs were politically motivated, the authors needed
    to compare them with alternatives that were not. They devised this
    benchmark by creating at random 1,000 hypothetical bundles of targeted
    goods for each trading partner, all worth the same as the actual trade
    facing tariffs.
    
    The authors then compared real-world policies with these alternatives.
    First, they assessed the political impact of each plan, by measuring how
    closely its targeted areas matched Republican gains when Mr Trump was
    elected. Next, they estimated how much each policy would harm a
    retaliating bloc's own economy, by counting the share of its imports of
    the chosen goods that come from America. The more a country relies on
    one supplier, the more switching to a less efficient source is likely to
    hurt.
    
    The study found that the eu prioritised minimising such damage. Its
    tariffs deftly protected domestic consumers, causing less disruption
    than 99% of alternatives. The bloc targeted Trump voters as well—its
    tariffs matched the election of 2016 more closely than in 87% of
    simulations—but not at the cost of upsetting its own citizens.
    
    In contrast, China focused on punishing Trump voters. Its tariffs
    tracked the election better than 99% of alternatives. They also
    disrupted China's own economy more than in 99% of simulations. Even
    among plans including soyabeans—one of China’s main imports, grown
    mostly in Republican areas—China’s policy was just slightly more
    politically targeted than similar options, but far worse for its
    economy.
    
    China's choice of tariffs seems designed to deter escalation at any
    cost. Only regimes with no voters to satisfy can run that risk. The
    lesson is clear: if you start a trade war, fight a democracy, not an
    autocracy.
    src: The Economist 27.04.2019

    Plot:
    [​IMG]


    Short summery: When coming up with tariffs - the voter states for the president responsible for the tariffs you are reacting to are targeted economically. EU did so while protecting their citizens from trade losses. China did so, while maximizing losses for the US, regardless of trade losses for their own citizens.

    China don't give a f*ck. ;)

    Fascinating stuff. :)
     
    Last edited by notimp, May 18, 2019
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  2. Xzi

    Xzi All your base are belong to the proletariat

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    Piggybacking on this, Trump recently announced escalating tariffs on Mexico, set to reach up to 25% in October. The result on consumers is effectively the biggest tax hike in nearly 30 years. So again the impact is greater on American citizens and the stock market than it is on Mexico. An apt metaphor for this administration's trade policies would be cutting off the nose to spite the face.
     
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  3. notimp
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    notimp GBAtemp Addict

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    China is expecting a fully fledged trade war by the US to "prevent their rise as an economic power."

    see also: https://www.nytimes.com/2019/06/02/business/china-trump-trade-fedex.html
     
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  4. Xzi

    Xzi All your base are belong to the proletariat

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    The worst part is knowing there's no endgame for the Trump administration in all this. All they're doing is continuing to bluff their way into a deeper and deeper hole with only a pair of twos in hand. Not only do Americans get hit with the higher cost of goods, we also get hit with the bill for farmer bailouts that are needed because of the trade war.
     
    Last edited by Xzi, Jun 3, 2019
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  5. notimp
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    notimp GBAtemp Addict

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    The interesting part is a little further down the article - here, I'll translate:

    Also - in the meantime the US is redirecting packages of chinese companies - to be routed over the US. Please excuse our little mistake - said Fedex.

    https://www.techradar.com/news/huawei-says-fedex-redirected-packages-to-the-us
     
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  6. Taleweaver

    Taleweaver Storywriter

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    What is it with Trump and global trading? He came to power in a perfectly healthy economy. Why is he so hellbent on destroying that? :unsure:

    That's kind of obvious: America is a lot richer than Mexico. But I'm not sure what the "again" is you're referring to. This probably happened with the last tariffs as well, but against China (which this thread is based around), I don't think that holds true. From what I understand, America can (and is busy) hit(ting) China a lot harder than vice versa. So even though Trump's audience feels the effect the most, I think the USA can weather the storm on that front.

    Erm...that is to say: you can probably survive this if you don't go all out against everyone else. I don't get these extra tariffs against Mexico at all. Shouldn't he be glad that his failed border policy is getting less press coverage lately*?

    *okay, he probably won't be because the calls for his impeachment now get more attention. but at least the media don't extend their airtime to brief on BOTH issues
     
  7. Isakill

    Isakill Member

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    Simple answer? Because Obama. Trump and the conservatives that support him (Especially McConnel) are hell bent on destroying anything associated with #44. I'll leave the speculation as to why up to you.


    The "again" he's referring to, is that as with the Chinese tariffs, the cost of things is going up for the consumer. (many home appliances have been estimated to increase $100 or more than last year before the "trade war") With mexico (Our largest trade partner) expect a LOT of food prices to go up. Which means, many here in the US aren't going to be able to weather the storm as well as you seem to think.

    As for the hitting? Many soy bean farmers are going bankrupt because the price of beans have completely bottomed out as of May of this year (May 13th to be precise). the only reason the prices have risen since then is because of Government subsidy. (Think back in the 80's with government cheese and the dairy industry)
     
  8. slaphappygamer

    slaphappygamer GBAPerm

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    I think he believes he can rule the world. I’m sure we will hear about some bullshit statue he wants to erect in his name. He’s got no idea what he is doing. Such an arrogant ass.

    Also, I think you can almost call them trump states. Sure doesn’t feel united. Perhaps he will like to go back to just 13 colonies. It’d be easier to rule.
     
  9. Taleweaver

    Taleweaver Storywriter

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    Yeah, no. Sorry. I thought of making a joke off of it, but it'd be too easy. Perhaps Trump is dumb enough to pursue a blind vendetta against Obama (and TBH: it's a stretch...even for him), but surely the republican party as a whole isn't dumb enough to just drive the country off a cliff like this. There should be something in it for them. Some sort of end game.

    Maybe I'm too cynic, but "re-election" would be a good speculation to me. Meaning: if tensions are high enough between the US and <insert self-created enemy>, then the population wouldn't want to change leadership to someone not the current leader. See also: W. Bush's re-election.

    I know all that. Tariffs almost by definition mean that prices go up. Which, in turn, almost by definition mean higher cost by the consumer. Okay...technically speaking, they only go up in the country you're taxing, but it's just a matter of time before Mexico responds in kind.

    Unfortunately, this doesn't answer my question as to what the 'again' refers to. I still think that in the USA vs China, USA is the most benef...sorry: has the least disadvantage of the situation.

    Simplified catan-like trade:
    USA: I want sheep. I have stone to give.
    China: nice. I'll take it. Oh, and...can I get some wood? I'll give ore.
    USA: sure.
    China: yeeey. Let's keep doing that. :)
    USA: okay. :)
    <later>
    USA: I'm going to ask for a fee to import your ore. But I don't want the wood I give to change.
    China: ...oh. Okay, then. Then we'll just do the same for our stone import
    USA: don't you fucking DARE touch our stone-supply! :angry:


    Thus far the game modus... Because while this might look playful, it is really far, far, FAR from casual. When I said that you would be weathering the storm, I didn't mean "each and every individual". I meant the global economy of the US as a whole. The amount of trading in general, so to say. There will be a number of people that will feel serious repercussions of this situation. Heck...I'll even raise you: because wealth has become so polarized into the hands of a small percentage, it'll be even a disproportionately large percentage of US citizens that will suffer.
     
  10. Clydefrosch

    Clydefrosch GBAtemp Guru

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    Prices go up for consumer not because Mexico will retaliate with it's own tariffs, but because industries don't just stop importing goods without a cheaper option of at least comparable quality.
    They will keep on importing say steel, paying the import tariff and say 'well this car cost us 300 bucks more in materials than before. Let's add it to the pricetag!

    The money the US car manufacturer pays in tariffs goes to the state, but since the car manufacturer gets that money back from US consumers, you're basically paying a tax equal to the currently in place tariffs.
    + Value added tax...

    Basically, he's squeezing all you guys pretending to fight in your best interest.
     
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  11. SG854

    SG854 If It Bleeds, We Can Kill It

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    Mexico looks like it’s already ceding to avoid Tariffs, since congress refuses to do its job handling the migrant crisis.

    The tariffs are a work around to pressure Mexico to handle their immigration crisis better since congress can’t even properly enact immigration laws we have.


    It’s gotten so bad that even leftist news outlets and Bill Maher are saying give Trump the border money he wants.



    Trump has had success using tariffs to get what he wants.

    Trump got the NAFTA overhaul.
    Got German automotive to back down in around 24 hrs.


    China had tariffs against us so Trump retaliated with Tariffs against them. Since U.S. believes in a free trade but China doesn’t, Trump is hoping that the Tariffs we put on them will get them to remove a few of their own tariffs so that we can have a more fair arrangement. And there is talks of the investor class begging the Chinese Government to stop and give Trump a little but of what he wants to ease things.
     
    Last edited by SG854, Jun 3, 2019
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  12. Xzi

    Xzi All your base are belong to the proletariat

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    We simply don't have that kind of leverage with China. They provide a lot more goods for us than we do for them. Additionally, their leadership is no longer elected, so they don't have to worry about the impact on citizens coming back to bite them in the ass.

    Trump doesn't understand any part of how tariffs work. He also has no exit strategy for the trade war. The stock market has been tanking as they've slowly come to realize this.
     
  13. cots

    cots GBAtemp Maniac

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    I suppose Mexico will be paying for that wall after all. No, on a serious side. If we're getting taken advantage of in the global market by other countries and raising tariffs on goods from those other countries fixes the problem and also addresses the lack of stuff being produced in our own country and we start to produce our own stuff again then I have no problem paying a little extra for my avocados.
     
    Last edited by cots, Jun 3, 2019
  14. Fugelmir

    Fugelmir GBAtemp Fan

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    A huge bump in manufacturing for Canada. Good on you, Mr. Trump.
     
  15. kumikochan

    kumikochan GBAtemp Psycho!

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    A short summary of all this is : Trump ain't that good in trade deals as he first thought he was
     
  16. Xzi

    Xzi All your base are belong to the proletariat

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    That's the thing, the only way tariffs manage to accomplish these goals is if people stop buying products from China/Mexico. But China's products are still cheaper than the competition no matter how many tariffs you put on them, and Wal-Mart isn't going anywhere. Mexico produces more than just avocados, they mass produce parts for cars, parts which end up even in cars manufactured in America. It's not like people can or would simply stop buying cars.

    So you can see how the trade market is quite a bit more intricate and nuanced than the Trump administration gives it credit for. Mexico is still a question mark right now, but China is absolutely prepared for the trade war to continue on for the long haul. They know it's hurting the US Midwest a lot more than it's hurting their grasp on a capitalist dictatorship.
     
  17. Isakill

    Isakill Member

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    Point of contention. Avocados aren't the only thing we import from Mexico. Like I said in my previous post, Mexico is (one of) our largest trade partner in many things. Which means, damn near everything we consume will go up in price. With China, Trump mostly targeted steel, while China targeted Soybeans. With Mexico? Beef, Pork, Chicken, Milk products, fruits and vegetables (where else do you think we get our off season produce?), cars, appliances (Hello Carrier anyone? Also a double whammy with China on these).

    So, yeah. This one could hurt more than that spankin new car or kitchen suite you don't really need.
     
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  18. UltraDolphinRevolution

    UltraDolphinRevolution GBAtemp Advanced Fan

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    For China, the most important issue is sovereignty. They don't accept foreign inspection and the outlawing of subsidies. Trump now giving subsidies to farmers is kind of ironic.

    Subsidies are a problem, they distort the prices of goods, e.g. in Africa European chicken kills off any attempt of having their own chicken farms.
    But if you think about it: any government subsidies for struggling families/individuals in Europe or the US also distortes markets indirectly*. And I don't think the Europeans are ready to give up their socialism either.

    *example: Germany's Hartz4 system gives money to low-wage workers if their salary is too low - which is beneficial to the employer.
     
  19. SG854

    SG854 If It Bleeds, We Can Kill It

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    It’ll be bad if a trade war starts with Mexico but the migrant crisis has gotten so bad that news outlets are not saying it’s a manufactured crisis anymore. People are dying, diseases are coming in, we are getting record numbers of people.

    Even New York Times said give Trump his border money.


    Trump has abandoned his giant border wall and is now going under the recommendation of ICE to build fencing in select areas.



    But Democrats are too busy playing politics with Trump trying to defund Trumps wall (which Dems just lost the legal battle in saying they can’t sue Trump), that they aren’t doing anything to handle this situation, they are just anti anything Trump making things more difficult then they should just to show their wokeness. Even Anti Trump Bill Maher defended Trumps merit based immigration plan.





    Leftist media bias has gotten so bad that even leftist New York Times has banned its reporters from appearing on MSNBC and CNN. They’ve become crazy conspiracy theorists and it has cranked up to the max ever since the Mueller Report came out. Bias is so bad that even leftist media don’t trust each other.


    https://www.google.com/amp/s/us.bla...ing-on-cnn-and-msnbc-shows-002923959.amp.html
     
    Last edited by SG854, Jun 4, 2019
  20. Xzi

    Xzi All your base are belong to the proletariat

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    It'll always be a manufactured crisis. The Trump administration cut off aid to all South American countries months ago, knowing full well the result would be tons more refugees. They knew full well that Mexico wouldn't be able to handle that kind of influx on their own, too. On top of which, Trump hasn't defined his parameters for Mexico's "success" in this matter. Which means all we're left with is an escalating tax on Americans that isn't likely to go away until Trump is voted out of office or impeached.

    Just more acts of bad faith and constant attempts to gaslight the American public. If Trump wants to go to war with Venezuela, he just needs to get on with it already. I think he's saving that boner for Iran, though.
     
    Last edited by Xzi, Jun 4, 2019
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