It's worth pointing out that China has been preparing for this exact trade war since 2016, when Trump first threatened it. And they have fairly good centralized command structure to force individual businesses to prepare for things like this. China is the primary target of the war, even if Trump thinks that trade imbalances with Vietnam are also theft from the US, as he frequently and loudly says. The administration has lots of China hawks, it does not have any Vietnam hawks.
Additionally, China is much better prepared for a trade war in that it has a populace that has been very well conditioned to go through hardship for longer term wins. The US does not, and there will be massive revolt for small hardship, or even the perception of hardship. This is largely why Harris lost: she was blamed for the inflation under Biden, even though the US did far better than the rest of the world economically for the period 2021-2024.
The prior trade war with China was short and inconsequential, Trump could buy off the farmers who were really hurt by it with less than a dollar sum of 10-11 digits. That won't be possible with the trade war that's currently planned, and the effects will be large enough to cause large inflation, while simultaneously providing zero methods for investors to safely build US-based production capacity.
The US has benefitted for a couple generations by being the reserve currency, meaning that we can make big mistakes and not suffer for them, while any other country would suffer. This coming trade war, if it actually happens, may finally break this exceptional status.
China's economic situation right now is worse than the US. They have incredible debt (accounting for provincial debt which is essentially state debt, China is not a federation), a massive housing asset bubble, and an aged population that is expensive to care for. Never mind also being stuck in a deflationary cycle with a high youth unemployment rate. And this is just working with the self-reported numbers from an authoritarian regime.
The biggest crunch to the US will be to the consumer, the biggest crunch to China will be the worker. People in the US will need to buy less shit, and pay more for what they do buy. People in China will need to work fewer hours and bring home less money.
Of course, the situation is fractal and ridden with unknowns. But I think a lot of people have this view of China as being a young slick economic powerhouse and the US being a weak economy with old decrepit money pile. That's far from the truth.
I'm sure that China will suffer greatly from any trade war, and I'm positive the US will blink first. Chinese consumer and workers are already significantly less likely to revolt, stop working, drag their country down. The second that dollar store becomes $10store in the US, it'll be pandemonium, and they only have a single person to blame for their troubles. China? They may be doing anti-competitive trade practices and haven't been put to task, but if you ask the Chinese citizen who to blame on the trade war, it'll be trump. If you ask a US citizen who to blame for this trade war, it'll be trump.
I actually have made it a personal rule to never sign up for TikTok. Instagram usually gets the stolen reposted content of whatever trends on TikTok a week ago. Browsing Instagram on the phone you are just swiping and taking in whatever the algorithm feeds you and unless you save it, that content might be gone forever. Who knows how much slop has just "drive by" messed up my brain.
Nevertheless I saved a couple pieces I found interesting or amusing:
I made a new TikTok account out of curiosity after Trump "saved" the platform. No exaggeration, half of the "For You" content was from "Team Trump" or Charlie Kirk. They are actively pushing propaganda, but I've seen no signs that it's Chinese propaganda, unless you assume that Bytedance is bowing to Trump, and that Bytedance is controlled by the Chinese Government, which just raises more questions.
Youtube Premium is the only "streaming service" I actually pay money for, and I use it quite a bit. Rarely ever does something off the wall get pushed to me. I do consume politics on YT, and occasionally something right wing shows up, but it's rare. I have no doubt that this stuff would be prioritized on a new account though.
The TikTok bill appeared to have died on the vine until it started to get a lot of Pro-Palestine content then all of a sudden it reappeared and the ban got put into law. I think Trump stopping the ban was actually the first major loss for pro Israel interests(certainly not the last we have seen so far).
I would say its not that extreme on the platform(I still see the week old TikTok posts sometimes reposted on other platforms) but regardless, the damage has been done. As they continue to lose this information war, their tactics become more and more unhinged. See the recent bill banning boycotting Israel products with a punishment of a million dollars fine. It was met with such backlash that politicians quickly withdrew it. Even MAGA jumped on board to block that.
Like it or not this is a competition between two nations. If they are going to push content that sways the populace by exploiting weaknesses why not the other way around?
You are acting like this started as soon as Trump opened his mouth, its been in the shadows for years but it really ramped up after he started this nonsense.
It's a competition between nations, but why support the political party that straight up says they hate you just because China also hates them?
Like, if I hate the idea of eating kittens, and someone I hate also says they hate the idea of eating kittens, I'm not going to say "oh hell no, I can't let them shittalk OUR kitten eaters!"
I'm just going to be like "yeah, they have a point on this one", accept that a broken clock is right twice a day, and move on. Nationalist/jingoist garbage just for the sake of it makes countries worse.
There are many ways you can look at this situation. In my view, I don't think its a matter of hate. You gotta separate the actions of the clown on top with the actions of the government. The government is tasked with protecting the people and ensuring their best future. To them, it does not matter if its competing against China or any other country. Its not personal, its business.
To that end, the US's rivals have long used its weaknesses against it. While there are unconfirmed reports that China and Russia helped to prop up BLM in 2020, we do know for a fact that the USSR fanned the flame of racial tensions during the cold war. The best way to fight this? Get as close as you can to a fix for the problem. In that regard the USSR's attacks could have been used against them as a motivation to improve things and the US has improved.
Likewise its questionable if pushing the lie flat movement would harm regular Chinese people. From the government's POV, it looks bad: Chinese people being worked to death, can't afford a one bedroom apartment and one couple has to take care of possibly four elderly people. Of course some will just decide to 'opt out'. Makes China look bad while also possibly helping regular Chinese people in the long run.
China faces many long-term headwinds but they're not in crisis yet. The Chinese housing bubble has been deflating since 2020. The state pension and healthcare systems are less than generous so care for the elderly is not that expensive (yet). And Chinese government debt is less than half the US despite being 5x the population.
At the end of the day, the US represents only 8% of China's exports and only 2% of China's GDP. Losing that will hurt, but China is far better placed to weather the loss than the US.
What is the difference between paying more for the item VS having less money to spend? Both to me seem like being unable to afford the things you need.
Americans buy a ludicrous amount of stuff they only think they need. American consumerism is unrivaled in the world.
In the US the poor are the ones who suffer from obesity. From having too many calories available cheaply. Let that sink in. The US is so much further from "needs not being met" than anyone understands.
The US has one of the largest agricultural sectors in the world, it should be no surprise that food is not in short supply. But we don't live in an era where people live in homes built from local gathered sticks and rocks and just need food to survive, our modern lives depend on far more than just food. Poor people are fat because we made extremely calorie dense foods the cheapest foods, poor people often shop by calorie per dollar, not because they have extra cash to throw around.
Try living on the US median wage only and let me know how much ludicrous amount of stuff you can afford.
<< Try living on the US median wage only and let me know how much ludicrous amount of stuff you can afford.
The question is not what you can afford. The question is what you can get. And whatever else you want to say about US system, it made the ability to show that you have $desired_item257 relatively easy to obtain even at low income level. It is genuinely not impossible to own status luxury items with aggressive financing.
It's more expensive to buy and prepare fresh food than shelf stable ultra processed foods and requires more time. Poor people have access to 'poor' calories. I would wager that children would also inherit the eating habits of poor parents.
right, but so far the consumerism has been the only thing doing bread and circuses away from the real problems of housing and whatnot.
it's interesting that many things like televisions and phones went from being multiples of rent or mortgage payments, to the reverse, so now cutting back on consumer spending to afford necessities wouldn't do a whole lot.
I'm not worried about the consumer aspect at all. It will be painful and maybe pull the wool off all the trumpets eyes, reveling his idiocy. But people are not going to be starving. Maybe starving for new clothes and iPhones like they get all the time.
I do worry though about embedded costs up the supply chain the depend on Chinese made things. The parts of parts that go into machines that are made domestically. I think that has potential to be the real knife in the back. Most things need all the pieces to work, and even though the machine is 90% made in USA, the last 10% that is a Chinese export is going to cause pain in all sorts o unexpected places.
Long term savings, productivity increases, and infrastructure investments. Buy less today to have more tomorrow. The us individual hardly saves at all, the US gov/society has financed decades of deficit spending n the outcome of ww2, 20th century global industrialization, and the “exorbitant privilege” of financing/coordinating it.
Common opinion is that china has the opposite problem, with massive productivity outputs being shipped overseas and a population base who cant/wont consume their own outputs.
While this is all true, China knows all the economic levers to cause lots of pain to the US (eg selling t-bills) whereas the leadership in the US is so economically illiterate that it thinks trade deficits are theft and that tariffs are free tax money that will strengthen the US.
The US's current leadership is so economically illiterate that most of the people who backed Trump thought he was just joking about his economic policy. When the stock market finally realized that he was so stupid as to follow through on campaign promises the stock market tanked. It is currently only held up at current depressed levels because it is assumed that Trump will back away from the trade war.
Though the US economy is the strongest and healthiest on the planet by a large margin, and while typically the president of the US has minimal impact, we find ourselves in a strange situation where the president has found a way to throw all that supremacy away.
In some sense Trump and co would want China to sell their t-bills. It will weaken the dollar (increasing competitiveness of US exports) and strengthen the yuan (decrease competitiveness of Chinese exports).
To some degree is it possible to frame this whole situation as America intentionally tanking the dollar because it is too strong (which has happened twice before, albeit in more diplomatic ways). The hard part though is getting our economic allies to go along with it while also not abandoning dollar supremacy.
How does the strongest boxer ever intentionally get weaker to avoid permanent injury, while also keeping bettors confident in his winning streak? It kind of needs to be done, but man I cannot think of a worse person to execute this than Trump.
>China knows all the economic levers to cause lots of pain to the US (eg selling t-bills)
China has been divesting itself of treasuries for a long time: a) because they create coupling between the two economies, and b) they know that the US will simply freeze them if China invades Taiwan. If China dumped all of its treasuries at once, it would hurt a little, but not that much.
A small amount of selling T-bills from bond vigilantes already caused Trump to drastically pull back his plan once. If a holder as large as China started a big dump of T-bills it would cause a massive financial disaster. China would feel some pain too, but the US having far higher interest rates as it rolls over new debt into new T-bills would be extremely difficult for us. We are at economic Mutually Assured Destruction levels this is still a lever that China can pull that is in their favor.
Almost all of US debt is internal. Social security and the federal reserve are the two biggest holders. Only 25% is in other countries, and the largest single other country is Japan at 3%.
If there is a secret Trump plan to devalue the dollar and force us treasury holders to accept cheaper longer term debt, the biggest plenary will be to social security.
(Though on the last numbers I saw had the UK and China with far more similar amounts of holdings.$
Calling T-bills debt is only half the picture. They function more like dollars, whose value can be deflated or increased after issuance merely by changing interest rates.
In the mind of a serial bankrupcy expert being in debt gives one leverage. In reality all the piled up treasuries give China breathing room and their sell-off would put the US under stress. The US may be the largest customer of China but is dwarfed by internal customers and the rest of the world. Loosing customers hurts China but it can be compensated. Now as a supplier of volume goods China is much harder to substitute. And as a supplier of specialized high-tech goods China is impossible to substitute. Loosing suppliers in manufacturing breaks complete value-chains so there is colateral damage. On the other hand imagine some smaller critical US component breaking a supply chain in China - there will be fewer of such cases and bad cases can be handled with exceptions. Much different from the US situation where there are many more specialized components from all over the world are impacted.
Let's look at car head-lights. These are highly integrated components, designed and manufactured by third parties using tools made by forth parties with the knowledge not in the hands of the car manufacturer. Swapping them may well need re-designs and re-certification. Hard to put an estimate on the overall process but it won't be quick.
And last but not least how is new business attracted: The rule of law makes a country safe for an inherrently very risky process of overseas investments. Expats are critical resources for knowledge ramp-up and managing the first years. Billionairs with a seat on Trumps table may not care so much about the rule of law but SME business do. Expats who may move with their family need to be able to rely on visa, green cards and travel being safe. The opposite of what is needed to attract business is done as far as one can see from afar.
A trade war with no clear path for winning started from a position of weakness.
> Additionally, China is much better prepared for a trade war in that it has a populace that has been very well conditioned to go through hardship for longer term wins
It's funny that I saw more and more opinions that Chinese will win the trade war by shopping and eating out more.
As much as China can prepare, it's still in a pretty vulnerable position and the whole "the Chinese people are more conditioned for hardship" is as much Chinese exceptionalism as any claim to American exceptionalism. At the end of the day they lose millions of jobs, factories shut down, and people suffer there too regardless of the CCP marketing about being "tough" and "prepared". Appear strong where you are weak or something like that. Meanwhile the US can see prices go up, but aside from a few specific items we can buy or make the things that China has been. At an increased cost, sure, but Americans can handle it.
> The US has benefitted for a couple generations by being the reserve currency, meaning that we can make big mistakes and not suffer for them, while any other country would suffer. This coming trade war, if it actually happens, may finally break this exceptional status.
Very doubtful. The main danger is lack of fortitude with continuing and enforcing policies, and letting ideological battles get the best of the Trump administration for cutting good and fair deals with the EU and others. You're welcome to invest in Chinese, Russian, or whatever capital markets, though.
It's not exceptionalism as much as authoritarianism. The lockdowns that happened in China for COVID were real and extreme. Meanwhile there were no lockdowns in the US and a significant chunk of the electorate acts as though there was extreme government overreach and in response gained control of large chunks of government with those arguments.
Sure, the Chinese government finally capitulated to citizen demand eventually, but the degree of control compared to the US is hard to overstate.
Americans nearly rioted over unenforced (effectively voluntary) Stay-At-Home and business closures that were openly ignored by business owners. If we can't even survive a few months of not buying khakis and eating at Olive Garden, how are we going to survive a hardcore and sustained trade war?
Americans are just like anyone else for the most part, albeit with some cultural differences.
We can put up with hardship just like anyone else, though our suburban ecosystems and factory farming make that more difficult than need be, it's just that we haven't had a real need to face true national hardship since World War II perhaps.
I don't disagree with the COVID-19 lockdowns or anything like that, but I'm not sure that's the best example here because as a nation we weren't really aligned on that being a hardship necessary to endure sacrifice.
And you think trade war with China is something that the entire nation believes is necessary hardship, when even Trump allies like Musk are speaking out against it, as is the entire business world?
Well I don't think it'll be that much of a hardship, but yea I don't think everyone is exactly aligned with how the Trump administration is going about it. Generally speaking "we have a problem with China - they took our jobs!" has broad consensus, at least in my experience. Also politically the Biden administration and others have undertaken steps to defend US economic interests against China.
I see no evidence that we will be aligned this time. A large portion of the population will be angry and blame Trump and the Republicans who supported this.
Personally I see it as a win-win. Tough on China, people get mad about their trinkets being more expensive, and then they kick the traitorous fools out of office and we go back to more sensible Democratic foreign policy and tough on China stances.
We can “buy or make the things China has been”? Buy from whom? Make in what factories, with what workers, with what supplies, equipment, and materials?
Ok if we can't then you're proving the need for economic and policy measures to make it so we can.
But yes, instead of buying a made in China t-shirt you can just spend a little more and buy one made in the USA, or even other non-authoritarian governments throughout the world (EU for example).
The unemployment rate is what, 3%? Where are you going to find the millions of people needed to make the iPhone domestically? Immigration? Hah, that would be an interesting stance. Automation? It would work to fill some gaps, but even apple doesn't want to pay Chinese workers for tasks that machines can do today. Someone in their company decides on when they automate, and when they use elbow grease. They may be able to afford a lot of the capital outlay to greatly improve the productivity of their workers if effectively required to onshore, or they may just stop selling iPhones in the US for a few years if all cell phones become prohibitively expensive to own. If Apple can't make the economics work, I can't see who can.
> The unemployment rate is what, 3%? Where are you going to find the millions of people needed to make the iPhone domestically?
I don't know off the top of my head, but that sounds like a great problem to have and I'd be happy to do whatever it takes to make sure we have that problem.
We instituted many processes during the Biden era for bringing manufacturing to the US. They were all carrot based: provide stability for capital investments and even some tax benefits. This resulted in massive investments in factories in the US, the most in a generation.
Tariffs do not provide capital security, they do not make it cheap to build the factories and in fact gigantically jack up the cost because we need to import a lot of the machinery to get the manufacturing going, and building the entire supply chain from scratch would add massive lead time to the other factories that use the machinery.
Further, the need for onshoring cheap tshirt manufacturing is far from clear. We have massive amounts of our workforce in far more productive areas that produce absolutely massive amounts of GDP, and reallocating the workforce to tshirt manufacturing makes us far poorer.
We are cutting drastically from scientific research, where each dollar spent by the government generates 2x-10x GDP, and telling those scientists to go work in factories. The very same types of factories that our trading partners would give up in an instant if they had the hi tech scientific research instead.
What do we need? Certainly not tshirt factories. We need scientists, services, and more productive sectors of the economy. It is absolute idiocy to give up the higher tiers of the economy only possible in the US in the 21st century, to return to far lower 20th and 19th century productivity level.
I was broadly responding to the OP's broad comment. Like yea you don't need to buy cheap crap from Temu that you saw on TikTok. And if you have to pay $5 more for a t-shirt suck it up and stop supporting authoritarian regimes. If that results in Americans working in t-shirt factories which aren't morally better or worse than any other factory, being paid higher wages and having that money stay here in our local economies at the expense of cheap goods with economic outflows to China, I say good and maybe tariffs are a good way to make that happen.
Remember, tariffs are just an economic and policy tool we can leverage. The EU uses them against China today even. I personally found the Biden administration's approach to trade to be better, but maybe we need a mix of policies to effect change?
To that effect I don't really understand your last comment about giving up higher tiers of the economy that are "only possible in the US" - we can't make computers and iPhones here. Those are those high tiers. That is a problem. Tariffs can be a tool to effect change there. Maybe not, maybe so. The status quo isn't sustainable though.
Cheap crap on Temu and phones that mainline social media into everyone's pockets are part of the circus machinery that keeps the population distracted and docile.
Nuking them is unlikely to end well politically.
As others have said, if you want to use tariffs to wage a trade war, you prepare first, so you're not cutting off the branch you're sitting on. You don't create tariffs and then build your factories.
Because you can't. It's just not possible.
But this regime has a shoot-from-the-microphone policy style which is completely irrational and unworkable, and minor considerations like practicality don't figure.
In any case, it's clear the regime is in a race between enforcing its grip on power with martial law (whatever it's going to be called) and political collapse brought about by economic collapse.
It's too early to tell, but if martial law wins, economic collapse on an unprecedented scale will follow.
You can be toxically positive and say that a lot of dead wood needed to be cleared. But in practice that just means whole swathes of the country will turn into Detroit of the 00s, but worse - rotting ghost towns, haunted by the ghosts of those who starved to death.
For some things, I agree it’s important to have domestic capability. For most things, global trade works well for everyone involved, so long as we do it in a cooperative way. The current tariff bullying approach is the worst way of building domestic capability or improving trade relations. More likely the US will sink into a decade or more of stagflation or worse as world markets move on without us, far more easily than we can become self-sustaining.
For your t-shirt example, sure we can buy US made shirts. But the US factories have a limit to what they can produce. Then what? What business person would invest in any new factories in the current environment? Where do they buy the materials to build the factory? (From our trading partners.) Where do they buy the tools and equipment used in the factory? (From our trading partners.) who do they hire to work in the factory? Former government bureaucrats? Immigrants? Oh wait!
You can Google something like "made in America t-shirts" and should find plenty of results as I did (not trying to be a jerk and say "Google it", really just trying to be helpful if you are indeed looking). I'm not sure about the European Union.
There are quite a few but just an example: https://www.american-giant.com/pages/about-us (no affiliation or any further research other than identifying from a lengthy list of made-in-USA clothing).
All I did was a quick google search, but I searched what the US imports from China, to fill in the word "stuff" from your post:
"The U.S. imports a wide variety of products from China, with the top categories including electronics, machinery, and furniture. Specifically, significant imports include computers, smartphones, electrical equipment, toys, and furniture."
I just don't think there will be riots in the street over this stuff. Maybe there will be, maybe there should be, I can't say for sure. I do know kids will survive just fine without toys, and I don't see riots over furniture. I don't know about the rest of it.
The other side of the coin is interesting: What if China decided they were never going to sell anything to the US? Would people riot in the street? Even more interesting, if China really wanted to play that game, why don't they? Why are they so mad? If this wasn't a threat to them it would be a giant nothingburger on their end.
Think of all the Made in USA stuff that makes use of Chinese components.
Many of the machines used in factories are made in China.
A lot of tool making is outsourced there (an injection molding die that might cost $50,000 to make in the US might be $10k in China, and the Chinese typically make them with a quicker turnaround time, even with shipping.
Unfortunately our homes, offices, and lots of infrastructure kinda require things like electrical equipment (amongst other trivial things like wood, metal, insulation materials, etc)
> At the end of the day they lose millions of jobs, factories shut down, and people suffer there too regardless of the CCP marketing about being "tough" and "prepared".
I have the feeling, not only from this comment but also those about Foxconn suicide nets, that people have a hard time judging quite how big things in China are.
Losing a million jobs would change China's unemployment rate by… 0.14% of the workforce.
Great then it is very simple and it won't bother them too much and we can gain 100k* jobs or so and pay more to make things here and everyone is happy. China can stomach the loss of a few million jobs and they shouldn't complain since it's no big deal.
* Job loss/gains wouldn't be 1-1 as new US factories would likely use fewer workers.
The US is currently at fairly high employment[0]. To a first approximation, if you attempt to move factory jobs to the US, not only do you need to build a factory, someone not currently working in a factory has to loose their non-factory job… or you have to encourage a lot more parenting and wait about 18 years[1].
More likely is that the US looses all the jobs that the imports were dependent on, and unemployment goes up.
"Dependent on" is also hard to determine. Lots of people now rely on smartphones, and even in a scenario like this the phones themselves won't evaporate overnight — they won't even really shift back to being the status symbol for the wealthy that they once were given how cheap the cheap brands are, but for the stake of illustrating the impact of consequences, *if* they were to shift back to being that status symbol, gradually there would also be much less call for mobile app developers and Uber, Delivery Hero, etc. drivers.
Because we don't live in a static equilibrium with respect to population? Even if we didn't gain jobs because the population was stagnant, this just puts wage pressure on employers to the benefit of workers. Or is that not a good thing?
But you are providing an argument against your own point:
> More likely is that the US looses all the jobs that the imports were dependent on, and unemployment goes up.
> The US is currently at fairly high employment[0]. To a first approximation, if you attempt to move factory jobs to the US, not only do you need to build a factory, someone not currently working in a factory has to loose their non-factory job
> Because we don't live in a static equilibrium with respect to population? Even if we didn't gain jobs because the population was stagnant, this just puts wage pressure on employers to the benefit of workers. Or is that not a good thing?
Wage pressure in this case would be pointing in the opposite direction.
First: If the average tariffs are less than something like 558%, at current salaries and exchange rates it is currently still cheaper to import, because US salaries (well, nominal GDP/capita, I approximated) are on average that much higher than Chinese salaries. The Chinese can cope with this because of two things you don't have: (1) lower starting expectations because they're moving through the process of industrialisation and started low, (2) lower cost of living. This means that below that level (which a more detailed analysis will likely show varies between products), all the tariffs do is act like a stealth purchase tax that reduces aggregate demand without inducing production to relocate (though production may *claim* to relocate for reasons of political correctness, they won't actually move from tariffs below this level).
Second: The only way to free up US workers to work in these factories, is to first cause massive unemployment so that people are willing to take on much lower paid manufacturing jobs. Otherwise everyone says "no, I will not take this stupid manufacturing job that pays $6.5k/year, why would I want that? This won't even cover my rent!"
And that $6.5k/year is what I've heard Foxconn pays line workers — great when your rent is $2k/year; awful when your rent is $2k/month. If there were any wage uplift from moving the jobs themselves, it would act exactly like a permanent tariff, and lower aggregate demand accordingly.
> Which is it?
Which is what?
Those are the same point.
To move a factory, people have to stop doing the work they're currently paid to do.
Destroying your ability to import things that people need for their work will indeed free up people to make those things in local factories, by massively increasing unemployment. Do you, personally, want to switch from your current job to making iPhones?
> To move a factory, people have to stop doing the work they're currently paid to do.
> Destroying your ability to import things that people need for their work will indeed free up people to make those things in local factories, by massively increasing unemployment. Do you, personally, want to switch from your current job to making iPhones?
I don't, but that's because it wouldn't be economically productive for me to do so. For someone working at Waffle House it might be.
Let's be very clear though that every economic decision we make as a country has repercussions, and winners and losers. Remember the coal workers who had to Learn 2 Code?
> all the tariffs do is act like a stealth purchase tax that reduces aggregate demand without inducing production to relocate (though production may claim to relocate for reasons of political correctness, they won't actually move from tariffs below this level).
Well we do need to raise taxes to pay for these services we want and/or to reduce the national debt. I don't believe that this is the best or only way to do that but that's a nice benefit in the scenario you are describing. If we purchase less that's better for the planet too.
No doubt many companies won't relocate at least in the short term, but some will.
I don't disagree with your assessment related to the average tariffs right now, but that figure is very much subject to change, and something like the exchange rate where China has put artificial pressure on the currency to keep it lower in value than it might otherwise be is an example that I think would be worthwhile analyzing when looking at the entire picture.
> The Chinese can cope with this because of two things you don't have: (1) lower starting expectations because they're moving through the process of industrialisation and started low, (2) lower cost of living.
Cope in what way? America will be just fine even with higher prices or even supply change shortages and can find other manufacturers to produce goods. China will be just fine too losing money and jobs but finding other markets like the EU for products that no longer come to America. Both countries can cope with less trade with each other. I've seen this trope repeated time and time again in these discussions about how China somehow is exceptional and can cope with struggle more than Americans and it's just as faulty of an assumption as claims to American exceptionalism are.
> Wage pressure in this case would be pointing in the opposite direction.
> Those are the same point.
I don't think so but maybe you cold elaborate if you have the inclination? It's also a little difficult to discuss because neither of us have really laid out assumptions very well so we may be discussing different things at times.
Generally speaking though in the case of unemployment rates which I think is what I was responding to, having to build new factories in the United States (however many) with a low unemployment by definition would increase wages simply due to labor supply and demand.
The person I was responding to (again going off memory here and could be wrong and I apologize if so - maybe it was you! :) ) was supposing that this was a bad thing or that the jobs couldn't come back because of the low unemployment rate because there wouldn't be any workers.
I disagree with that general assessment completely.
We would see a rise in wages and increases in investment in automation and manufacturing technology due to the rise in labor cost.
They'd think it because otherwise the prices would be too high and it would be difficult to sell the goods. If iphones go to $3000, the market for iphones will get much thinner.
That doesn't explain the ratio. If a highly efficient and automated China is employing (say) 1e6 people to supply US demand, it's implausible that anyone (including the US) would be able to spot a way to fire 90% of the factory workers when rebuilding the production line at same capacity anywhere else (including the US).
Of course, I simplify. But despite the wage difference, China's no longer the place you go to substitute expensive machines for cheap humans.
The wage difference between the USA and China also means that for any given product, there's a minimum tariff below which it still makes more sense to import and pay the tariff rather than to pay local workers. To paint a very broad brushstroke, if I naïvely compare GDP/capita, that's about 558% — from https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... I get US 90,105 and China 13,688; then 90,105/13,688 = 6.58…, less 1 because tariff of 0% means the importer pays 100% of the money to the exporter.
To be clear I was suggesting that the number of jobs gained in the USA would not be 1-1 with the number of jobs currently in a given hypothetical factory. I.e. the Chinese factory loses 100 jobs, a corresponding American factory is unlikely in my view to gain 100 jobs, and instead the number may be much lower.
I guess it's possible if China is that good at efficient manufacturing that the number of jobs in the United States would increase relative to the job loss of the same factory in China, but I wouldn't view that as a bad thing. Higher employment and more wage pressure for regular workers, and companies will have to invest in better technology and processes to alleviate that wage pressure.
Oh so we would gain more jobs then? So we'll take a highly automated factory in China, shut it down since it won't be selling products to the US, build that factory here even though it might be a little less automated, and then we'll have the same number of jobs and maybe more than the Chinese factory had? Sign me up! That sounds awesome.
If there is a goal for more factories in the US, and it's certainly not clear at all that this is a policy goal of the current US executive branch, there's not a clear route to achieving that goal.
If the factory gets staffed at all, it will be competing in a labor pool in the US that only has 4.2% unemployment. The high employment rates, and inability to find workers during Biden's presidency, led employers to revolt against Biden.
The question is whether those automated factory jobs will be better than other jobs for the workers, whether they will be created in places with the appropriate worker pool (education, unemployment high enough etc.).
There's also the question of whether there's anybody willing to build some new high-cost automated factory when the same capital could be deployed to another purpose that likely has a far higher capital return rate. There's almost zero protection that the impetus for having the expensive highly-automated factory--namely the tariffs--will exist past for most of the life of the factory. Or in fact if they will even be in place by the time that the factory is constructed and ready to go, which will take a minimum of 3-4 years.
All the stars have to align perfectly for some sort of new jobs to appear and then it's not clear that they will be better than existing jobs. And if it does happen, we all suffer from several years of being poorer in the mean time.
All great points and great questions - today however they're not really available for consideration because those jobs remain in China.
I mentioned in another post, but I think having a 4.2% unemployment rate and putting even more pressure on that rate is a good thing, particularly for workers who will see wages rise, and technology as new automation techniques will be created to also alleviate that same pressure.
The status quo today is, well, we have none of that and those factories sit in China and we continue to buy things and ship them over - not really great for the environment either.
> And if it does happen, we all suffer from several years of being poorer in the mean time.
Yes, that's kind of how America operates - quarter by quarter. We focus on the short-term and worry about Temu products* doubling in price, but fail to see the long-term implications - economic outflows, loss of manufacturing capacity and know-how, etc.
* Yes, I know China manufactures more than these specific products and "we can't", which is all the more reason we need to figure out how to do it, even if it costs more money to do so. Absolute efficiency and the cheapest possible price for a good/product are not ends in themselves, but outcomes to economic policy decisions we make.
Nah, the problem is EU will face the same problems the US is facing (they don't want products dumped on their markets at subsidized costs putting their workers out of business), and a lot of the posturing (Canada I think is different) is for the public and because Trump is an asshole but the EU sees the same problem the US does. Nevermind China very overtly aiding Russia in its war in Europe which has the EU not very happy. Guess we forgot about that?
The EU is actually quite protectionist, despite public claims to the contrary. Most countries are in various fashion protective of many or certain industries.
Trump no doubt damaged ties, and again I think the Biden administration's approach was superior in many ways, but there's a limit to what agreements the EU will make with China. The manufacturing capacity that the Chinese have built isn't sustainable without a substantial increase in Chinese domestic consumption.
> Nah, the problem is EU will face the same problems the US is facing
The US problems are problems of their own making.
EU has only trade rivalries with China, not ideological issues like the US has. Those can be ironed out. And honestly the US administration also has an ideological hatred for Europe, as illustrated by the vice presidents own words. Not really conducive to any sort of deals.
As for China dumping cheap things here, as you said, EU is very protectionist (China is as well), and EU consumers have a lot less appetite for consumption than the US. I really think that is less a problem than you believe.
> Trump no doubt damaged ties, and again I think the Biden administration's approach was superior in many ways, but there's a limit to what agreements the EU will make with China.
I think you really downplay the kind of generational damage the US is doing to the relationship with former allies.
> The manufacturing capacity that the Chinese have built isn't sustainable without a substantial increase in Chinese domestic consumption.
You forget that China is only in a trade war against the US. The US is in a trade war with everyone else.
Depends on the specific trade issue. There's a limit to what can be ironed out, and the large bulk of the problem is that both the EU and China are rather protectionist even compared to the United States and so for either to iron out these trade issues they'll have to both open their markets. So far that hasn't worked out for the United States, even prior to the ideological battles, and I'm not sure I see a path forward for the EU that's significantly different than the status quo.
Also China is happily helping Russia fight a war in Europe so I wouldn't be so quick to assume the EU only has a trade issue with China - that's rather naive.
> I think you really downplay the kind of generational damage the US is doing to the relationship with former allies.
I was just in France for two weeks, nobody I spoke to in my broken French really gives a shit outside of "man that guys sucks right?" The internet isn't day-to-day life. For some reason people think that political grandstanding and harsh rhetoric is only an American phenomenon and that European leaders don't do the same. The issue with Canada I would argue is much more as you are describing, and is rather unfortunate to say the least.
> You forget that China is only in a trade war against the US. The US is in a trade war with everyone else.
Sure ok - feel free to buy all the Chinese products that are made and shipped to your country from China. Best of luck! Let us know how that turns out for you.
> Also China is happily helping Russia fight a war in Europe
The US is also helping Russia in its efforts right now, it's important to underline this.
While China is more pragmatically washing their hands and keep trading with Russia, the US actually calls for Ukraine to just capitulate.
> I was just in France for two weeks, nobody I spoke to in my broken French really gives a shit outside of "man that guys sucks right?" The internet isn't day-to-day life. For some reason people think that political
1) I don't live in the internet. I barely have any online presence beyond this forum.
2) People are generally polite. I know people from the US, from very liberal to very MAGA. I try to be pleasant to them. And I don't fault them for their government, even the ones that obviously voted for the current president.
3) When I speak about generational damage to relationships, I am talking at the diplomacy level. Building a web of great allies was something that the US could do after the two world wars because the opportunity was there and they seized it. I think it will be very hard, on a diplomatic level, to repair that. This ship has already sailed.
> Sure ok - feel free to buy all the Chinese products that are made and shipped to your country from China.
Have been for a while. I don't see that as a huge problem. As I said, Europe consumers have a lot less appetite for consumption than the US ones. Partly for cultural reasons, partly because the US had the strength (yes, strength) of commandeering a huge trade deficit that actually benefits immensely its economy.
There are some industries that for strategic importance is good to have around, but I would see no benefit in bringing over manufacturing like textiles or cell phone assembly sweatshops. Those can stay in China no problem.
Protectionism is good only for what you need protectionism.
> The US is also helping Russia in its efforts right now, it's important to underline this.
1. That's definitely false.
2. China supplies intelligence to Russia and also equipment directly or indirectly.
3. The US continues to provide intelligence and directly military support to Ukraine.
> People are generally polite. I know people from the US, from very liberal to very MAGA. I try to be pleasant to them. And I don't fault them for their government, even the ones that obviously voted for the current president.
Right - but that's not because people are seething with anger at the United States (aside from Canada which is deserved), it's because life goes on.
> When I speak about generational damage to relationships, I am talking at the diplomacy level. Building a web of great allies was something that the US could do after the two world wars because the opportunity was there and they seized it. I think it will be very hard, on a diplomatic level, to repair that. This ship has already sailed.
You're over-reacting. We dropped nuclear bombs on Japan and we're best buddies now. It's certainly a temporary setback, however. There's a lot of political grandstanding but that's just for placating domestic audiences. EU and US are the same there, as is China and Russia. Talk big and all that.
> Have been for a while. I don't see that as a huge problem. As I said, Europe consumers have a lot less appetite for consumption than the US ones.
Great, this seems like a win. European customers will buy more of the Chinese products (China needs to sell them somewhere to make up for losses in US sales so that'll be going to your markets), and the US will just suffer without the imports and everyone wins and America loses. That sounds just fine to me. We can be less consumerist oriented and the EU and China can increase their consumerism. Well, unless you're suggesting the EU won't buy more Chinese made things, in which case who will buy the Chinese products?
As I said before, you very much downplay the sort of damage the US is causing to its relationship with former allies. For example, you seem to forget the very real threats of US annexing Greenland, which is part of Denmark. Such an act of war would force every EU nation to go in its defense, even non-NATO ones. This is far beyond political grandstanding.
As for the rest, I think you very much downplay the gravity of going in a trade war with the whole world at once can do to the US economy, while you massively amp up the damage simple trade between China and EU can do to EU.
This conversation quickly got nowhere anyway, and I already said everything I wanted to. Time will tell who is right. Feel free to have the last word, and have a pleasant evening.
> As I said before, you very much downplay the sort of damage the US is causing to its relationship with former allies.
No, no I'm really not. It's more so that you are overstating the damage. All of a sudden we are "former allies" now? That's nonsense.
> For example, you seem to forget the very real threats of US annexing Greenland, which is part of Denmark. Such an act of war would force every EU nation to go in its defense, even non-NATO ones.
There's 0 chance the European Union would go to war with the United States over this. Not that I condone it, but it just won't happen. The EU can't fight Russia (why are 500 million Europeans asking 330 million Americans to defend them from 180 million Russians?) let alone the United States.
> As for the rest, I think you very much downplay the gravity of going in a trade war with the whole world at once can do to the US economy, while you massively amp up the damage simple trade between China and EU can do to EU.
Well we're not really in a "trade war with the whole world" - many tariffs haven't been implemented, some are already being suspended, exceptions are carved out, etc. I don't agree with the way we're going about things, but I think you're overstating things again. The EU isn't going to absorb the former US - China trade. That's simple a fact of reality.
I'm sad you feel the conversation got nowhere, but I suppose that happens when two people just see the world fundamentally differently. I have no interest in getting in the last word, I simply am interested in discussing and debating things and so I usually reply. I sincerely hope you have a good evening as well.
> No, no I'm really not. It's more so that you are overstating the damage. All of a sudden we are "former allies" now? That's nonsense.
It’s your president and VP saying it (and a lot of their acolytes). What do you call an "ally" who threatens to invade you? And don’t say it’s not serious. The bullshit trade wars was also something that was not serious and that he would not do, until he actually did it. A tip we learnt the hard way and that may be useful: when a wannabe dictator tells you what he wants to do, believe him.
> Depends on the specific trade issue. There's a limit to what can be ironed out, and the large bulk of the problem is that both the EU and China are rather protectionist even compared to the United States and so for either to iron out these trade issues they'll have to both open their markets.
It’s not a hypothetical. The EU in general is a trade partner of China. Both have a long history of trading with ups and downs, tensions and détentes. History is full of proofs that these issues can, in fact, be ironed out. We’ve been there before.
Similarly, there were a lot of trade skirmishes between the US and the EU (and various member-states before the EU was a thing). Again, nothing you cannot solve with diplomacy, negotiations and horse trading. What you are saying is fanciful.
> Also China is happily helping Russia fight a war in Europe so I wouldn't be so quick to assume the EU only has a trade issue with China - that's rather naive.
So is the US. I don’t think you get the full picture. As a citizen of one of your oldest ally, I have to tell you: the US are not the good guys in this. Trump is demonstrating every day that we cannot trust the US long term anymore, and that you could turn hostile very quickly. It pains me, but it is true. So you can talk all day about this and think that you are reasonable, but in fact it is completely unserious. Or indeed naïve.
> I was just in France for two weeks, nobody I spoke to in my broken French really gives a shit outside of "man that guys sucks right?"
The US have an advantage because regardless of the disagreements with France (and there were many), ultimately either side could rely on the other in the long run. Again, look at recent history. French people were at the "your countrymen are fine but your government sucks" with Russia about 10 years ago, they always have been mostly Russophile. Now, the vast majority of the population would tell you that Russians are murderous war criminals and brainwashed sycophants. What changed was that Putin got aggressive and it turned out that actually a lot of Russians supported him.
The parallel with the US right now is clear. Trump is agressive and you collectively support him. He won the election fair and square, including the popular vote.
So, give it time. 4 years of this and there will be much less sympathy for normal American people in Europe.
> For some reason people think that political grandstanding and harsh rhetoric is only an American phenomenon and that European leaders don't do the same.
Again, you don’t understand. The issue is war at our doorstep and a hostile neighbour that thinks its sphere of influence includes half the continent. It is not grandstanding, it’s about our future. Look at what most European governments are doing and you will see that they are dead serious.
> Sure ok - feel free to buy all the Chinese products that are made and shipped to your country from China. Best of luck! Let us know how that turns out for you.
You don’t have a commercial problem with China. Nothing existential, anyway. China did not prevent you from reaching a peak in manufacturing what, 2 years ago? It does not prevent you from having an overwhelming military, or a disproportionate amount of soft power. It does not prevent you from flooding the world with your services.
The trade deficit is a red herring. You do have a strategic problem with China, because they want to kick you out of their backyard, and they want their turn at being the bully in chief. We are not in the same situation.
> Again, nothing you cannot solve with diplomacy, negotiations and horse trading. What you are saying is fanciful.
Why is it that the EU and China can have a long history of trade and détente, but the United States can't or doesn't? Remind me which country brought China into the WTO? Which country negotiated opening of Chinese markets to the world? Which country provided direct military support to China against the Japanese? Your premise is faulty. The United States has a long history with China and can engage in the same diplomacy and negotiation that the EU or its member states can. We also have agency, less you forget.
And why are you suggesting that the United States cannot also solve issues with diplomacy? Certainly in my view the Trump administration is doing a bad job at it today, but so what? Things change. Maybe we have tried diplomacy and been undercut along the way? You are being overly reactionary to words and statements and espousing an ideal that this is somehow "it" or the end of everything. I mean look at where you are already - you're literally arguing that the United States is helping Russia fight a war in Europe...
Last I checked the US has and continues to provide tens of billions of dollars in direct military equipment and financial support to Ukraine, and has continued to do so since the start of the war.
Trump running his mouth hasn't changed that, and I'm not sure if you're just spouting misinformation or generally misinformed, but China isn't providing that support to Ukraine, and it is providing support, albeit covertly, to Russia. How in the world do you equivocate the actions of China and the United States here?
It's unfortunate to read comments suggesting that I "don't understand" when you're borderline parroting Russian misinformation and suggesting the US is helping Russia.
> We are not in the same situation.
Then why the complaints? The EU can increase their trade and imports with China of very valuable technology at cheaper prices and the United States as we would like can reduce that trade. Everyone is happy.
What "the same problem" EU sees? Because one huge problem EU has is America being literally hostile nation, aligning itself with Russia and capitulating to it. Oh, and threatening annexation of parts of EU.
And and hostile tariffs from USA on flimsy excuses.
I believe we were talking about trade and tariffs, so the same problem that the EU would see in this context is that Chinese manufacturing is generally better and cheaper than what western nations currently do, so the EU will have to maintain current protectionist policies or enact further trade restrictions with China or risk losing jobs to cheaper and better products from China. Germany is going to protect its auto industry, for example.
Europe specialises in high-value manufacturing - aerospace, precision tools and machinery, some pharma. China has been trying to enter those markets, but not with great success.
China is much better at components, consumer items, and mid-weight machinery.
The EU also sells a lot of food, including staples like pasta, and also niche/prestige branded foods, some with localised brand name protection. (Like balsamic vinegar from Modena.)
They're not really competing markets. The auto industry is one of the few sectors with direct competition, and the EU is working on setting minimum prices instead of tariffs.
Not great success yet. But sure, hopefully the EU and China can work out a great trade deal that works for them since they're not as you say competing markets, and everyone but America wins. That sounds great to me.
The same Americans who voted in Trump and gave Republicans in Congress a majority because of inflation? How long do you suppose it will take to build all the industries in the US to replace Chinese goods, and who is going to be performing the cheap labor making those goods after deportations kick into high gear?
America has survived stagflation before in the 70s, but there was a large political fallout.
You are making a lot of bold claims without much to back it up. As someone who reads a lot about the topic, I would characterize your assessment as far removed from mainstream opinion and rosier than the rosiest professional assessments that don't come from an acolyte of Donald Trump. In other words, a fairy tale.
If you have a specific comment or point to make I'd love to talk about it. Most mainstream opinions aren't very valuable, though certainly there are some that are better than others.
When so much is thrown at the wall at once it makes it onerous and boring to respond to every slapdash point. If they had stumbled on a truly valuable and novel perspective that convincingly goes against all prevailing knowledge, I can only imagine they would have presented it with significantly more evidence than they did in that screed. Otherwise, mildly-educated people like me discard it immediately as empty rhetoric or maybe just propaganda. Aka trolling.
I think that's rather unfair, and if you don't want to participate in a conversation you can just ignore the comment instead of accusing others of trolling. I'm not trolling, I like to discuss and debate these topics on the Internet, and if there are facts or concepts that you think should require a source in civil conversation you can ask for those. This is also a new paradigm shift in America and so most of the mainstream opinion articles you read don't have much more information than anyone else, and funny that you mention propaganda because that's exactly what you're going to find hidden away in those mainstream opinions.
If you go against established facts you have a greater burden to prove your views aren't bullshit. Yet people coming from perspectives that just happen to line up with the teachings of Donald Trump always seem to provide less information. Do you not notice this trend? If you want to convince people try being convincing.
What specific information are you asking me to provide and for what specific claims? Happy to do my best, but all you are doing is ranting about my post and that's neither interesting nor productive.
Additionally, China is much better prepared for a trade war in that it has a populace that has been very well conditioned to go through hardship for longer term wins. The US does not, and there will be massive revolt for small hardship, or even the perception of hardship. This is largely why Harris lost: she was blamed for the inflation under Biden, even though the US did far better than the rest of the world economically for the period 2021-2024.
The prior trade war with China was short and inconsequential, Trump could buy off the farmers who were really hurt by it with less than a dollar sum of 10-11 digits. That won't be possible with the trade war that's currently planned, and the effects will be large enough to cause large inflation, while simultaneously providing zero methods for investors to safely build US-based production capacity.
The US has benefitted for a couple generations by being the reserve currency, meaning that we can make big mistakes and not suffer for them, while any other country would suffer. This coming trade war, if it actually happens, may finally break this exceptional status.