Trade War with China: Why Not?

[Superman]

I posted this question a while ago. In fact, I have discussed it with folks verbally and, like electric power deregulation, I have yet to hear an explanation that makes sense. Here's my theory:

China is engaging in unfair commerce practices, from environmental irresponsibility to Yen value manipulation to marketing dangerous products. Et cetera. We, America, are the world's most robust consumer market. Plus.....we owe China money (according to what I hear).

I say we place MASSIVE tariffs on products made in China. This would give American manufacturers a shot in the arm, complete with peripheral economic benefits of that. Our trade imbalance would be reduced. In other words, we would be keeping more dollars here in America instead of sending substantial net dollars overseas. And quite frankly, Americans would be buying less Chinese crap-quality products which, in the long run, is more expensive than buying reasonable quality tools and such. And we would be placing American consumers, including children, at less risk. We need an economic boost right now but instead, we are continuing to be the world's most ridiculous consumer sales playground for China and everybody else with corresponding trade deficit that hurts our future.

Chinese are holding our debt. BFD. Tell them they can come get it if they can get past our defenses. Yeah, that's hardball. What game do you think they are playing?

[speeder]

They would probably nuke us. "No more Mr. Nice Guy".

[Rick Lee]

Supe, I assume you mean yuan or RMB, not yen. And surely you know that WTO members cannot slap tariffs on each other. If China is breaking trade laws, I don't think our doing the same to get even with the guys who fund our gov't. debt is going to fly. The short version is that we're not in a financial position to be bossing our masters around.

[krystar]

even if we did put massive tariff's on, it would not help us in the short term.

what it will do is create sudden price hike in "everyday" goods that walmart, target's, costco's of the corporate world will see coming and accordingly change their suppliers' costs and (equally or exponetinetially) pass the costs down to the common individual. thereby u get a massive outcry of "we can't afford plates and napkins anymore" from majority of the population.

[red-beard]

Originally Posted by Rick Lee

Supe, I assume you mean yuan or RMB, not yen. And surely you know that WTO members cannot slap tariffs on each other. If China is breaking trade laws, I don't think our doing the same to get even with the guys who fund our gov't. debt is going to fly. The short version is that we're not in a financial position to be bossing our masters around.

I wouldn't call them "our masters". They are redeeming thier T-Bills and bonds as they come due and are not buying more. This is why Bernake has been buying them through banks with money loaned yb the fed.

[Evans, Marv]

They've probably already placed sypware, malware, bots, etc. into our financial systems, infrastructure systems, defense systems, etc., ect., and will shut the whole country down holding us hostage until we open up to their way of doing business again.

[Vintage Racer]

Originally Posted by Superman

I say we place MASSIVE tariffs on products made in China.

Yea, the last time we placed massive tariffs on products (Tariff Act of 1930, or the Smoot–Hawley Tariff); we entered The Great Depression.

The WSJ had an opinion piece today about using Congress to manipulate trade and currency:

Mr. Boehner was left to fill the Presidential vacuum, saying that "It's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency." He added that "This is well beyond what Congress ought to be doing,"

Review & Outlook: Washington's Free Trade Adult - WSJ.com

[Porsche-O-Phile]

I knew Smoot Hawley would come into this. The world has changed. We import FAR more from China than they import from us. Also, the stuff China imports from us is far more necessary than what we import from them (food, mostly). This was not the case in the 1930s with Britain and other European countries targeted as part of S-H. It was much more of a tit-for-tat policy then with both sides having a lot of exposure to necessity (food) exports.

It is likely that as a result of imposing huge tariffs on Chinese produced goods that (yes) it would piss them off and (yes) it would result in a dramatic decline in the flow of Chinese stuff to our shores. Prices would go through the roof in the short term (spike) then gradually decline a bit over several months as U.S. manufacturing ramped up.

Pros: help the long-term problems (too much consumption of too much crap, too much focus on price point only consumerism, etc.), encourage domestic production, etc.

Cons: torpedo the very fragile U.S. economy. This is a bad time to be doing it (but is it going to be better anytime soon?)

As an initial reaction I have to say I'm all for it. It's something that would hurt China a hell of a lot more than it would hurt us, although I'm a little reluctant because it WILL hurt us at a very, very vulnerable time. However, things might very well only get worse here at home, meaning the best time to act is now.

For one I'd love to see the USA tell the WTO to go F itself with a chainsaw and see us start doing what's in OUR interests, rather than what's in the interest of every other puppet government and banana republic around the globe. The Chinese have been playing us for idiots and I'd have no problem with us deciding to take the gloves off and show them that we won't be knocked off our perch as the world's superpower so willingly. Far better to go down fighting than willingly surrender... And there's a chance we might not lose that fight as well.

The side benefits of a resurgence of American manufacturing and (hopefully) a return of people to trades (which I'm sure is not overlooked by the O.P. and his well-known affiliations) isn't necessarily a bad thing either. I find it laughable that every "C" student in America thinks they can - and that it's best for them to - go waltz through a college education and be entitled to a six-figure job spitting out TPS reports or doing "solutions consulting" or other meaningless crap (poorly at that) rather than pursuing a rewarding career as a tradesperson, helping shore up our manufacturing base and contributing something meaningful to society.

Of course you'd get pushback from the multi-billion dollar college student loan industry and the associated univesity machinery connected to it whose job it is to simply spit out degrees in exchange for lots of big checks, but it's time we dismissed the notion of a 100% (or nearly 100%) "service economy" as being even remotely sustainable too.

[lane912]

Originally Posted by Porsche-O-Phile

I find it laughable that every "C" student in America thinks they can - and that it's best for them to - go waltz through a college education and be entitled to a six-figure job spitting out TPS reports or doing "solutions consulting" or other meaningless crap (poorly at that) rather than pursuing a rewarding career as a tradesperson, helping shore up our manufacturing base and contributing something meaningful to society.
.

one of my top 5 reasons that America is in the state it is in presently. i work with a young man that epitomizes this statement, even admits it himself but does not find fault in it. in fact he thinks he is better than us older folks because of it-

[RWebb]

I am certain that the Financial Engineers on Wall St. will fix everything

[lane912]

Originally Posted by RWebb

Financial Engineers on Wall St.

this is new? we could add it to the list.....
AEROSPACE ENGINEERING-
AGRICULTURAL ENGINEERING-
ARCHITECTURAL ENGINEERING-
BIO/BIOMEDICAL ENGINEERING-
CHEMICAL ENGINEERING-
CIVIL ENGINEERING-
COMPUTER/SOFTWARE ENGINEERING-
ELECTRICAL ENGINEERING-
ENVIRONMENTAL ENGINEERING-
INDUSTRIAL ENGINEERING-
MANUFACTURING ENGINEERING-
MECHANICAL ENGINEERING-
METALLURGY AND MATERIALS ENGINEERING-
MINERAL AND MINING ENGINEERING-
NUCLEAR ENGINEERING-
OCEAN ENGINEERING-
TRANSPORTATION ENGINEERING-

[tc-sacto]

Absolutely,
We need to institute wage and environmental parity tariffs that level the playing field between production in China/India and ours. You cannot have "free trade" with a nation that does not have reasonable environmental and per-capita GDP parity with your nation. It's not possible. You will get exploited in any such arrangement, irrespective of how you claim you're going to avoid it. There is only one way to prevent this outcome, and that is to institute wage and environmental parity tariffs that level the playing field between production in that nation and ours.

US bond sales don't fund Government spending,(a major misunderstanding by most people) so the fact that China happens to own US treasuries is irrelevant. Even if they did try and dump the bonds they currently own they would only be hurting themselves.

Lastly, by doing this coupled with drastically lowering the Corp tax rate we would certainly attract manufacturing jobs back to the US. This is the solution to our high unemployment problem.

[BRPORSCHE]

Originally Posted by lane912

this is new? we could add it to the list.....
AEROSPACE ENGINEERING-
AGRICULTURAL ENGINEERING-
ARCHITECTURAL ENGINEERING-
BIO/BIOMEDICAL ENGINEERING-
CHEMICAL ENGINEERING-
CIVIL ENGINEERING-
COMPUTER/SOFTWARE ENGINEERING-
ELECTRICAL ENGINEERING-
ENVIRONMENTAL ENGINEERING-
INDUSTRIAL ENGINEERING-
MANUFACTURING ENGINEERING-
MECHANICAL ENGINEERING-
METALLURGY AND MATERIALS ENGINEERING-
MINERAL AND MINING ENGINEERING-
NUCLEAR ENGINEERING-
OCEAN ENGINEERING-
TRANSPORTATION ENGINEERING-

ya missed a big one. Starts with a P and pretty common around these parts.

[jyl]

I guess we should put tariffs on every country not at a wage and environmental parity with ours? India, Mexico, Brazil, Vietnam, Indonesia, Egypt, Russia, basically everyone not in the G10? Presumably they would do the same with us. So you now have big tariffs on, oh, 1/3 of world trade.

US manufacturers then pay much higher prices for the materials and components they import from China and all the other "low-cost" countries. Far higher than paid by, say, German companies or Japanese companies or UK companies. So now US goods are uncompetitive versus those G10 countries. Our balance of trade with China improves, but our balance of trade with the rest of the G10 falls apart.

Maybe we put tariffs on the G10 countries too? So now there are big tariffs on 2/3 of world trade?

The Great Depression and the events leading up to it should show you why that is a very bad thing.

[JJ 911SC]

No Balls...

They hold your debts

If you guys want to hurt them where it counts, STOP buying stuff me in China...

[Vintage Racer]

Originally Posted by Porsche-O-Phile

IOf course you'd get pushback from the multi-billion dollar college student loan industry and the associated univesity machinery connected to it whose job it is to simply spit out degrees in exchange for lots of big checks, but it's time we dismissed the notion of a 100% (or nearly 100%) "service economy" as being even remotely sustainable too.

No one cares about the student loan problem.

They borrowed money, and they must pay it back. It's just a failure on the debtor to find a good job. Only a "loser" argues this point.

BTW, it's called a university? What is an "univesity machinery"?

[Porsche-O-Phile]

The problem is we've created a society where it's expected that every entry-level schlub doing mindless work is expected to have a degree (and tens of thousands of dollars in debt to prove it!)

Sorry for the hijack but this is a subject that deserves its own thread (or two).

We have many, many young folks today with degrees, yet are unable to write, communicate effectively, critically think or demonstrate functional expertise in their supposed areas of study. All a degree proves today is that you wrote enough checks and that presumably you know how to sit down, shut up and regurgitate bullet points on demand - in far too many cases.

I'll start another thread on this subject... Again, sorry for the hijack.

[tc-sacto]

Originally Posted by jyl

I guess we should put tariffs on every country not at a wage and environmental parity with ours? India, Mexico, Brazil, Vietnam, Indonesia, Egypt, Russia, basically everyone not in the G10? Presumably they would do the same with us. So you now have big tariffs on, oh, 1/3 of world trade.

US manufacturers then pay much higher prices for the materials and components they import from China and all the other "low-cost" countries. Far higher than paid by, say, German companies or Japanese companies or UK companies. So now US goods are uncompetitive versus those G10 countries. Our balance of trade with China improves, but our balance of trade with the rest of the G10 falls apart.

Maybe we put tariffs on the G10 countries too? So now there are big tariffs on 2/3 of world trade?

The Great Depression and the events leading up to it should show you why that is a very bad thing.

Since we now have a massive consumption engine in the US. I'm not sure the same issues from Smoot- Hawley, as mentioned a few post above, would occur in the 21st. Cent.

How wouold you suggest we combat slave wages, and a manufacturing without any concer n whatsoever for the environment. I'm no tree-hugger, but there must be some balance. No?

[Rick Lee]

Originally Posted by tc-sacto

How wouold you suggest we combat slave wages,

They're not slave wages in those countries. In fact, when you take the whole cost of living in those countries into consideration, they're usually plenty more than our own menial jobs pay. No one ever mentions this, but the $150 a month factory wage in China includes all meals and a place to live and those folks still manage to send a good portion of their income back to their home village.

The way you compete with them is in areas where they're not as competitive. You could take the entire population of the US out of China and not make a dent in their labor pool. Since we're always preaching to other countries to be capitalist and free market, why do we have a problem with other countries paying market prices for labor? Meanwhile, our gov't. controls the price of labor. Such hypocrisy.

[RWebb]

Originally Posted by Porsche-O-Phile

The problem is we've created a society where it's expected that every entry-level schlub doing mindless work is expected to have a degree (and tens of thousands of dollars in debt to prove it!)

Sorry for the hijack but this is a subject that deserves its own thread (or two).

We have many, many young folks today with degrees, yet are unable to write, communicate effectively, critically think or demonstrate functional expertise in their supposed areas of study. All a degree proves today is that you wrote enough checks and that presumably you know how to sit down, shut up and regurgitate bullet points on demand - in far too many cases.

I'll start another thread on this subject... Again, sorry for the hijack.

interested to see that & how you evaluated their skills