Author Topic: Explain the Trade War with China Please  (Read 5312 times)

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Explain the Trade War with China Please
« on: August 03, 2019, 05:47:50 PM »

Offline Neurotic Guy

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This is a sincere request for a ďdummyĒ explanation of what is happening between the US and China, how we got here, Trumpís strategy, and outcomes that would be beneficial or detrimental to the US and/or world.

I believe there is some consensus among Dems and Republicans that America has been in an unfavorable trade position in with China for a long time. There seems to be disagreement about whether Trumpís tariffs are a correct approach. Lately, there have been reports that a trade deal is close.  Does this mean Trumpís strategy is working?  What are the trade deal features that would indicate a true win for the US (we know Trump will claim it is the best deal regardless). Conversely, what would be the indicators that the deal is closer to status quo or not worth the cost of the tariff strategy.

Please respond with this in mind:  I (and perhaps I speak for others) have remarkably little understanding of economics, especially global economics.  I am starting this thread in an attempt to find a concise, practical way to understand. Please donít link lengthy articles - Iíve tried and Iím not really getting it.  Try the ďexplain it to me like I am 8Ē approach.

Re: Explain the Trade War with China Please
« Reply #1 on: August 03, 2019, 06:29:01 PM »

Offline NKY fan

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Trade wars have had little positive effect long term in history of countries and their economies.
Trumps main goal is to get elected which means he wins... no matter how he wins that’s the goal.. by starting this trade war he appeals to the “hypothetical hard working American” who lost or is about to lose their job to Chinese companies or plants which are on the receiving end of American companies outsourcing their manufacturing.
Notice that many of those Americans who lost their job live in the so called swing states which often decide the outcome of the elections such are :
Ohio , Michigan, Pennsylvania Wisconsin...


With that said the agreement on any sort of “deal” will probably be dragged all the way to next year elections at which point trump will probably declare a victory and move on..


American companies main goal is to return profit to the shareholders
While Chinese companies main goal is to increase output and global share at any cost ... in other words Chinese companies don’t have to return profits as long as they are growing and win international markets...
Take for example a non Chinese company :

Air Qatar ... they provide competitively priced tickets and world class service with no worry whether they will return profit because the Qatari royal family sponsors them through the government...
American Airlines and British airlines have to cut all corners possible to return profits to their shareholders .... their service is not as great ... they stopped giving away unlimited alchohol inflights and the ration of food you receive basically is enoug for you not to starve...
Other conflicting theory is that trump uses proxies to invest his assets on the stock market using the volatility his trade war tweets cause... this is more a conspiracy but it can make sense that certain individuals or investors benefit from the swing in stock prices (especially companies like apple who rely on its Chinese operations to grow and expand its profits)
There are of course other wrinkles in the trade war but that would make for a loooong post.
« Last Edit: August 03, 2019, 06:54:58 PM by NKY fan »

Re: Explain the Trade War with China Please
« Reply #2 on: August 03, 2019, 06:44:06 PM »

Offline NKY fan

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I forgot to mention that tariffs on Chinese imports are a way to make up for the tax breaks given to American companies..

Re: Explain the Trade War with China Please
« Reply #3 on: August 03, 2019, 07:15:37 PM »

Offline Tr1boy

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This is a sincere request for a ďdummyĒ explanation of what is happening between the US and China, how we got here, Trumpís strategy, and outcomes that would be beneficial or detrimental to the US and/or world.

I believe there is some consensus among Dems and Republicans that America has been in an unfavorable trade position in with China for a long time. There seems to be disagreement about whether Trumpís tariffs are a correct approach. Lately, there have been reports that a trade deal is close.  Does this mean Trumpís strategy is working?  What are the trade deal features that would indicate a true win for the US (we know Trump will claim it is the best deal regardless). Conversely, what would be the indicators that the deal is closer to status quo or not worth the cost of the tariff strategy.

Please respond with this in mind:  I (and perhaps I speak for others) have remarkably little understanding of economics, especially global economics.  I am starting this thread in an attempt to find a concise, practical way to understand. Please donít link lengthy articles - Iíve tried and Iím not really getting it.  Try the ďexplain it to me like I am 8Ē approach.

Trump doesnt want China to become a superpower over the USA

They already own "factory".... if they gain techonology innovation ability or copycat almost as good.... 

Thats what Trump is afraid of

Re: Explain the Trade War with China Please
« Reply #4 on: August 03, 2019, 08:06:10 PM »

Offline Ogaju

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Did someone say stock manipulation? WOW conspiracy theories.

Re: Explain the Trade War with China Please
« Reply #5 on: August 03, 2019, 09:19:38 PM »

Offline Csfan1984

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This is a cluster of a topic that I agree borders on conspiracy theories. I love conspiracies as its all sort of like scfi to me yet I can't just go on spouting them as fact. I'm already in the dog house of many on here for my views on basketball lol.
Trade deadline mock team: Celtics,
Irving, Rozier, Wanna
Smart, Robinson, Dozier
Tatum, Morris, Semi
Griffin, Theis, Yab
Horford, Baynes, Williams

Re: Explain the Trade War with China Please
« Reply #6 on: August 03, 2019, 09:36:39 PM »

Offline hwangjini_1

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well, without knowing and understanding global economic and hegemonic theories, it is hard to explain. i used to spend entire courses teaching on these complex topics. so, no easy solutions explanations are possible. but let's try this folks....

keep in mind that following WWII the US built an series of global structures and processes to support itself and its allies politically (UN, world court), economically (World Bank, IMF, etc.), militarily (NATO, SEATO, CENTO, eventually military bases in over 130 countries), and educationally (fulbrights, student mobility, educating global intellectuals, blah....).

this network of systems benefited the rich nations (called the core countries) more often and more effectively than it did the poorer nations. (often referred to as the periphery) this was the intent and purpose of the system - to safeguard global inequality, which it has done rather well.

it resulted in nearly 70 years of the US being the overwhelming center of global growth and influence and a near total lack of war between major powers (ie. no WWIII). of course, war happened, but usually in the periphery, or, when the core exercised its military powers there. (US in latin america, vietnam, iraq, etc.)

the US has paid more and worked more to keep the system going (as trump often notes on who pays for military etc.) but since the US garners BY FAR the lion's share of the benefits, the benefits to the US far far outweigh the costs to it.

so, what trump is doing by undermining NATO, NAFTA, trade with europe, trade with China, limits on international students to the US, cutting of international education funds, etc. is to corrode and undermine the very complex international systems the US set up after WWII. it is making these systems less desirable to other powerful countries so they will start thinking how to do things WITHOUT the US. that is, the systems that created the current world order are being eroded and other countries will try to replace them with systems of their own, but mostly regionally and not globally. (germany will focus mostly on europe, brazil on LA, china on East Asia, etc.)

as with all change this massive, there will be an increase in political, military, economic, and social chaos and disorder throughout the world. BUT as this increases, the traditional ways of dealing with it (UN, IMF, NATO, etc.) will no longer exist/be diminished and therefore the disorder will be harder to contain.

end result? a more violent and disordered world with more violence, starvation, etc etc etc. and fewer solutions, especially at the global level

WHY? simple enough. trump has no idea how any of this works and he only surrounds himself with people of identical opinions and brain power. (remember tillison's famous "he's a ****ing moron" quip.) trump is a honest to goodness simpleton who does not and cannot grasp that economics are embedded in larger world system. he thinks that in world without these systems, the US will be better since it is stronger than anyone.

he fails to understand that much of US power is directly derived from this US created system.

whew... and China? it is simply one major brick being removed from the system. in the immediate future, the momentum of the systems and habits and remaining systems will carry the world forward. but within a decade, if this continues, the world will be facing fundamental changes, and very unpleasant ones.

TL;DR - trump is directly undermining a 70 year old international economic/political/military/educational system that served US interest more than any other country's interests. more benefits flowed to the US than anyone else in this system. without this system and the support of other rich countries, the US will face an increasing fragmented, disorganized, and chaotic world with increased economic instability and political and military violence.

it will become ever more difficult for the US to control events as its loses the allies it won from having this system.
« Last Edit: August 03, 2019, 10:54:08 PM by hwangjini_1 »
I believe Gandhi is the only person who knew about real democracy ó not democracy as the right to go and buy what you want, but democracy as the responsibility to be accountable to everyone around you. Democracy begins with freedom from hunger, freedom from unemployment, freedom from fear, and freedom from hatred.
- Vandana Shiva

Re: Explain the Trade War with China Please
« Reply #7 on: August 03, 2019, 10:44:18 PM »

Offline NKY fan

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Did someone say stock manipulation? WOW conspiracy theories.
I mentioned it and I did say itís borderline conspiracy theory

Re: Explain the Trade War with China Please
« Reply #8 on: August 03, 2019, 10:58:57 PM »

Offline Ogaju

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well, without knowing and understanding global economic and hegemonic theories, it is hard to explain. i used to spend entire courses teaching on these complex topics. so, no easy solutions explanations are possible. but let's try this folks....

keep in mind that following WWII the US built an series of global structures and processes to support itself and its allies politically (UN, world court), economically (World Bank, IMF, etc.), militarily (NATO, SEATO, CENTO, eventually military bases in over 130 countries), and educationally (fulbrights, student mobility, educating global intellectuals, blah....).

this network of systems benefited the rich nations (called the core countries) more often and more effectively than it did the poorer nations. (often referred to as the periphery) this was the intent and purpose of the system - to safeguard global inequality, which it has done rather well.

it resulted in nearly 70 years of the US being the overwhelming center of global growth and influence and a near total lack of war between major powers (ie. no WWIII). of course, war happened, but usually in the periphery, or, when the core exercised its military powers there. (US in latin america, vietnam, iraq, etc.)

the US has paid more and worked more to keep the system going (as trump often notes on who pays for military etc.) but since the US garners BY FAR the lion's share of the benefits, the benefits to the US far far outweigh the costs to it.

so, what trump is doing by undermining NATO, NAFTA, trade with europe, trade with China, limits on international students to the US, cutting of international education funds, etc. is to corrode and undermine the very complex international systems the US set up after WWII. it is making these systems less desirable to other powerful countries so they will start thinking how to do things WITHOUT the US. that is, the systems that created the current world order are being eroded and other countries will try to replace them with systems of their own, but mostly regionally and not globally. (germany will focus mostly on europe, brazil on LA, china on East Asia, etc.)

as with all change this massive, there will be an increase in political, military, economic, and social chaos and disorder throughout the world. BUT as this increases, the traditional ways of dealing with it (UN, IMF, NATO, etc.) will no longer exist/be diminished and therefore the disorder will be harder to contain.

end result? a more violent and disordered world with more violence, starvation, etc etc etc. and fewer solutions, especially at the global level

WHY? simple enough. trump has no idea how any of this works and he only surrounds himself with people of identical opinions and brain power. (remember tillison's famous "he's a ****ing moron" quip.) trump is a honest to goodness simpleton who does not and cannot grasp that economics are embedded in larger world system. he thinks that in world without these systems, the US will be better since it is stronger than anyone.

he fails to understand that much of US power is directly derived from this US created system.

whew... and China? it is simply one major brick being removed from the system. in the immediate future, the momentum of the systems and habits and remaining systems will carry the world forward. but within a decade, if this continues, the world will be facing fundamental changes, and very unpleasant ones.

TL;DR - trump is directly undermining a 70 year old international economic/political/military/educational system that served US interest more than any other country's interests. more benefits flowed to the US than anyone else in this system. without this system and the support of other rich countries, the US will face an increasing fragmented, disorganized, and chaotic world with increased economic instability and political and military violence.

it will become ever more difficult for the US to control events as its loses the allies it won from having this system.

TP ... I wish you could post more on this topic. Very illuminating. I studied Economics, and understand your theory. Do you believe the policies of this government plays into the hands of China. What is this leads to an alignment between China and Russia?

Re: Explain the Trade War with China Please
« Reply #9 on: August 03, 2019, 11:07:58 PM »

Offline Erik

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One facet that is really easy to understand is labor costs.

China is able to undercut all competition by enslaving their workforce. If you think that the cupcakes here think that they donít make a living wage, try living in mainland China. They are bullying the rest of the world with the ability to make products at a fraction of the cost.

While it is true that tariffs will cause Chinese companies to raise prices to maintain their profits , if enough of the world says enough, or if the prices get so high that itís not worth buying their stuff anymore, countries will begin to re-enter markets that were previously locked out.

The reason everyone is panicking is because businesses LOVE exploiting Chinese workforce. There are entire business models that buy crap from China and rebrand it as a private label, not to mention how much dependency our largest companies have on them.

While this has serious repercussions in the short term, it is also unsustainable to cede all manufacturing to China.

A Trump victory here looks like America getting some extra tariffs (compensation for labor cost difference) without counter tariffs.

The other part is IP theft. China steals ideas from American companies and there isnít a great way to prosecute.

Currency manipulation is pretty complicated. The tldr is that China is able to pick what their currency is worth and uses that to gain leverage on trade partners.

Re: Explain the Trade War with China Please
« Reply #10 on: August 03, 2019, 11:24:29 PM »

Offline NKY fan

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One facet that is really easy to understand is labor costs.

China is able to undercut all competition by enslaving their workforce. If you think that the cupcakes here think that they donít make a living wage, try living in mainland China. They are bullying the rest of the world with the ability to make products at a fraction of the cost.

While it is true that tariffs will cause Chinese companies to raise prices to maintain their profits , if enough of the world says enough, or if the prices get so high that itís not worth buying their stuff anymore, countries will begin to re-enter markets that were previously locked out.

The reason everyone is panicking is because businesses LOVE exploiting Chinese workforce. There are entire business models that buy crap from China and rebrand it as a private label, not to mention how much dependency our largest companies have on them.

While this has serious repercussions in the short term, it is also unsustainable to cede all manufacturing to China.

A Trump victory here looks like America getting some extra tariffs (compensation for labor cost difference) without counter tariffs.

The other part is IP theft. China steals ideas from American companies and there isnít a great way to prosecute.

Currency manipulation is pretty complicated. The tldr is that China is able to pick what their currency is worth and uses that to gain leverage on trade partners.
Dude Iím not defending China but stealing IP is such a broad accusation that itís hard to be measured ...
Also did trump or anyone give specific examples of China stealing whatever ideas from USA ? I understand they are copycats historically but stealing is a serious accusation if it potentially can be sanctioned.... and on the topic of stealing ... the USA has helped  made the world education system such that in effect America is stealing the brains from all other countries including China ...
This is one of the frustrations with trump administration... they made it so much more difficult for smart people to study and stay or want to stay in USA and deliver their ideas to businesses

Re: Explain the Trade War with China Please
« Reply #11 on: August 03, 2019, 11:31:17 PM »

Offline Ogaju

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One facet that is really easy to understand is labor costs.

China is able to undercut all competition by enslaving their workforce. If you think that the cupcakes here think that they donít make a living wage, try living in mainland China. They are bullying the rest of the world with the ability to make products at a fraction of the cost.

While it is true that tariffs will cause Chinese companies to raise prices to maintain their profits , if enough of the world says enough, or if the prices get so high that itís not worth buying their stuff anymore, countries will begin to re-enter markets that were previously locked out.

The reason everyone is panicking is because businesses LOVE exploiting Chinese workforce. There are entire business models that buy crap from China and rebrand it as a private label, not to mention how much dependency our largest companies have on them.

While this has serious repercussions in the short term, it is also unsustainable to cede all manufacturing to China.

A Trump victory here looks like America getting some extra tariffs (compensation for labor cost difference) without counter tariffs.

The other part is IP theft. China steals ideas from American companies and there isnít a great way to prosecute.

Currency manipulation is pretty complicated. The tldr is that China is able to pick what their currency is worth and uses that to gain leverage on trade partners.

 huh? How would Tariffs cause Chinese companies to raise their prices. Sounds more like the tariffs will be passed on to the companies that import Chinese products, and they will in turn pass it on to their consumers or endure lower profit margins.

If China is hurt in any major way by the tariffs they will most likely retaliate.

Yeah currency manipulation is more than complicated. It is a hoax.

« Last Edit: August 04, 2019, 12:16:53 AM by Ogaju »

Re: Explain the Trade War with China Please
« Reply #12 on: August 04, 2019, 09:21:05 AM »

Offline KGs Knee

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Trade war with China, yeah I don't even care.

Consumerism is the root cause of all of this, and until we cure that disease it won't matter.  Our insatiable desire to buy loads of stuff we don't need is the real problem.

Re: Explain the Trade War with China Please
« Reply #13 on: August 04, 2019, 09:31:49 AM »

Offline slamtheking

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One facet that is really easy to understand is labor costs.

China is able to undercut all competition by enslaving their workforce. If you think that the cupcakes here think that they donít make a living wage, try living in mainland China. They are bullying the rest of the world with the ability to make products at a fraction of the cost.

While it is true that tariffs will cause Chinese companies to raise prices to maintain their profits , if enough of the world says enough, or if the prices get so high that itís not worth buying their stuff anymore, countries will begin to re-enter markets that were previously locked out.

The reason everyone is panicking is because businesses LOVE exploiting Chinese workforce. There are entire business models that buy crap from China and rebrand it as a private label, not to mention how much dependency our largest companies have on them.

While this has serious repercussions in the short term, it is also unsustainable to cede all manufacturing to China.

A Trump victory here looks like America getting some extra tariffs (compensation for labor cost difference) without counter tariffs.

The other part is IP theft. China steals ideas from American companies and there isnít a great way to prosecute.

Currency manipulation is pretty complicated. The tldr is that China is able to pick what their currency is worth and uses that to gain leverage on trade partners.

 huh? How would Tariffs cause Chinese companies to raise their prices. Sounds more like the tariffs will be passed on to the companies that import Chinese products, and they will in turn pass it on to their consumers or endure lower profit margins.

If China is hurt in any major way by the tariffs they will most likely retaliate.

Yeah currency manipulation is more than complicated. It is a hoax.
Agreed on the tariffs.  Chinese companies aren't paying anything.  Tariffs just hit the wallet of American consumers by the tariffs imposed on chinese goods purchased by American companies being passed along to the consumers.   

Not to overlook the fact the Chinese cutting back on their purchases of American goods in retaliation.  Ask the farmers how they're making out with China buying a lot less American produce

Re: Explain the Trade War with China Please
« Reply #14 on: August 04, 2019, 10:26:10 AM »

Offline seancally

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One facet that is really easy to understand is labor costs.

China is able to undercut all competition by enslaving their workforce. If you think that the cupcakes here think that they donít make a living wage, try living in mainland China. They are bullying the rest of the world with the ability to make products at a fraction of the cost.

While it is true that tariffs will cause Chinese companies to raise prices to maintain their profits , if enough of the world says enough, or if the prices get so high that itís not worth buying their stuff anymore, countries will begin to re-enter markets that were previously locked out.

The reason everyone is panicking is because businesses LOVE exploiting Chinese workforce. There are entire business models that buy crap from China and rebrand it as a private label, not to mention how much dependency our largest companies have on them.

While this has serious repercussions in the short term, it is also unsustainable to cede all manufacturing to China.

A Trump victory here looks like America getting some extra tariffs (compensation for labor cost difference) without counter tariffs.

The other part is IP theft. China steals ideas from American companies and there isnít a great way to prosecute.

Currency manipulation is pretty complicated. The tldr is that China is able to pick what their currency is worth and uses that to gain leverage on trade partners.
Dude Iím not defending China but stealing IP is such a broad accusation that itís hard to be measured ...
Also did trump or anyone give specific examples of China stealing whatever ideas from USA ? I understand they are copycats historically but stealing is a serious accusation if it potentially can be sanctioned.... and on the topic of stealing ... the USA has helped  made the world education system such that in effect America is stealing the brains from all other countries including China ...
This is one of the frustrations with trump administration... they made it so much more difficult for smart people to study and stay or want to stay in USA and deliver their ideas to businesses

You can start here:

https://law.stanford.edu/2018/04/10/intellectual-property-china-china-stealing-american-ip/

Re: currency manipulation, the Chinese renminbi is a state-controller currency. The Chinese communist government controls it and sets it. For example, if Trump increases tariffs on Chinese goods, china could (and has) drop its currency to minimize the impact of tariffs. Currency control gives counties an unfair advantage and goes against principles of the IMF, World Bank, Etc - as I understand it.

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