Quote:
Originally Posted by jyl
Some are saying that because Chinese imports of US goods is much smaller than US imports of Chinese goods, in a simple tit-for-tat tariff war China will run out of bullets first.
That is misguided.
1. Much of the goods that the US imports from China are consumer goods. Large increases in the prices of these will cause enough pain to US voters to force politicians to change course.
2. Chinese consumers are a lot angrier at the US than US consumers are at China. And the former are not voters.
3. US companies are very exposed to China as a key part of their supply chain for goods sold globally, while Chinese companies are not similarly exposed to the US. Think consumer electronics goods assembly. Most semiconductors are packaged in China. Appliances. Etc.
4. US companies have major investments in Chinese subsidiaries and joint ventures that manufacture in China goods for the Chinese domestic market. The US automakers, for example.
5. A devaluation of the Chinese currency can be used to partially offset tariff impacts.
6. MOST IMPORTANT - if tariffs rise to anywhere near to where China is starting to run out of bullets, the US economy will have long since fallen into a recession.
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And what happens if we do nothing?
Owned by China?
There is a big push-back against our consumer society from young people, they may actually vote for measures that would cause U.S. citizens to value goods instead of one use throw away like we do today.
Young people want to see re-use, recycling. The higher prices on cheaply made consumer goods may be something that is considered good.
Look at some of the threads here about how young people aren't buying things these days. There may be less pushback to raised prices than you think.
Now those disposed to complain because of who is president will complain no matter what happens.
How do you think what you outline in your post affects the long term treasury bond yield vs the short term treasure bond yield?
I see the need for a long term recession so we can get our stuff together and be more responsible, responsible and boom times rarely go together.