The China-U.S. trade war thread.

a reply to: nwtrucker

Correct, the company that originally sponsors it has to navigate the process and pay for it. Typically, a company only counts on having someone for 1-2 years. After that they usually go elsewhere... the turn over isn't quite as high as say, McDonalds but there's an industry expectation that people will switch jobs every 1-2 years. Usually, what the H1B's do, is come over working for a large company, and then leave to work in a startup hoping to hit the equity lottery, where they can then leave once the startup IPO's, and they can sell their stock, then take the pile of cash and move back to a country where the money goes much further.

As I said though, the whole industry is dysfunctional. No one knows how to hire, no one knows how to pick which technologies they need, and the industry does a horrible job at developing talent. That's why it has this weird dichotomy where juniors will get 1 response for a first stage interview for every 100 resumes sent out, but there literally aren't enough midlevel and senior people to fill even half of the available jobs. Universities, boot camps, companies, hr departments, prospective employees, and more... they're all contributing to this really uncertain hiring/retention practice in their own ways, because nothing is standardized. And don't even get me started on the people who offer BS like a 5% equity stake in exchange for building and implementing their big app idea for no pay.

originally posted by: sunShines
China do steal American plane exports, even if it's drones. They are copycats and they use cheap price to undercut competition. Also, diplomatically they are more liked by 3rd world countries because they don't bomb other countries.

So are you saying 3rd world countries don't bomb other countries now.
Says India-Pakistani war. Look at African countries 3rd world invading other 3rd world(Blood diamond).

Georgia attacking Russia in 2008 war.
China is not a third world country anymore. It is beyond first world.

Trump should check with lawyers who know WTO rules before looking silly if the WTO rules against the US. Hopefully he is getting the homework done. Markets could use a break and rally before doing any more tariffs. I'm not president nor do I tweet.

O.O

China just announced even more tariffs, this time on 106 American products including soy. Apparently these tariffs will only come into effect if trump follows through on his next wave of tariffs.

China has decided to impose tariffs on 106 items originating in the United States, the Ministry of Commerce announced.

The government has chosen to add a tariff of 25 percent to 106 goods originating in the United States across 14 categories, such as soybeans, automobiles and chemicals.

The implementation date will be subject to the US government’s imposition of tariffs on China’s goods, to be announced separately.

China announces new reciprocal tariffs on 106 US products

Here's a 2nd article from the same website.

China on Wednesday unveiled a list of products worth $50 billion imported from the United States that will be subject to higher tariffs, including soybeans, automobiles, and chemical products.

The Customs Tariff Commission of the State Council has decided to impose additional tariffs of 25 percent on 106 items of products under 14 categories, the Ministry of Finance (MOF) said in a statement on its website.

The move was taken after the US administration announced a proposed list of products subject to additional tariffs, which covers Chinese exports worth $50 with a suggested tariff rate of 25 percent.

China imposes additional tariffs on US products worth $50b

ETA: To put this into perspective, China is by far the largest importer of US soy, buying roughly 10 times as much as our 2nd largest importer (Mexico). Here's a link to get the point across.

a reply to: enlightenedservant

OK, using soy as an example, where will China get the soy from to replace the U.S. imports? It may or may not be available from other nations. If it is, then there will be a drop is those nations sales elsewhere that the U.S. can replace.

If not, then there becomes a scarcity of soy in China which drives their prices up creating inflation in China. Multiply those numbers with the other products China has listed and now there's the potential for damaging inflation inside China as well.

The question I have, and so far hasn't come up, is not 'who has the advantage or who 'wins', it's what do the corporations do?? They're the ones that profited by using China as a manufacturing base. They're the ones that have invested a fortune putting plants in China fully expecting windfall returns from those investments.

Who will they...or some...side with? China or the U.S.? For example, Ford stated they were an 'International Corporation', not an American corporation. Others likely feel similarly. Which ones? Which ones stay 'loyal'? Will those choices stay 'prudent' and base them on pure financial interests? How many are locked into the globalist vision and are willing to take a short term hit, financially, in the interests of long term gains? Does XI make offers to these Corporations that induce Chinese loyalty rather than the U.S..

That's an area of question and 'could' turn the results in a direction unforeseen by either nation.

I have no idea. Thoughts?

Companies will move manufacturing to wherever they think they'll be able to best take advantage of the market. FoMoCo does well over half it's sales in the US. If the US places tariffs on auto imports from Mexico/China, then Ford is more likely to make them somewhere else. The more fhr margin decreases, the more likely there is to be a US plant.

For soy farmers, tariffs will suck. We are the world's largest producer of soy, and China is the biggest importer. So they have to buy beans that would have been bound somewhere else. But for every soy bean China buys that was bound to Japan, there is a shortfall in Japan's supply. It will take time to readjust, but I don't think you'll see a massive change in worldwide production, and as the lead producer, we set the market. You can't expand soy production instantly, so there will be shortfalls in the short-term to take advantage of. Long-term, we might shift away from soy.

originally posted by: RadioRobert
Companies will move manufacturing to wherever they think they'll be able to best take advantage of the market. FoMoCo does well over half it's sales in the US. If the US places tariffs on auto imports from Mexico/China, then Ford is more likely to make them somewhere else. The more fhr margin decreases, the more likely there is to be a US plant.

For soy farmers, tariffs will suck. We are the world's largest producer of soy, and China is the biggest importer. So they have to buy beans that would have been bound somewhere else. But for every soy bean China buys that was bound to Japan, there is a shortfall in Japan's supply. It will take time to readjust, but I don't think you'll see a massive change in worldwide production, and as the lead producer, we set the market. You can't expand soy production instantly, so there will be shortfalls in the short-term to take advantage of. Long-term, we might shift away from soy.

There was a time when we paid farmers to NOT grow wheat. Is that an option with soy?

Why not just subsidize the one-time switch to a different crop if the tariffs end up changing the markets? Or buy excess at a minimum price point to ensure they don't lose their shirts? I bet if people got tofu instead of a debit card for food assistance, we'd see less dependence! haha

Just saw the Chinese tariffed whiskey.

There may very well be a violent uprising and overthrow in China now.

originally posted by: AugustusMasonicus

Just saw the Chinese tariffed whiskey.

There may very well be a violent uprising and overthrow in China now.

They will just have to drink more real whisky instead.

originally posted by: ScepticScot
They will just have to drink more real whisky instead.

Then cannot get enough bourbon, trust me. China is like a drinking problem that has a country.

originally posted by: AugustusMasonicus

originally posted by: ScepticScot
They will just have to drink more real whisky instead.

Then cannot get enough bourbon, trust me. China is like a drinking problem that has a country.

Bourbon, I suppose the Chinese need something to clean their toilets.

originally posted by: ScepticScot
Bourbon, I suppose the Chinese need something to clean their toilets.

Meh. I guess this is one of those 'our stuff is better' moments. I don't discriminate, I like it all.

originally posted by: AugustusMasonicus

originally posted by: ScepticScot
Bourbon, I suppose the Chinese need something to clean their toilets.

Meh. I guess this is one of those 'our stuff is better' moments. I don't discriminate, I like it all.

With that view you are as well mainlining de-icer.

Which I suppose is similar to drinking bourbon now I think about it.

originally posted by: ScepticScot
With that view you are as well mainlining de-icer.

Which I suppose is similar to drinking bourbon now I think about it.

Don't leave out Stern-O and Pruno.

a reply to: nwtrucker

1. It's tariffs, not outright rejection of the products. So they can still buy those goods from us, there's just a potential 25% additional fee/tariff added on top. By making our products more expensive in China, they are giving a competitive advantage to any other soy producer, including their own say producers.

2. There's no guarantee that an increase in a country's sales in one region equals a drop in sales in another region. Brazil produces roughly 80% of the same amount of soy that we do and places like Argentina specialize in it (producing about half of what we do). So if these tariffs last long enough, I'd just expect the other soy exporting countries to ramp up production of their soy production to meet the new demand.

The question I have, and so far hasn't come up, is not 'who has the advantage or who 'wins', it's what do the corporations do?? They're the ones that profited by using China as a manufacturing base. They're the ones that have invested a fortune putting plants in China fully expecting windfall returns from those investments.

Exactly why I started my last post with O.O lol. This is one of the questions that everyone should be paying attention to. I have no clue how this is going to go down, but since the US started this tariff riff, we'd likely lose any international arbitration cases.

Who will they...or some...side with? China or the U.S.? For example, Ford stated they were an 'International Corporation', not an American corporation. Others likely feel similarly. Which ones? Which ones stay 'loyal'? Will those choices stay 'prudent' and base them on pure financial interests? How many are locked into the globalist vision and are willing to take a short term hit, financially, in the interests of long term gains? Does XI make offers to these Corporations that induce Chinese loyalty rather than the U.S..

It's way too late to be asking about "loyalty". Multinational conglomerates aren't loyal to any specific country, much less to any specific politician. Many aren't even based in a "real" country, instead registering their headquarters in whatever small tax shelter gives them the best tax benefits without actually having to put their headquarters or operations there. For example, the little 102 square mile Cayman Islands has a tiny population of 60,000, but had more than 100,000 companies registered there in 2016 (here's a good article explaining it). National loyalty died a long time ago in the business world.

It also helps to note that many business people & politicians have been against the idea of these tariffs, against scrapping NAFTA, etc. China, Canada, and Mexico are our 3 biggest trade partners by far, meaning they both buy more American goods and sell us more goods than any other countries in the world. So these anti-trade policies literally involve us starting new conflicts with our biggest customers. Why would you expect a company to be loyal to politicians who ignore their warnings and then deliberately mess with their bottom lines?

ETA: As a side note, a lot of unions support tariffs because it makes foreign produced goods more expensive and less appealing to local customers (so that local union produced goods are more appealing to local customers). But tariffs are an area where I disagree with those unions because I like buying whatever products I want, regardless of where they're made. Sometimes the locally produced goods are better but sometimes they're not.

I also disagree with them on tariffs because of the concept of "reciprocity", which states that one country will respond in kind to gestures of good will or ill will. So if we place tariffs on their goods, they place equal tariffs on ours. For example, the last I'd heard, Brazil had both raised the visa fees for Americans (U.S.) and started subjecting American (U.S.) travelers to TSA-styled security checks as a policy of reciprocity for our visa fees and TSA security checks (I haven't kept up with the issue so they may not be doing it anymore).

a reply to: enlightenedservant

Good. I get it.

My only 'wait a minute' is your last comment re; the big trading partners and businessmen. Assuming those other trading partners are benefiting from those agreements, including those same businessmen who are, as you say, not suffering from 'loyalty', then why should more consideration be given them when none have our national interests in mind? besides, negotiaions are ongoing re NAFTA and improvements are likely with both. China on the other hand seems less benign, to say the least.

These moves, any moves for that matter, will step on toes no matter what. The Chinese have just come out with the comment that it's a lose-lose. I see that as worst case scenario and far better than 'win' for China and 'lose' for the U.S.. It also a sign of weakness, IMO.

Now that I think of it, if other nations increase production to take advantage of tariffs on U.S. production, the supply and demand kicks in in the U.S. with the increased soy supply, at least initially, which is deflationary. Add in other potential products and is it possible the inflation side is somewhat offset?

a reply to: nwtrucker

If you come down to it, we could kill the global at market. We could flood the market with subsidized soy and push the price point so low that competitors in Brazil and Argentina can't stay open. We can afford that; noone else can.
That's basically what China has been doing with subsidized industry for some time.

ES:

I also disagree with them on tariffs because of the concept of "reciprocity", 

But this is, ironically, exactly what we're seeing. The US is finally using it's leverage and being reciprocal instead of bending over while everyone else places massive tariffs on US products for their markets. The goal should be fair trade! We don't have it. We're being taken advantage of, and you can see that in our crumbling industrial base. China has had a free ride protecting its favourite (state-sponsored) industries, and denying access to their market through protectionist policies. They cannot win a trade war. They need our market. We already have slim enough access to theirs. We'd love free access to their markets, and they deny it through protectionist policies/tariffs. They love the imbalance because it means billions in hard currency flooding into China's coffers, keeping their economy afloat. Now that the US is finally saying, we'll use our leverage to find a fair deal and open your markets to reciprocal free trade, they have to hope we fold to their bluff. They can't cause enough pain to win a war with tariffs.

US trades to China account for less than a percent of our GDP.
China trades to US account for 4-5% depending on whose numbers you use.

That means a 25% tariff on everything from China will have more effect on China than China placing 100% tariffs on US goods will have on the US.

See why they're reacting? They need the status quo too much to just knuckle under first-- and if they can't have it, they need the best deal possible. That's why they're throwing their weight around -- because the US has always bowed to corporate pressure and Chinese threats to keep the trade lines open every time before this. We've never called the bluff.

a reply to: RadioRobert

Bravo.