All this actually started with a good point.
The Chinese were stealing intellectual property.
It wasn't supposed to go this far.
Everyone get up on Patent Law.
Farmers of either country were not supposed to be hit.
Aluminum and steel makers were not supposed to be hit.
But here we are.
1
The only silver lining I see is that when Trump crashes everything our nation might be in a more receptive state to consider policies that work for the majority of Americans, not just corporations and rich people. Disaster has a way of opening one's mind when nothing else works.
38
Excellent. Proof that the policy of untethering from China is working as planned.
2
Meanwhile, our oceans are dying.
4
"GoPro, the camera maker, said this month that it was shifting some production from China to Mexico. Universal Electronics, a manufacturer of remote controls, announced a similar move late last year. " Sounds like countries not called America are the true beneficiaries of Mr. Trump's trade wars.
5
So much for being competitive in the future. Eventually, the fact that the Chinese are the largest market in the world with one of the fastest growing economies will remind everyone why we were trading with them. The best answer remained TPP. I don't hear folks talking about that anymore.
4
Like so many of this administrations policies, the trade policies are also intended only to cause harm. Although Chinese companies may be hurt, the production will still remain outside of the U.S. This does nothing to help Americans, unless you get off on hurting other people. Maybe a far higher proportion of people than ever imagined are sadists, and they are in charge now.
2
Trump's actions show a lack of leadership and zero understanding of trade. The reason Nixon approached China was twofold. One, better relations through a shot of Capitalism DNA would help China emerge from the cold war. The second was to develop a mutually beneficial trading relationship. China opens its doors to the West's products and technologies as the west moves onto developing and producing ever more sophisticated technologies. China takes over manufacturing less sophisticated products. Unfortunately, China was granted a most favored trade status in the WTO. The West never developed a monitoring system to see if China was breaking the rules and eventually China flooded the world markets with their cheap, government supported manufacturing. The USA and it's allies should have put their foot down immediately and didn't. Now we have to confront China's economic and military aggressiveness. Trump's trade policy will prove to be a disaster for the USA and our allies. We need a coalition of Western countries to help China understand that it must adapt and follow the WTO rules and it needs to understand that it's military aggressiveness will hurt its ability to trade through newly negotiated treaties. We certainly don't wish to fall into the Thucydides trap with China. It's of paramount importance that the US lead a coalition of Western countries in future negotiations.
4
As the US becomes a less reliable trading partner, a lot of companies around the world will be "designing America out". This is not going to end well.
5
One of the few things the Trump administration has gotten right, in my opinion, is his effort to move China from its central place in the global economy. Their disrespect for human rights, intellectual property, and anything outside their own borders makes them the most undesirable of partners, and it is clear by now that all attempts to behave like responsible citizens of the world has failed. That said, while a trade policy focused on isolating China might have been a good idea, Trump's policies, including arbitrary tariffs against other countries, have alienated virtually every country who could have been a natural ally in this fight. The most damaging of these decisions was his withdrawal from the TPP, which could have provided Trump's China tariffs with a global force multiplier. Giving America's treaty partners the chance to come down on one side or the other of this trade war would have been uncomfortable, but probably successful in the long run. Trump could have made this a battle of the world against China. Instead, he is turning it into the U.S. against the world.
This could have looked like a savvy move by the President. Instead, it appears to be more proof that even a stopped clock is right twice a day.
7
As an American living in Europe, the most striking thing about China (and Africa) here is how much more media attention they're given. I could watch a TV documentary every night about either country, and they're incredible, vibrant, dynamic societies that are going to shape the 21st century. It's lunacy to think Trump is going to put a dent in China's growth. Their market is 4 times the size of the US! Only the magic of national currencies allows the dollar to maintain a hegemonic status over other national currencies. When that gives, the US will just look like a backwater with nukes.
3
This article points out what I believe is the goal of these arbitrary tariffs.
By forcing US manufacturers to lose confidence in the viability of the Global Supply chain, we will become more isolated in a small period of time and the Nationalists will be able to make even stronger inroads.
In the short term, manufacturing jobs will increase, wages will remain stagnant, inflation will rise, and cries to make America pure again will increase exponentially.
When the Fed cannot lower interest rates below zero, how do we avoid rampant inflation as costs of goods rise?
1
The economy, mired in debt, is not strong.
1
Does anyone really believe that Malaysia’s (or any other SE Asia country’s) sudden ability to provide product is not simply China using some trick of corporate chicanery to hide a subsidiary there to serve as a conduit for home factories? They can’t even keep track of aluminum sourcing.
2
@Chuckles
I am sure the experts who dreamed up the "double Irish with a Dutch sandwich" - a combination of Irish and Dutch subsidiary companies so US multinationals could avoid tax - would be keen to help out.
Or it could be as simple as exporting finished goods and empty packaging to be "assembled" and labelled where ever is convenient. Imagine trying to quantify Chinese input in every item imported,
2
Trade wars are easy to win.
Australian farmers are winning as they take over the Chinese market. Vietnamese factories are winning as the US moves away from cheaper Chinese suppliers. Airbus is going to see Boeing frozen out of the world's market. As American companies struggle to replace their supply chain with alternative suppliers, foreign suppliers forge ahead. The whole world is winning - except for China and the US.
Trump's tariffs on allies have evaporated any support he may have made on this fight. Nothing better than watching two bullies slug it out and Trumps recent move on Mexico underlines how unscrupulous and bullying the US can be on trade agreements.
Bring on the popcorn.
4
Two things are happening in this trade war:
Trump will prove that trade wars are not easy to win but easy to lose.
And, as retaliation against US trade politics, or more aptly named trade blackmailing, will rise, there will be a new label introduced for a lot of goods made in the US:
Made with pride in the USA but also sold only in the US.
4
This will inevitably lead to an inflationary cycle which will fall heavily on Trump’s cult members.
4
The key takeaway from the article is that Chinese tariffs must remain for, what, a minimum of 3-5 years, perhaps forever, to convince businesses to source away from China. America can win a tariff fight with China because exports to China are much lower, and narrowly focused, than imports.
In order for manufacturers to return to America, tariffs would be required pretty much everywhere on Earth where labour costs are significantly lower....
But.... But of course American exports would then be targeted by other nations.
The truth is that with American unemployment less than five percent, America doesn't have enough workers to increase domestic manufacturing.
5
Corporate America is only concerned about one thing, the bottomline! They get a massive cut in their taxes with the "Great Corporate Tax Gift Act". So what do they do, buy back stock, buyout other companies. and fill stockholders pockets with the extra money. Did they pass on any reduction in costs on to the consumer? A big fat NO.
Now they have the tariffs to deal with. So what do they do? One, search for other low cost foreign manufacturers as a substitute for Chinese labor so they can keep their obscene margins at a high level. Two, just pass on the costs and let the consumers pay for the tariffs.
In the end, all tariffs will do is cause a minor inconvenience for corporations and hurt the consumer and small businesses.
3
I don't understand why people are so determined to ensure we trade with China. They are a terrible trade partner. Human rights abuses are endless.(e.g. Muslim treatment, free speech suppression, etc.) They have zero respect for intellectual property. They have zero respect for ethical standards.(Gene editing) They are destroying the environment.(Coal generated electricity) They are a bully. Even if the jobs don't come back to America, moving a job from China to Ghana or Peru is a huge victory.
53
They have zero respect for ethical standards? Zero respect for the environment? Seeking coal fired solutions? Acting as a bully!
Friendly to literally murderous dictators and authoritarian regimes.
You've described perfectly the New United States and its president.
50
@Tom - missed the point entirely. American's want cheap products. Cheap products require cheap labor. Cheap labor comes with costs to people and environments. Shifting our production from China to another cheap labor country like Ghana or Peru changes nothing except geography. It certainly doesn't help our economy or the relocation of business to the US.
21
@Tom, I can't tell if this comment is sincere. All the reasons you list for why Americans shouldn't want to do business with China, are the reasons American corporations like doing business with China: exploitation, no environmental standards, etc.
21
Oh, and can someone please characterize the extent to which our pharmaceutical manufacturing currently depends on China?
4
I am sure there was similar enthusiasm for protectionism in the 1930s. We know now how that harmed the world economy.
The main harms of protectionism are in two areas. One is the general level of uncertainty that reduces investment. The other is that when you close a factory in one place and you then build a similar factory in another place you are doing capital destruction. And while some people may consider that justified from the national perspective it certainly isn't from the global perspective.
Of course a government has a role in national competitiveness. But a wise government chooses gradual means that avoid capital destruction and uncertainty.
1
Regardless of the international tariffs imposed by the unchecked Orange Narcissist-in-Chief, I'm imposing my own internal boycott on all products, services and tourism in the New Dark Ages states: AL, MS, MO, GA, SD, NC (did I leave any out?).
9
@JCX This just in: Louisiana.
How competitive will America be in 15 years? More.
3
"GoPro, the camera maker, said this month that it was shifting some production from China to Mexico."
Not sure how that's going to work out...
5
If the result of tariffs is reshuffle in the global supply chain in ways that we buy from everyone, not just China; if it helps American businesses find new solutions to manufacturing problems (robots, automation), then these are good things. People yelling against tariffs do not seem to have any solutions to China's dominance (and their current stash of over 1 trillion US bonds, a similar amount in cash).
6
A better solution would have been the TPP, gaining trade partnerships in Asia to counterbalance China. Instead, this president unilaterally (as is his style) imposed tariffs, claiming a ‘national emergency, and that ‘a deal would be done soon’. Some months later, no deal has been done, and China will see the US as unreliable.
2
Sure enough shifting supply chains away from China could become a work in progress (how long it can take, impossible to determine) but the sheer amount and size of the Chinese factories plus the impressive number of skilful staff available would anyway be hard to do without. Other countries will unmistakably profit. And China too may become more independent with a rapid growing internal market for everything available. China today has a high middle class the size of the entire U.S. population. And they know how to buy. Electronic payment is bread and butter everywhere. They have Amazon very active but also Baidu. This Chinese internal market for the moment was in favor of such an important American company as GM (salvaged by Obama in the critical 2009); in conflict don't count on it, Chinese will easily discard GM in favor of Mercedes, BMW or Peugeot from Europe. The same can happen with pork or soy beans. Forget Boeing... Airbus or self aviation industry will take the place. People around the world are scratching their heads, insanity in the open.
1
THis is Chapter 2 of President Trump's drive to get every American more choices of where to work. Not even the Republicans saw this success coming.
China uses unfair practices in trade. Nobody's disputes this.
The Obama strategy to face this threat was to form an alliance (TPP) and the EU. It was a slow and boring approach but it is the only way to nail down millions of complex issues.
Trump's strategy is to fight a trade war with China one to one. At the same time, he has opened trade battles on multiple fronts, including friendly nations. Trade wars makes him look like a bold and decisive leader. The problem is that has a short attention span, no interest in details, a very weak team, and national security advisors who are very interested in started a war or two.
Guess which strategy would China find easier to fight , Trump's or Obama's?
Trump's great skill lies in creating the illusion that he is doing something that is benefiting the nation even though the facts show that farmers, industry and consumers in the US are likely to be worse off due to his poorly planned trade wars. He is a very, very effective demagogue!
15
Anyone who thinks this is about economics and trade is jumping up the wrong tree. Who are 45's closest advisors? Bolton, Pence, Mulvaney, Pompeo, Navarro, most of the Dept of commerce members like Wilber Ross, and many of the military. chiefs. All neocons who want to impose their views on other countries. They want China to change its system to meet our values.
I have no love for China's treatment of its people and for its policies in defense and trade, but I know a pig in a poke and this is one.
13
Biggest winners: Vietnam, Mexico and other low cost manufacturing countries.
Other winners: Japan, Europe and other high cost nations that can buy tariff free from China.
Biggest loser: China as manufacturing goes offshore.
Other losers: US manufacturers as they must compete with foreign manufacturers who can use tariff free Chinese components and sub assemblies. US consumers who pay higher prices for both Chinese goods and from protected domestic manufacturers.
9
I don't understand why these manufacturers are making all these hard-to-reverse changes. "Trade wars are easy to win." I have that on the highest authority - from a man who knows more than anyone about everything, ever. "Believe me."
Trump, having inherited a strongly, smoothly growing economy, seems determined to scuttle it... and if he keeps his bumbling, protectionist, market-interventionist policies, he -will- succeed. I only hope that, along with all the tens of millions who will lose their retirements, foreclose on their homes, and destroy their lives; I only hope that Trump loses just as much. He deserves no less, and has earned nothing, not even 'no more' than the worst that happens to anyone because of his inept, uneducated, and foolish economic policies.
12
I can’t help but believe, we are heading for another 2008, where another Republican administration has crashed the economy, leaving the Democrats to clean it up, and then being accused of causing it. I support the idea that China is long over due, to be confronted regarding their unfair trade practices, and theft of US intellectual property, but Trump’s approach is reckless, and lacks direction. Trump has demonstrated he has no clue how trade works, claiming the tariffs are being paid by China, while Americans shoulder the burden of these additional costs, with no end in sight. Then, to add salt to the wound, he has opened trade wars with Canada and Mexico.
Trump is life long crook, and has a long history of cons. He has done nothing for the working class, no matter how much his supporters want to believe this con. The US needs real leadership now, from someone who honestly cares for the working class, and is capable of dealing with the tremendous challenges the country faces, from climate change to our massive failing infrastructure. Trump is unqualified and incapable. Trump cares only for Trump.
16
Trump's tariff's on Chinese imports are doing exactly what Russian wants:
1. Disrupt decades of US foreign policy,
2. Weaken the U.S. Dollar as a reserve currency, and
3. Eventually collapse the U.S. petrodollar.
The U.S. Dollar's decline had begun since late 2016. Prior to that, it had recovered somewhat.
It couldn't be more obvious. The blatant gutting of the U.S. State Department, placement of the most unqualified people into positions of power, verbal attacks against our long time allies, tariffs when the economy is just starting to recover.
If you wanted to disrupt U.S. economic and political influence across the world, this is how you would do it.
What is so bizarre are how many Americans want tariffs to happen. I can't imagine Americans want the USA to relinquish their economic and political power, of that so many Americans want America's reputation to drastically decline.
Some people wanting tariffs are...eh...not the smartest bunch of folks. See Exhibit "A" our president. So it seems that Individual #1 was preferable to them than a competent woman with a little baggage and 30 years of constant character assassination.
Well, we are getting what they wanted. Next time, vote BLUE.
8
What will it take for people to face the obvious fact that Trump is a Manchuria Candidate elected by Putin to wreck America every way he can, starting with its alliances, then our economy, finally, for dessert, bankrupting us with war with Iran, if Americans have’t had enough Trump wreckage in 2020,
7
Xi Jinping is an experienced politician and government leader.
The first Chinese leader since Mao Zedong whose thoughts are deemed worthy of study by members of the Chinese Communist Party. And the first Chinese leader since Deng Xiaoping to be designated a core leader. By dismantling the term limited collective leadership model of Mr. Deng Mr. Xi is seeking the Mandate of Heaven of a Chinese emperor.
Donald Trump inherited 295 streams of income from his daddy while playing a businessman on reality TV and failing in every business he developed on his own. Trump has no political nor government experience. Trump is not very bright nor wise nor smart nor mature nor moral nor temperate nor secure.
13
If the tariffs brought jobs back to the USA, they might be a good way to bring the trade between the USA and China into better equilibrium. However, I suspect that that will not happen and that manufacturers will find new suppliers in the rest of SE Asia or Eastern Europe. What we do know though, for sure, is that the cost of protective tariffs will be passed along to consumers. The economic history of the USA between the end of the Civil War and Woodrow Wilson's administration is proof of that. Of course during that period our manufacturing industries grew, but there is no certainty that that will happen now as we have access to the world. A much better way to correct trade imbalances is through long, slow, patient treaty negotiations as changes there will not jolt the world economy and are much less likely to produce a sudden disruption in the global economy. Of course that course does not produce dramatic TV coverage for this reality TV president. The Republican Party will rue the day that its leaders supported Trump for several years while he wrecked the economy.
4
Trump is right on China. They are very sneaky, patient, and they do not follow the trade agreements they sign. They cheat. Hope the manufacturing goes to the other Asian countries so that there would be a balance as the other countries start trading with US.
Never trust China, always verify.
16
@mike Just because USA manufacturing didn't do due diligence when shifting their businesses to China, doesn't mean that China cheated. Money talks. China is a reliable trading partner of Australia and New Zealand.
13
The American clients always say we are one team on the boat of the global supply chain. We are assigned with different tasks: some people are manufacturing, some are exporting, some are importing, and some are selling and marketing. NO one is free. Everyone has a job to do. No one takes advantage of another. It is only a different task we are assigned to. No complaint. Keep working.
2
Trump’s trade war is going to stall the economy - we are already seeing signs of the looming slowdown.
These tariffs amount to little more than a new tax on Americans. Trump already raised taxes on the middle class to pay for tax cuts to his Billionaire donors. We don’t need another one of his tax hikes. Prices of goods have gone up faster than the economy has grown, and these tariffs will exacerbate this problem
12
To attribute Chinese growth over last four decades to stealing foreign technologies is overstated if not misleading. I was working in a steel mill which was "copied" from a Japan model plant by Japanese company. The chinese steel mill paid 2/3 of its capital ($2.8 b US$) to Japanese company to get plant built, including all payment to patented technologies and "know-hows"(trade secrets), between 1978-1985 (Chinese patent law was implemented in 1985). Also, the Chinese company had a legal team dedicated to check all the patented technologies claims to reverse possible overpayment for expired patents.
By that time, foreign companies were all clever enough to protect their IP assets by either shielding their key technology at homeland or over-charging their Chinese clients/partners for any possible technology transferring regarding Chinese's overall attitude towards IP protection. Bottonline, it is impossible to "steal/copy" an industry from foreign companies without paying high price giving the nature of how complicated a modern manufacture would be.
3
@Steve
Overstated by how much?
It is extremely believable when take into account that 80% of Chinese clinical trials have been fabricated - and this was admitted by the Chinese government themselves. https://www.sciencealert.com/80-of-the-data-in-chinese-clinical-trial-is-fabricated
It becomes even more believable when you read about fraudulent accounting practices. According to a study in 2010, well over 25% of Chinese companies listed on the Chinese stock exchanges openly admitted to fraudulent accounting practices between 1999-2005.https://www.sciencedirect.com/science/article/pii/S1755309111000268. Such problems are still very prevalent today, and technically worse as fraudulent financial statements are used to get listings on American stock exchanges.
2
trumps New Mexico tariff will simply result in many imported products becoming more expensive to US consumers. There is no easy way to replace the huge amount if imports from Mexico anytime soon. And Mexicans have no reason to eat the tariff themselves. trump apparently has no idea how his tariffs work. Enjoy your new higher prices.
2
If you followed Trump in his speeches you would know he touted this change in US Policy if Elected.
The Board Members and CEO's should have been listening. I guess they thought Trump was blowing smoke like his predecessors.
Companies finally got the message, they are leaving China for some other Asian Country or are returning. I think they are a day late and a dollar short. The US Politicians who championed China entering the WTO have egg on their face today, they were totally wrong. They gave Power, Money and what the Chinese didn't get handed to them, they Spied and Stole the rest! Now the Chinese Dragon is saying we are going to completely displace the U.S. in the future one way or the other.
I lived there, they have to do all they said. If they don't do it, they lose face and no Asian will allow that to happen.
3
As an ignorant citizen, I guess we just can’t pay anything since everything has a tariff associated with the price.
Years ago companies shipped jobs overseas because American CEO’s wanted to destroy the middle class by shipping all the jobs overseas. Why pay Americans fair salaries, benefits,pension plans etc.for American citizens.
So now we are watching our life style rapidly disappear , gov’t shutdown during the holidays people living on the streets Facebook streaming murders and a president who is nothing more than a Russian con man who hates all that is good about America.
Mexico will be a happy bystander watching Trumps emotional break from reality.
4
Because these are the people who voted for Trump, my sympathy has died.
4
too many harmful disruptions from this trade war with China
to our own businesses
1
The beauty parit is, half the wacko pro-Trump responses are straight out of Sax Rohmer novels.
Amazing.
1
Looks like the intended consequences are in action. China is NOT the powerhouse it thought, NOT quite impervious to the US.
Looks like China loses and Mexico is winning it......
Love it.
1
350 billion in US Dollars going to China and the export of millions of American jobs that is the problem that the president is addressing the president and working America will soon have another Victory and even more economic benefits
2
Unplanned moves by Trump are having unexpected results. That is to be expected with efforts undertaken without a lot of thought and contingency planning.
It would help if the words used to describe the situation were not designed to infuriate. China has sought to gain knowledge by every means possible. Industrial espionage, cyber intrusions, offering businesses a share of their market in return for trade secrets and knowledge about how they make things. Some is cheating but a huge proportion I’d just businesses deciding that they are willing to pay a dear price to make lots of money with China. Now it may be that these businesses just will not be able to do business in China. China will have the knowledge to go on without them.
1
Fund US infrastructures with the new tariffs paid by China, perfect.
Tariffs are ultimately paid by the consumer
8
The American consumer pays the Tariffs/Taxes , not China. So many do not unserstand this.
Trump wants to offset the tax cuts he dished out without much thought.
1
Japan & South Korea have been very successful at industrial policy. They also have huge bureaucracies to manage it. We exercise industrial policy in only two sectors: Agriculture and Defense - and they are two of the largest bureaucracies that we have. Agriculture policy attempts to square a circle - it has to provide farmers with a decent income while delivering an abundance at low prices. It isn’t easy. It’s complicate.
I don’t necessarily disagree with the idea of having industrial policy - I just have a problem with someone who is so stupid that they don’t know how to operate an umbrella (couldn’t close it before getting on Airforce One - and - didn’t attend a summit with other world leaders in France because it was raining and he’d have to operate an umbrella) implementing industrial policy by shooting from the hip. That’s a recipe for disaster.
We might not be able to make all that we consume but we should retain some capacity in everything in case we are forced into a situation in which we do.
4
Well, the great irony in all of this is that we outsourced to China in large part because they have so few environmental regulations.
That's a big reason why they are cheaper - it's not just the lower labor rates. Rare earths, which are a fundamental component of many tech devices, predominantly come from China not because they are only found in China, they are actually not rare at all, but the process to create them is a big polluter, so we shut our mines, and let China do the smelting. So Default Don's tariffs will serve to drive up domestic costs and pollution, while allowing European tech suppliers a golden opportunity, all while the US Gov is subsidizing farm production in the MidWest, since China is no longer buying, which is tat-amount to a huge entitlement program. As usual, Trumplestilskin doesn't have a clue about how trade actually works. To boot, if our economy falters, look for him to make any deal with China ASAP. The only thing Trump has going for him is the economy's continued momentum.
4
What I don’t see discussion of is the trans-pacific trade alliance (former TPP) that is moving forward without the U.S. The U.S. will be outside of the alliance organized to counter China’s influence. The U.S. will be denied favorable intra-alliance arrangements. And, subject to whatever trade constraints are placed on nonmember economies. Trump’s go it alone strategy risks “winning the battle, but losing the war.”
10
@Charles Williams It might be a good idea to review who "exactly" is in the TPP. Not a lot of economic heavy weights. Do you really want to open American markets to "international arbitration review" for those limited economic returns. Market protection is most likely a better course of action.
2
Japan, Canada, Mexico, Australia, New Zealand, Singapore are all in the CPTPP...some of our biggest trading partners in the Pacific.
6
@Mary Sampson Canada and Mexico are part of NAFTA. Japan has a separate economic treaty with the US. (Not to mention reliance on the 7th Fleet for protection or its maritime sea lanes.) You want to open up our domestic markets to international arbitration review for Australia (24M population) and New Zealand ( 4m population) Insane! That is like adding the populace of NYC and Detroit. And to give them equal standing in adjudication.
2
"How competitive is America going to be in 10 or 15 years?"
Ah, but where will President Donald J. Trump be then?
3
Trump will not "win" the trade war with China, contrary to his endless assertions. But this is not a binary situation, where the U.S. either wins or loses.
Every reputable economist (NOT Larry Kudlow and NOT Kevin Hassett) has predicted that Trump's trade war folly will shave percentage points off of America's economic growth. So it's not a matter of whether the Americas economy can "withstand" the trade war with China, but how much of a haircut it's going to get (1%, 1.5%, 2% reduction in GDP?), and how -- and how much -- the inevitable rise in prices will impact our consumers.
In any event, some of our businesses can successfully shift away from China in favor of Vietnam, Malaysia, etc., I don't see that as a bad thing. We need to become less dependent on Chinese manufacturing.
I don't see China's economy slowing down much as a consequence of these idiotic trade wars, due to the Chinese government's heavy involvement in that country's economy and banking. Indeed, China has continued to claim that its GDP will be galloping ahead as usual.
Finally, with respect to Huawei, from everything I've read it is does appear to be a significant security risk to the U.S. and we should avoid it like the plague.
4
Gosh, I hate to say it, truly I do: Mr. Trump has to be a Russian agent. His insistent harming of American industry and his repetitively discomfiting of markets of cheap labor, principally China, isn’t in US interests.
Incidentally, today’s tariff threat v Mexico is nowhere legal. Please vote this man out. For all of us.
12
This article only tells one third of the story.
With China's retaliatory tariffs on US goods, China will look to source their materials from other countries. Even if we end our tariffs, China is under no obligation to remove theirs... with different suppliers lined up and the US seen as unstable, there is a chance we've lost our ability to sell in to China for a long time.
The article says that GoPro is relocating their manufacturing to Mexico. But they are already under intense pressure from Chinese action camera competitors. These competitors can sell directly to Europe and the rest of the world with no penalty, but GoPro is going to be saddled with higher costs. These markets make up 55% of GoPro's revenue, growing from 49% in 2017 ... it's going to be even harder for them to compete.
7
Patriotism has a price and demands sacrifices. For strategic US national interests China must not be allowed to flood the US markets with unfair means such as state subsidies, exploited labor, currency manipulation etc. However, are the US citizens willing to substitute cheap Chinese imports or those manufactured elsewhere for US manufactured goods at a higher cost? If not, then a compromise, how so ever disliked in some quarters, is unavoidable.
3
It’s not patriotism. It’s nationalism—a dangerous idea that supports exclusivity and racism, much like what’s going on now. If you see yourself as part of the world’s citizens, you could see that you can NEVER be “self-sufficient” because the world is interconnected. For example, as simple as spices, some sort of which cannot grow naturally in the US, the reason why the Western community sailed away a long time ago. You will always need a resource you cannot find in your own land, and that’s why you need other countries and other people and trades.
2
I'm a manufacturing and logistics director for a large US automotive supplier that has a strong presence in China. I've been leading multiple projects to shift production and sourcing of materials out of China for several months but we've not brought any jobs back to the US. We're sending them to India, Poland, Turkey, Brazil, Vietnam and yes, quite a bit to Mexico. However, for Mexico we protected ourselves for the most part against Trump: we assemble in Mexico products that are made in other fairly low cost countries. It's not as cheap as China, but the freight and costs are still much less than the US.
I've been in global operations for over 20 years. Trump and his supporters are sadly mistaken if they think that they can force jobs back to the US. It's a shell game and those of us who know how to play it will still come out ahead while Trump will further destroy the jobs of many members of his base.
27
We are China's #3 market and our share is shrinking. China's economy is 30% bigger than ours and growing three times faster. China outspends us 3:1 on R&D.
Is this a good posture from which to start a trade war?
8
@Godfree Roberts US R&D: $553B in 2018. China $475B in 2018. And with the trade war, China will have to move financial assets to buttress internal needs. Has to be worrisome for all of the Western Pacific Rim of Asia. The economic paradigm is shifting to other regions.
Your numbers are woefully off.....
To understand why the supply chain can not nilly wily shift around from China to some other low wage country, consider the New NAFTA agreement between the US and Mexico.
"Trump’s trade deal with Mexico gives workers more rights than NAFTA. "
"But there is one striking difference from NAFTA: The new pact includes several labor rules meant to benefit workers on both sides of the border. For example, Mexico has agreed to pass a law giving workers the right to real union representation, and to adopt other labor laws that meet international standards set forth by the United Nations. American auto companies that assemble their cars in Mexico would also need to use more US-made car parts to avoid tariffs, which would help US factory workers. And about 40 percent of those cars would need to be made by workers earning at least $16 an hour — three times more than Mexico’s minimum wage"
https://www.vox.com/2018/8/29/17791430/trump-mexico-trade-deal-nafta-labor
It might be hard to swallow, but Trump is actually doing something for American workers - as well as Mexican ones
1
Think the jobs will be coming back to America in 6 months? in 1 year? in 4 years? How many of these American company can survive before they do? Don't think China will start to sell off their American treasury note and but a block on the 60% of all rare earth elements in all our computers and electronics in that time zone. 'TRADE WAR ARE EASY TO WIN" - trump
2
I laughed at GoPro.
"GoPro, the camera maker, said this month that it was shifting some production from China to Mexico".
Just as Trump implements his new tariffs on all Mexican imports.
These tariffs must be so much fun for American companies! Why not add tariffs on all Canadian imports too, then you'll cover all 3 of your biggest trading partners?
12
Here is the idea for the administration regarding trade deficits: just tell all the countries that we trade with that for every dollar they export to us, they have to import the same dollar value from us. If they don't import the same dollar from us, then their exports will be curtailed down to the same level as they import from us. This will eliminate trade deficits and no tariffs need to be imposed on imported goods.
1
Companies should have long ago recognized political risk and the need for supply chain diversification at the outset instead of becoming dependent on single sourcing from China.
An obvious example was Japan, as an energy importer, diversified its sourcing of energy resources form three or more countries as a matter of explicit public policy.
For U.S. companies, it was a basic failure if elementary risk management.
2
Any company that relies on just one source for a particular part is vulnerable, having multiple suppliers for the same part is always the wisest move, but no one ever accused a bean counter of being wise.
Many are penny wise and dollar stupid.
Redesigning isn't going to do much good as POTUS continues to start/continue tariff wars with other countries... The effects will just become more confused.
What a disaster this is becoming!
2
So it ends with Stacy from HR commenting on this saying her what I would consider to contrived to be a bewildered scared position about the government....yet the company is doing fine , so why end on that note ????, thought the whole article was balanced until then and then at the end with Stacy’s from HR comments about the government just became a judgement piece
Can you afford to wait until 2020?
2
President Trump has perfected the art of "lose-lose" negotiation. Destruction of collective enterprises.
A grotesque, shallow, deteriorating man - consumed by ego and avarice.
God help us all.
6
Robots will replace Chinese labor.
5
Actually, Chinese robots are replacing Chinese labor.
4
I wish someone would explain that tariffs are taxes. Think of it this way: when you purchase something, say shoes, you, the purchaser pays an additional per cent age determined by the state or city or county, etc. TARIFFS are TAXES paid by the IMPORTING company. To cover this cost the price YOU pay when you make a purchase is adjusted up.
Trump would have you believe the exporting country/business pays the tariff and these monies go into the US treasury. Sucker!
5
Please God, I'm tired of winning.
5
"Hey, Larry. Remember how pumped we were to find a new supplier in Mexico when Trump cut us off from China?
Uh, never mind."
2
Note how none of the companies are shifting their manufacturing from China back to the US. NOT ONE SINGLE COMPANY. So how is this helping us? And what’s u; with the $16 billion aid pkg for farmers? Aren’t Republicans opposed to welfare? Oh wait, corporate welfare is 100% A-OK.
How about if we not have a trade war and let the farmers earn a living instead of putting these businesses on corporate welfare? Think about what we could do with infrastructure and healthcare if we spent $16 billion in these areas instead of an aid pkg for farmers. Why are Republicans Ok with this???
13
Let me see if I have this right, our trade deficit with China will go down dramatically but also increase an equivalent amount with other countries (Southeast Asian primarily). Few, if any, jobs will return to the US but all goods, even after the trade war is over, will cost American consumers more. All the while corporate executives will be receiving multi-million or billion dollar compensation and worker's wages will continue to stagnate. Assuming the US continues down this path we are doomed. Thankfully I am old so the worst pain will be for later generations.
20
@Carl Moyer I don't believe you're correct. If Vietnam or Indonesia can produce these goods at the same quality and price as China, why weren't they supplying at least some of them all along? I suspect that the overall cost of imported goods will actually increase, just less of it will be with China.
4
I believe it was because the Southeast Asia was more expensive than China-hence the products will cost more than pre tariffs.
2
Since the Constitution specifically gives Congress the power to levy tariffs why is Congress allowing Trump to seize this power for himself? Taking that power back should be a lot easier than impeachment and it can be done immediately. Congress can get an emergency injunction ordering Trump to immediately cease and desist his usurpation of Congressional power to levy tariffs.
8
I love this trade war. Ultimately the costs and pain will be severe enough for both sides to cry. This may take a few years. Maybe then those that voted for Republicans in 2016 will think about alternatives (and not necessarily Democratic ones).
4
Of course, China has also known that their so-far successful industrial structure doesn't continue forever and this trade war can be a good occasion for them to realize it more seriously: Mr. Trump is not giving them punishment but a great help for their future.
3
@KI More likely, not the case. China has probably over-stepped. Large population (projected consumer base) can only bring so much. China now has the unenviable task of advancement of its development creativity. Hard to accomplish if a majority of your developer and entrepreneur class wish to emigrate. Internal political tension is in China's future.
4
I always believed part of the reason we tiptoed around China's human rights violations and trade espionage was because China holds so much of US public debt. Not only is China going to fill the vacuum of leadership on the world stage left by Trump, they can call in their debt if we make the road too bumpy for them, and eat our lunch, too.
5
They need our markets more than we need their bond holders.
4
People keep saying the world will get along without the US and that is true. Very true.
Heck, in Australia we think -
- so China isn't going to buy as much US wine? Mmm, well China we can sell you wine.
- so China isn't going to sell the US rare earth metals, well in OZ we got those.
But we fear it is only a matter of time before WE, US allies are used as pawns. Because if the US is weak, that day will unfortunately likely come.
8
@EC Australia should be aware the populace of America does understand that China is its major trading partner. Australia is one of the raw material depots for the ascendancy of China. ( The reason you have had 27 years of prosperity, without recession.) All due to he relocation of manufacturing to the Western Pacific Rim.
1
"ControlTek, which makes circuit boards in Vancouver, Wash., has begun shifting supply chains out of China and designing products that don’t require Chinese parts."
This is the best news I've heard in decades!!
10
The best news in decades, seriously?
1
To everybody who changed their supply chain to run through Mexico instead: whoops, looks like you're getting 25% tariffs there as well. Better luck next time folks!
5
Thank you, President Trump! Fair trade or no trade AT ALL! Cheap goods don't enrich our society! Long live the western manufacturing!
8
@Wendel
Fair trade is in the eye of the beholder.
2
And the laborer.
5
@Once From Rome
And the consumer.
3
It’s clear that there are two camps - those that understand the facts and those that believe the spin. Trump’s “ideas” are outdated. Americans wanted cheaper clothing and companies wanted larger profits - everything from clothes to electronics. Even the Trump family brands are Made in China!!! and they tried to sell access to the US in exchange for brand access in China - talk about double-dealing! Canada arrested the Huawei CEO at Trump’s request - and now Canadians face death because of Trumped up charges. Let’s keep Trump’s wheeling dealing in perspective- “full of sound and fury signifying nothing”. Random tweets full of ignorance and bluster.
6
And what did they think would happen?
1
Well written and insightful.
Thank you.
I am a Canadian, I hope and pray we don't follow the USA down the rabbit hole. We are a member of the TPP and Mexico is the largest TPP member with its percentage of the middle class close to that of the USA. It was that long ago we were where Mexico is now and now life in Canada on every measure of quality is on average far better than in the USA.
This is the TPP agreement. This is what life without the USA and its "leadership" looks like. Unless you decide to blow us all up life without the USA holds lots of promise.
I do not hold your President in high regard. He has my sympathy as he is a pitiful creature but it is obvious the USA was not to be trusted. I am thankful to Trump for making us consider contingencies.
https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng
3
@Montreal Moe
Life in Canada is better on every measure of quality? HA!
The cost of living is significantly more expensive and the salaries of even the most educated professionals is significantly lower.
Public funding for post-secondary education has been gutted, so much so that all STEM programs at top schools have a majority of international students - not because they are more qualified than domestic students but because they pay significantly more in tuition.
Public funding for healthcare has also been gutted, with wait times for essential services like cancer treatment and hip replacements being so unacceptable that people are sent to the US.
And yet with all this "prosperity" insolvency rates are skyrocketing, and provinces like Ontario are drowning in debt.
4
@Montreal Moe
You are enjoying those services, and getting half the tuition rate of other Canadians because Quebec enjoys the largest transfer payments of the other provinces.
What I have said is not "garbage information". It is verifiable facts, rooted in Statcan statistics, and even OECD data.
It is rooted in my grocery bill when I see that even "cheap" vegetables like cabbage are over $4 apiece, despite not being grown in Ontario, where I live.
It is rooted in seeing my oncologist and being told that I have to wait 8 months for a colonoscopy - and that too a private clinic where my medical information is sold for profit. This, despite the fact that as a recent cancer survivor, it's statistically very likely (over 50%) that it may have spread elsewhere in my body.
It is rooted in my employer paying me 30% less for the same position I could be doing in NY or CT - with significantly lower cost of living.
Perhaps if you had read them more carefully, you'd know that OECD stats put Canadian childhood poverty at 23% (with Aboriginal communities clocking in at 50%) the highest in the G7 nations.
I don't own a TV because I can't afford cable or a car any more. I don't watch FOX news. I do watch my grocery bills skyrocketing and my health deteriorating while being insulted by the likes of you.
1
@Viv
I am not in Ontario I am in Quebec where we are enjoying a 4.4 billion dollar surplus and an expansion of daycare and health services.
Our problem is a shortage of workers and we do not have a rust belt economy.
Healthcare, education and welfare are Provincial responsibilities and unfortunately yesteryears sterling economies like fossil fuels and automobile manufacture are not the cash cow they once were.
My wife and I both have US Medicare and we are closer to a very good American hospital but we continue to travel further to our Canadian hospital.
Someone is feeding you garbage information we are seeing we're hiring signs close up and the new subdivision around Sherbrooke pop up like mushrooms. We are watching our southern neighbours struggle.
Ontario is drowning not in debt but in stupid and incompetency competing with an economy that has a sixty year head start .
My wife's hip replacements req'd virtually no waiting and my cancer surgery took less than a week from diagnosis to surgery.
We moved here from rural Michigan and if we had stayed we would probably both be of blessed memory.
American healthcare as we have witnessed is as good as any in the world but is no better than we receive here and better than what we saw in Red America.
We trust the statistics of the World Health Organisation and those of the Organization for Economic Co-operation and Development. They do seem to confirm our observations.
Of course they are not as fair and balanced as FOX News.
3
Has anybody visited Vietnam recently and seen brand new factories appearing everywhere? US and European Corporations have been vying the Vietnamese labor market simply on a cost factor. Simply put, Vietnamese labor is considerably cheaper than the Chinese workforce next door. Most global manufacturers have only one obsessive thought in mind . That is maximize profits and minimize labor costs . Since labor costs are cheaper in Vietnam and Trumps has not levied tariffs against the Vietnamese people . Then China’s Pearl River Delta home to a large percentage of China’s manufacturing base could become a concrete desert. As companies move across the border to Vietnam, Cambodia and even Laos . If Americans think large scale manufacturing is moving back to the US . Then there’s a bridge in London called Tower Bridge I would like to sell you.
Vietnam’s rulers who consider themselves communist tend to rule with an iron fist over their subjects. So for human rights activists and other China hating groups . Vietnam could in the future be the target along with China for verbal venom spouting from left and right members of the US political spectrum.
8
Hard to reverse? Nonsense. Manufacturers migrated out of the US. When the financial incentives change then they’ll migrate back into China or wherever it makes sense. If they can be so nimble as to make major supply chain decisions in response to the fickle preferences of our genius president then they can change again when the next disruption inevitably comes along.
13
@Mike Read the piece in its entirety. Those jobs will not materialize due to the cost of operations which also includes labor.
So, dream on.
3
Our manufacturing jobs outsourced to other countries mainly because our income tax code reduced taxes on the rich starting in the 1980s. Company executives could keep more money and rationalize that they were moving jobs out of the country to help stockholders and keep the company competitive. Mainly the motivation was selfish.
15
The jobs-are-never-coming-back crowd (aka free-trade Democrats) will keep hanging on to that hope until the evidence makes it undeniable, like the historically low unemployment and rising wages exploded the trope that all it was just a continuation of the Obama recovery. The article notes that manufacturers are not looking to relocate production back to the U.S. -- yet -- but the fact that they are looking for alternatives to China is first step in that direction, and a phenomenon the forget-America free traders never thought would happen. Trump is exactly the disrupter this country needed.
12
@PL Hogwash. When the disrupter's tariffs begin to bubble to the top and the cost of goods swells in proportion will you still crow about how the disrupter showed those "aka free-trade Democrats"?
5
@PL
Tell that to people who are working 3 jobs to keep themselves barely fed and housed. The idiot 45's policies create McJobs that can't support a single person, let alone a family, and stacks the deck against those people in terms of gaining social mobility.
The idiot 45's tariffs are going to undermine the American economy - even now, stalling and losing ground rather rapidly - and hopefully hurt the people who voted for him to the point they realize that his schtick is nonsense, and that he does not have either their or the nation's best interests at heart.
1
@outlander -- I'm one of those people who couldnt find a job during five years of Obama's recovery, a chronically unemployed older worker, then started getting gigs not long after Trump was elected. Yes, they don't pay as well, they are part-time, and I have three of them, but they *are* employment nevertheless. PS, my taxes were cut in half under Trumps tax reform.
2
Dear Economists - and especially Mary - who thinks that U.S. competitiveness in ten to fifteen years may be affected by today's tariffs: you guys cannot even predict correctly what will happen next quarter. And with conventional economic wisdom proven so wrong so often, one would think a little humility would result.
11
Like the humility displayed by those who assert this will all pan out in America’s favor because Trump is a disruptive stable genius? Right.
1
Welcome to the new Cold War.
Americans always love to see everything as a war. There is something in our culture. We had the original Cold War with the USSR. Then the War on Poverty. The War on Drugs. The War on Terror.
Opening this new Cold War with China is apparently the real goal of the tariffs and trade dispute. It was never about bringing manufacturing jobs back to the U.S.
China is certainly a bad actor in many areas, including human rights, that go beyond IP and trade issues. On the other hand, they are certainly not the expansionist colonialist political threat that the Soviet Union was, nor are they an existential threat to the U.S. via nuclear war. (Rather, they are economic colonialists - most recently via the Belt and Road Initiative - much like we are economic colonialists.)
---
So now that this is all out in the open, let's have a national debate:
1. Do we, as Americans, want to engage in another multi-generational Cold War with China?
2. Or are there other ways to engage with China and contain their worst ambitions that are in opposition to our national interests?
This implicit question will effectively be on the ballot in 2020.
7
@MidtownATL Democracy will prevail. Name one thing you buy from China that was invented in China. Hard to do. Dictatorships do not encourage free thinking, like that required of inventors. And the few free thinkers in China are looking for a way out. China hoped to leapfrog the world with stolen technology, producing knockoff fighter jets, knockoff Boeing aircraft, knockoff computer chips, and just about anything else we've unfortunately taught them or they've stolen. China's finances are not in nearly as good a shape as they would lead you to believe. They need to step down a peg, and start following the rules as admission to the WTO.
7
@Steve
Thanks for your comment. Like you, I very much hope for democracy to prevail.
A couple of thoughts:
1. I do believe that it is inevitable that China becomes the world's largest economy during the 21st century. (In and of itself, that is not entirely a bad thing. But it will amplify their power and sphere of influence.)
2. Sadly, most of human history has been dominated by authoritative governments. The current wave of democracy is somewhat of a recent phenomenon. And it appears to be under threat in many democratic countries today.
3. The Chinese are very different from the Soviet Union, our prior Cold War adversary. The Chinese are not really Communists anymore. They are authoritarian capitalists. They don't have the weakness (of a flawed economic system) that the Soviets had. As such, we cannot bankrupt them, like we bankrupted the Soviets in the 1980s.
---
Personally, I don't think we can "beat" them over the long run. But I also don't see this as a zero-sum game or a winner-take-all scenario. Maybe beating them should not be our objective.
Perhaps, instead of a Cold War, we can come to an understanding with the Chinese where we will compete with them economically across the globe -- as opposed to framing this as an political or military existential fight. And perhaps we can even find areas where can collaborate with them on common interests, that benefit all people across the world.
Or we can just go back to our old ways, and declare a new Cold War.
1
@Steve
They're already IN the WTO.
2
This article was unbalanced. Tariffs are zero sum and it failed to expose US companies that are winning. I’m very fortunate to work for one.
6
@Alex Emerson Why don't you drop the other shoe and illuminate us on your "winning" company? What industry, product, or service? Otherwise, you're just a tease.
China holds the rare earth minerals which is the life blood of these so called microchips. Once a poor China has survived and evolved in centuries. Now, it threatens a toddler USA, economic and geopolitical. Trade war is not a means to an end. Economy requires alliance and cooperation. Business bankrupted Donald typifies a wrecking ball to world economy.
5
The cost of tariffs are ulimately borne by coprorations in the form of lower margins or consumers at the checkout stand.
There is a potential solution. Invest in manufacturing facilities and training in Central America. The benefits could be three-fold: 1) Maintain corporate profit margins 2) Continue consumer access to low cost products 3) Create an economic incentive for Central Americans to stay put.
9
@Jim
But part of solving the issue in Central America will be US arms manufacturers curbing the sale of guns in those countries. The violence, while not unassociated with poverty, is also a product of NRA meddling outside US borders.
We in Australia and NZ just told the NRA they can get out, I hope Central America will also one day have success ousting that evil group.
4
International trade is facing great uncertainty because of Mr. Trump's "America First" policy. It's understandable that these small companies quickly run for cover for survival. For large companies, shifting of supply chains won't be as easy, and they have more capacity in waiting things out. In the long run, globalization is a trend no country can stop. That's a basic rule of economics, as shown in history.
4
People fail to recognize that the new cold war is here. When I was young, you could not sell, buy, or travel to the Soviet Union without approval. The US system went up against that socialist dictatorship and bankrupted them. The same battle has begun with China, and goes far beyond jobs. Its about who will be the dominant world power in 100 years. There will be 2 communication protocols going forward. A Chinese one and an American one, and they will not talk to each other. Other nations will need to pick sides..democracy or dictatorship. Before you respond, think about the system you want to live under. Our democracy is being tested from within right now, and none of us like it.
15
The goal of the trade war is to force China to negotiate on ending forced technology transfer and providing more open markets to American goods. There is generally bi-partisan support for these goals. Based on the comments it appears many readers don't understand this.
Our leverage over China is much greater than their leverage over us as a result of their closed markets. Our exports are only about 1/3 of what we import from them. We are using that leverage to force negotiation and these concessions.
Companies shifting jobs from China to Mexico, Vietnam, etc. just increases our leverage as they suffer the economic pain.
The expansion of American jobs would mainly come from an agreement with China opening up its market to accept more of our imports.
9
We do understand. We just don't think trump is going to win without hurting Americans.
17
What is the point of forcing the “opening up of their market to US companies when, in the process, you alienate all your prospective one billion customers? If the Chinese people decide Americans are bullies, they won’t buy our goods.
Nobody is arguing that China doesn’t need to change its behavior. But just because the US has more leverage and won’t be hurt as badly as China doesn’t mean that a trade war is the best route to force change. It’s a bit like cutting off your nose (long-term sales prospects) to spite your face (show China who’s “stronger”).
1
@Thomas Wolf
What is the best route for change then, Continuing Kissinger's brilliant plan?
People who think this way refuse to accept that you can't play free market economics while your trade partner is an authoritarian mercantilist.
1
China will not give in. We will pay more for less. Period.
8
Not to throw too much of a curveball here, but this is smoke and mirrors. Why is there no talk of China's ownership of US land, its economic interests in US agriculture (ownership of chunks of it, not just that they're not importing it) and its fingers around the throats of every American in Trump country--via Walmart and Dollar General. One cannot have a healthy manufacturing and labor economy AND the cheap prices of WalMart and Dollar General at the same time, but that's what we seem to have lost in this discussion about electronics. So your iPhone or your rare-earth dependent electronics are going to cost more--big deal. The real problem is that people in Trump country aren't going to be able to afford the things they think matter, and they're still going to be working for the Chinese when they buy US commodities grown on land and operated by machines that are tied to China anyways. Globality is here, and it's stupid to divide things without distinguishing how they're connected!
2
America may want to look into these new supplier "sources" . China has invested huge amount of uts wealth around the planet. This so called "sources" may be likely Chinese, Chinese owned or invested where most of the profit goes to the dragon.
2
As many others have mentioned, this won't bring jobs back to the US... but with a 3.6% unemployment rate, we aren't exactly desperate for the work.
I do think this is the right strategic move the for the US. Our strategy to encourage China to liberalize through free trade failed. In fact, under Xi china is becoming more despotic, and has millions of people in concentration camps. Meanwhile, there is rampant technology theft. Huawei stole code from Cisco systems, and then went on to supplant their place in the market.
It's time to rethink what our relationship with China. We can't just keep plodding down this course we decided on 30 years ago that no longer makes sense.
6
Do you really think trump cares about people in concentration camps?
At the run up to WW II, many of our factories that were making domestic goods got converted to making things for war. Let's reverse course, re-tool the factories to make domestic goods, and shift over to a peace economy. A trillion a year for endless war is clearly not sustainable. Think how the rest of the world would cheer, and we would discover that we can make good products here, as opposed to bombs and outmoded tanks.
5
Yeah. We’ll just wave a wand and replace the military-industrial complex and chemical toxins industry with cribs we have to recall, unaffordable motorized wheelchairs for our burgeoning numbers of elderly, and stupefying educational materials for our children, designed, manufactured and sold by Secretary of Education Doofus. What a plan!
@Mercutio
Of course, in order to do this, or anything visionary, we would need someone like FDR at the helm. Such a correction would sure be nice, as opposed to our drift into kleptocracy.
1
Very insightful article, however, a very noticeable flaw. It neglects to bring details of the "trade war" to China, and its people. Keep in mind a small percentage of the population are actual members and affiliated with the Chinese Communist Party. Internal political tensions in China have to be building. And, the assumption that neighbors in the South China Sea will benefit is very presumptive. As likely, is disruption of maritime shipping lanes during this standoff. American manufacturing, in reviewing supply chains, should consider looking closer to North America.
5
Beware, the recession is on the horizon and it is coming. The trade war will hurt us and the US consumer will pay for the tariff's.
4
This is the best effect of the trade war-- ABC: Anywhere But China, when it comes to outsourcing. Diversifying vulnerable supply chains away from China as much as possible is worth a little pain.
13
Economists are horrified that US workers get paid more than their counterparts in countries that have slave labour wages. The old argument that "cheap foreign labour" conveyed an economic advantage was a fallacy has been conveniently discarded. Of course when the US had such a great productivity advantage it offset the wage advantage of poor countries. But reality has a bad habit of interfering with theories and wishes.
Foreign investment with its embedded technology has narrowed the productivity gap and provided cast advantages to countries with low wage labour. Does the economics profession really consider lowering US wages to the level of, say, Mexico or Bangladesh a desirable outcome, even if it is a preferred strategy for US-based multinational corporations.
Let's innovate, invest, repatriate jobs and create new ones. We have helped to raise hundreds of millions of people out of poverty globally. The US has imported products for the benefit of foreign workers and to the detriment of American workers. As well, foreign workers also have been imported creating more job competition for American workers.
Now it is time to improve the lot of American workers.
7
As Oliver Hardy said to Stan Laurel on many an occasion:
"Well, that's another fine mess you've gotten us into"
9
It's just another regressive tax, but on consumption. As others have noted, production will just shift to other cheap labor nations (Vietnam was already getting business, before the tariffs because Chinese labor is getting expensive by 3rd world standards).
For every American job that gets created American consumers collectively will pay millions in tariffs.
When was the last time you saw an American made consumer electronics product.?
China will eat our lunch within a decade. They are a culture that reveres education and achievement, not sports, drugs and beer. There are 1.3 billion of them and 330,000,000 of us.
The world will bifurcate between those in the U.S. orbit and those in the Chinese orbit, with Chinese patent law, internet and operating systems.
5
For too long now, China has been ignoring WTO rules and abusing its welcome in global markets by flooding cheap shoddy goods while destroying manufacturing bases. In addition, it has remained hermetically closed to foreigners, including the US, from whom it has stolen all of it technology. The trouble for the US is that Trump, having alienated, our allies, is going at it alone. If Western Europe were to join this initiative, China would amend its ways faster than you can say Huawei.
15
Don't forget Donnie's greatest skill - claiming bankruptcy. Can anyone honestly think that he won't drag the rest of the country with him? Farmers first. Who's next?
12
It took 30-40 years for manufacturing to leave the US and go abroad. Did anyone think that suddenly it was going to come back overnight? The fact that many US companies are now eliminating Chinese parts from their products is part of the whole point of a trade war in the first place. It’s a good thing. Smart US entrepreneurs will start their own companies to fill the gaps for Chinese manufacturers. We will begin to make the things we used to make. I’ll gladly pay a few cents more for a product made in America. Half the products that come from abroad are cheap in quality anyway. Clothes that fall apart or are terribly sewn. Cheap electronics that burn out in weeks. The problem is that it took way too long for the US to start this trade war. It was bound to happen.
12
Sure supply chains will shift. China is not the only place that can manufacture. I’m sure Vietnam, Thailand, Taiwan, Singapore, etc etc. will be very happy to have the business that China will lose. They have far more to lose than the US.
8
Hard to feel sorry for people that did not want to pay American wages but want to charge American prices. The government and the multinational corporations gave the country away.
12
This is a Trade WAR and like with any war, there are casualties and collateral damages. If this was a conventional War, not only would the economic cost be way higher, there would be destruction and countless of lives lost.
The goal of Mr. Trump trade War is to limit China ascend. Based on this article, we can say Trump is succeeding. Companies are leaving China. If this trend continues, it could create domestic trouble for the CCP.
This Trade War will determine which country and values lead the next century. If losing 2 or 3 points of economic growth is the price to pay, so be it.
Never in history, as an incumbent Superpower gave up it's position without a WAR. Rather a trade war than a conventional War.
China is holding more than a million Muslims in camps. China has taken by force lands that belong to its neighbors. China has done all of that despite not being a Superpower yet. Just imagine for a minute what China would do when it becomes the lone Superpower. Anyone who believes that China would behave differently or better than the US has not been paying attention.
This is a War, and whether we like Mr. Trump or not, we should all stand united behind him against China, the same way, Chinese are standing behind Xi.
7
@Chaks
Wrong.
The goal was to bring jobs back and to lower trade deficit. None of this is happening. Now it is about limiting China ascent? What next? To invade China?
15
No, he’s right: the goals have changed in a classic bait and switch. The admin went from a goal of better trade that helped America to a goal of a trade war that hurt both the US and China but hopefully hurt China more, to stop its rise in the world.
4
@CarolinaJoe
To bring jobs back and lower trade deficit, the solution would be to get out of the WTO, for if not China, there are other low cost countries ready to take over as mentioned in this article.
Nobody is talking about invading China. We are talking about humanity future.
By the way, you wouldn't be able to post here if China had its way.
3
Trump's trade war on China demonstrates that the United States is an unreliable trade partner and a spiteful competitor.
Many other countries will adjust their trade patterns in Hard-to Reverse ways.
Goodbye, Boeing!
8
China can still ship their goods to Mexico without significant tariff ramifications, with goods getting assembled in Mexico and shipped stateside at similar price points as before. Furthermore, the US education system has missed building enough of a skilled-trade labor base to handle any return of the jobs we lost to China.
This is a political shadow game that will cause major supply chain disruptions and unfortunately not yield any significant manufacturing job gains stateside.
That being said, China had to be forced to pump the brakes and play fair. They haven't for decades, aiming for manufacturing and technological world domination. I have spent ample time there to understand that fact clearly.
4
I agree with the sentiments here that (a) suggest no return of jobs or at least no return of the kind of manufacturing base that we once had and that China now has; and (b) reinforce the importance of reworking the inputs/outputs of federal monies.
On this last point, the particulars speak to revenue reform (current tax policy, especially the latest redo, is a total sham) and to spending reform. MIC (military-industrial complex) spending needs dramatic and permanent reform, with resources instead redirected toward the fostering of the industries and skills that can power our economy and re-establish lost livelihoods. Spending reform must also encompass discussion on monies spent by the SSA and CMS. We cannot afford what we do today and into the future. The whole thing needs to be turned on its head
There is an underlying assumption to his trade war that is fallacious and deceptive. It is that if a product isn't made in China the natural alternative is to make it in the US. That's what he's letting his supporters assume and he's getting away with it. Fact is, India, Bangladesh, Vietnam, Indonesia, and Africa are viable options and equally low-cost, or lower. China can absorb some of the losses because their economy is huge and they take a very long view. (Read Kevin Rudd's column in this paper this week.) They know they will remain a very desirable location for manufacturing.
5
True. The deeper underlying assumption is that economics is a zero sum game. It’s not.
@Stevenz
If there were many viable options, companies would have already diversified their supply chains. They know full well that having only one country as your supplier is risky.
At the end of the day, China is run by a totalitarian government that can kick them out at whim no matter what the US President does or says. Anyone who has been to totalitarian countries and runs afoul of their ad hoc laws knows this full well.
5
The tariff negotiating strategy is little other than another form of a Trump wall. After an adjustment period, probably relatively short, it will be circumvented, most likely by creating an intermediary system of supply chains with other countries. It may, actually, be a net benefit to China in that it will serve as a catalyst to shift their own production capacities to lower cost regions like Vietnam. Moreover, the United States will have demonstrated itself to be an unreliable trade partner, and China will strengthen existing relationships with other countries, or establish new trade relationship that make it less dependent on any one player.
Looks to me like the United States has a lot more to lose...
2
If its supply line tries up, GM might move the Buick Envision manufacturing back to the US
I guess this is the stage of winning which comes immediately after being "bored of winning." It is definitely not boring, like the last days of Trump Casinos were not boring.
1
Forty years ago, our manufacturers were changed in irreversible ways, too. We were one of them. Impossible to compete with the wages in China so we started to import and closed our factory. It was heartbreaking to let people go who had worked for three generations of their families - and ours. Government offered some immediate help to the workers, but the towns never came back. Maybe we were wrong forty years ago to change our economy into a dependent one, just like China is now seeing that their one child policy was a huge error. I, for one, am pleased to disentangle our economy from Asia and I'd like to see more of it. I'm very tired of being scared of the dragon.
12
That dynamic cuts both ways. China is now and will forever by soybeans from Brazil, airplanes from Airbus, and the list goes on. This is a lose/lose for America. Trump is not a great deal maker; he's a great mess maker.
12
Most naive to assume that sourcing out to other Asian countries or even Mexico, means taking Chinese profits away. It just means dealing with a via media country instead of directly with China simply increasing costs for no real reason. We have cut our noses to spite China.... ouch indeed.
2
Lowest costs = lowest wages and yet economists and others state they cannot understand why wages are not rising. Nor is inflation. Aggregate demand has just about peaked and not even additional debt can resurrect the mess we have put ourselves in.
3
I find it astonishing that about 40% of Americans believe that China is paying the tariffs, rather than the end consumer. The level of ignorance is remarkable.
16
@Larry 40% are Trump voters, not much of a coincidence.
3
The global Chinese cartel and monopoly of pharmaceuticals prescribed for Americans is a serious health risk. Years ago, Big Pharma moved manufacturing from New Jersey to Beijing. For years China subsidized low prices of active pharmaceutical ingredients (APIs) and drugs, destroying pharmaceutical companies outside of China and eliminating competitive capacity in the U.S., forcing many to China.
China now has a near monopoly on many critical drugs like penicillin and antibiotics that it can stop selling to the U.S. or create a shortage that drives up prices. The only other source is India, which like China, has subpar manufacturing practices.
As of April 2019, there were nearly 100 Chinese companies blacklisted from importing drugs into the U.S. Many products were found dangerous or the manufacturers refused to allow FDA inspectors into their plants.
Source: http://www.fiercepharma.com/. (APIs are Active Pharmaceutical Ingredients).
The FDA has cited China’s Lumis Global Pharmaceuticals in a warning letter for selling APIs it got from a supplier on the FDA import alert list, then falsifying COAs. (A Certificate of Analysis is a document issued by Quality Assurance that confirms that a regulated product meets its product specification. They commonly contain the actual results obtained from testing performed as part of quality control of an individual batch of a product.)
We must bring pharmaceutical and medical device manufacturing back to America.
9
It's easy to say that Trump is a fool. But there is a bigger issue here... Americans wanting cheap stuff without paying dignified wages for the labor involved. Our long term reliance on cheap labor in China Mexico Bangladesh etc has a deep ideological relationship to our slave history. The implications are that we still view millions of people as expendable bodies to be used and discarded when a chapter option becomes available. I actually wonder if the tariffs are good for weaning is off cheap stuff and our subservient exploitation of foreign labor.
4
@Christopher
Stuff isn't really cheap when it doesn't last nearly as long as better quality, more expensive products.
How is it cheap to spend $30 for a pair of shoes that last two years tops, when you can spend $80 for a pair of better quality shoes that last you 5 years or more?
Walmart doesn't just make money because they sell cheap things. They make money because their products fall apart easily, forcing you to buy more.
Where is the Libertarian wing of the Republican Party? Where is their outrage?
Donald Trump is a COMMUNIST.
He favors top-down central control of the economy. He is picking winners and losers. He is subsidizing his chosen protected classes (such as the farmers) with taxpayer money in order to buy their votes. He wants to tell us what we can and cannot buy, and who we can and cannot hire.
There once was a nation that was almost entirely self-sufficient. They manufactured their own goods domestically. The had full employment. They did not depend on foreign nations for trade or immigration. (Sounds a lot like Mr. Trump's vision, right?)
That nation was called . . .
the Soviet Union
How'd that work out for them?
10
So is this good news for Xi? Hard to reverse for who? If Trump does nothing else but break China he will go down as one of the Greatest US Presidents in history. And China will break just a question of how badly.
7
Nope. Not unless Trump can unite all the other nations of the world against Xu/China which, guess what! he can’t.
4
I am tired
of all this Winning
Winning!!
What happened to losing???
1984,.... is coming true
Bad, bad dream
2
This is great news. Good for Trump. Crazy and corrupt, but on this and immigration absolutely correct. The Dems were all virtue signalling on the surface and greed underneath on immigration and trade.
5
(A lot of us left the Democratic Party after witnessing firsthand what the ClintonDNC did in the last election cycle...)
2
Left it and went... where? The pure and virtuous RNC?
Please.
3
Shifting supply chains away from China is a huge win for the US even if those jobs don’t directly come here.
First it spreads the wealth to countries that also need growth.
Second - Whatever you feel about the US holding the mantle of the world’s superpower, it won’t exactly make the world a better place to have that title held by China - an authoritarian dictatorship with an abysmal human rights record and its unscrupulous trading practices. China has harmed poor countries they did business with far more than the US ever did. (See Ecuador)
Third - maybe just maybe, China will change its ways after feeling the pinch.
9
Tariffs on goods made in China and imported into the US may be a blessing in disguise.
It remains to be seen if the tariffs will crate business conditions that may bring back the value chains which were shifted by the US corporations to China. By forcing the US corporations to share their technology and requiring them to have Chinese business partner as a precondition to setting up the manufacturing facilities, China has created the world's most competitive technology ecosystems.
1
Donald Trump: "Winning a trade war will be easy and quick....."
On the contrary----The article says it all:
"Suppliers are sourcing components from Vietnam, Malaysia and other countries where possible..."
"Mr. Isaac said he did not expect to see production shift back to the United States in meaningful volumes, the stated goal of Mr. Trump’s policies. So far, the data backs him up. Imports from China have fallen precipitously since the trade war began, both in electronics goods and over all. But that decline has been offset by increased imports from other countries. The nation’s trade deficit has been largely unchanged."
Question for Trump: If the trade war is not easy or quick, and actually does nothing to return skilled jobs to the US, what does it actually accomplish?
1
@James
What does it accomplish?
At a minimum it keeps the U.S. from funding a geopolitical adversary/rival and enables us to enhance our relationship with a number of other countries.
In addition, a small (10-20%) amount of higher value manufacturing will return to the U.S., even if it's done primarily with automation.
6
@John
So the real purpose of the tariffs and trade war was not to bring manufacturing jobs to the U.S.
Rather, it was to start a new Cold War with China.
Got it. Thanks for clarifying this.
4
You’d prefer to be put under the thumb of a brutal dictatorship?
Got it.
5
I think this sums up Trump's view quite well and I wish more would remember that he could care less about the working classes in this country:
“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we
are. They are different. ”
3
A few decades ago, I was a design engineer at a highly regarded medical electronics company. One Christmas season, the pastor of our church delivered a disturbing sermon focusing on the "death squads" in El Salvador and the apparent indifference of our government to the issue. The next day at work, I was getting some parts for a prototype from our engineering parts area and noticed that the country of origin printed on the bottom of many of the integrated circuits was--you guessed it--El Salvador. Our government's policies were at least ignoring, and more likely enabling, a tyrannical regime so American chip manufacturers could package their chips with the cheapest possible labor.
Now, we have our trade policies being dictated by an ignoramus who knows about as much about such matters as a garden snail does about nuclear physics. Maybe or maybe not he has some awareness that in the past, trade wars have led to wars of another kind, fought with bombs, bullets and blood.
This isn't likely to end well.
15
@Art Marriott
Are you suggesting that the people of El Salvador would be better off if companies didn't produce ICs or other products there?
2
So Trump's brilliant plan is to slap tariffs on Chinese imports so US companies will bring all those manufacturing jobs to the US.
Brilliant-except for the fact that most Americans won't do that type of work-particularly at the labor rate required to make those items affordable to US consumers. Also, the problem that companies are shifting to other low labor rate countries like Vietnam and India. I guess he didn't factor that in to his grand plan.
And how about all the US companies who still manufacture in China and have the factory ship the product directly to their non-US customer-- avoiding these tariffs?
China will retaliate-you can bet on that. No more purchasing US luxury goods, cars and Iphones-that should sting a bit. And just wait till they stop sending their kids to US universities and coming here as tourists.
The "Awesome Dealmaker" in The White House will damage our economy bigly.
6
Human beings are notoriously ill-equipped to do long term planning. Whether this is just part of our biology or not, it is a problem.
Where are leaders who can think beyond the next day or next election cycle, people who understand at least to some degree the short and long term consequences of this or that action? Mr. Trump surrounds himself with people who are just like him, brutal in their efforts to twist every reality to fit their narrow world view. There seems to be no one on his team who understands where regulation might lead to a desired effect or how technology might be leading us toward a path we haven't the skills to negotiate or an imposed tariff can spiral out of control in its consequences.
6
Our trade dispute with China created unintended consequence. China is now moving up its supply chain to a higher level. They now build better and smaller chips than before, reducing their dependence on us. Of course, they still need higher-end chips which they cannot make. Instead of buying from us, they can now buy from S. Korea, Japan, or Taiwan. On the other hand, they moved the low cost productions to peripheral countries such as Vietnam, Malaysia, and Indonesia. In a way, we pushed China to move up. Of course, their labor force suffered a bit due to fewer labor jobs. But so are our consumers that we will face higher costs. In the end, trade war produces no winners.
5
If the tariffs get high enough, will executives decide it makes sense to do more manufacturing in the USA?
@Jean
Yes. But the products will be so expensive that no one will buy them.
3
@Jean
80-90% of the manufacturing will be in low-wage countries (some of that still in China); This is still a geopolitical win for the U.S. by not supporting a rival/adversary and enhancing relations with friendly countries.
10-20% will return to the U.S., though much of that will be automated
1
@John
Thanks for your post. So we are diversifying out of China to other low wage countries that may be friendlier to U.S. interests.
So what was the purpose of Mr. Trump's tariffs against Canada and Mexico? And what is the purpose of Mr. Trump's proposed tariffs against the EU and Japan?
3
Great. Now these jobs will move to Cambodia, Vietnam, Taiwan, and Indonesia, anywhere but the United States.
5
Will anything survive trump's vassal dictatorship?
6
China is hurting. Massively. I have PC boards made there for my business. Not anymore. And my contacts over in China tell me that the trade war is killing their business as more and more companies are moving work elsewhere. The company I dealt with keep sending me more emails every week looking for projects or contracts. Don't kid yourself. Things are going poorly for many right now. I shifted my new PC board production back to Canada.
14
Long live Canada. BPOE. Love Vancouver.
2
@Will
You're just dodging the tariff by getting the Canadians to buy the Chinese parts for you.
1
There needs to be an article written about what Trumps daughters businesses in China are doing and how it affects them. Is it a case of, do as I say not as I do.
Are Trumps family businesses making America great again? What's happening with all his millions or billions he has? Where's his money and what's he doing with it?
Instead of tarrifs Trump could've got the USA manufacturers to bring back their companies by offering incentives for them to start up businesses in the USA or for USA based businesses to expand and employ more people.
Also, he should spend lots of money on a public works development so USA businesses can grow and export. He's gone about this the wrong way around.
10
“The tariffs are different because it’s your own government.”
Of course they didn’t think twice about depriving their fellow Americans of livelihoods when they offshored everything. The article doesn’t come out and say it, but it appears that Trump’s tariffs are actually working, after a fashion.
4
Why aren't American companies setting up manufacturing plants in Central America where there is, obviously, an abundance of available workers? Those countries should love to have factories making bicycles and cell phones, etc. Would help raise their economies, gives some economic opportunity to the poor who are invading our country and would make the Chinese listen to reason.
10
Central America has cheap labor. China has cheaper labor. Companies do what is best for themselves and not was is best for the country or the economy.
3
The textile manufacturers often have their products made in Honduras. Nearly all the socks companies of USA use factories in Honduras.
1
@Robert Bosch
I'm not sure about the comparative wage rates in China vs. Central America. I do know that wages in China have risen and by 2017 were on par with wages in countries like South Africa and Portugal.
https://www.cnbc.com/2017/02/27/chinese-wages-rise-made-in-china-isnt-so-cheap-anymore.html
More importantly, however, it's important to consider the total production cost including productivity, quality costs, and logistical costs. China may be actually advantaged over other low-wage countries in some of these areas and not in others, depending on the type of product.
I work for a growing restaurant group. We have 12 locations and just received all our go aheads to begin franchising and were expecting to be at 50 locations in the next 18 months. With this we started to source a significant amount of our paper and chemical supplies directly about 6 months ago, all from China. Margins are extremely tight in F&B and the move was going to free up lots of capital. The tariffs have thrown this all into flux. Contracts negotiated months ago are going to raise our costs. Expansion is basically on hold because of this. Those extra stores represent 100s of jobs.
Once we do get back going again we are shifting the supply chain to Taiwan. US manufacturing just can't compete in this sector and doesn't. These tariffs are a complete blunder and are only hurting businesses and workers here.
16
Your competitors who wisely believed Trump’s campaign promises would be accomplished and ordered from other countries, will benefit from your greed.
It's not enough for newspapers & cable news to call out the President's lies. The main stream media should be doing it too.
I miss the days when CBS News would have an Opinion set where Edward R. Murrow could call out Joseph McCarthy.
10
@Harold Rosenbaum: The US media is as doped on prescription drug ads as the public is on opiates.
2
Redesigning products to avoid Chinese components? Over 3/4 of all SMD devices are made in China. The rest are made in India or Malaysia.
6
American labor costs too high? The simple solution is to reduce the standard of living for all but the wealthiest Americans to third-world levels. Repeal labor laws like the minimum wage, eliminate the costly Social Security and Medicare programs, and eliminate those pesky burdensome environmental regulations.
Then we'll finally be able to compete with China and Vietnam, and multinational corporations will flock to the US to build factories that take full advantage of our cheap labor and deregulation. As bonus, this will also solve the immigration problem-- nobody other than the wealthy executives of multinational corporations will have any reason to come to the US!
This all seems quite in line with the vision of Libertarian corporate feudalism the Koch Brothers are lavishly paying Republicans to implement in this country. And also in line with what Trump's Cabinet appointees are doing to the agencies they head. All we need to do is re-elect Trump in 2020, and give him a supermajority Republican Congress. America will be Great Again!
43
@Ted: Until recently, Libertarians opposed all international borders.
@Steve Bolger
Absolutely.
And I think they still do.
Would someone tell the president that 'we'll have to wait and see what happens' is not a trade strategy.
15
This will finally push China towards tech independence from the United States. It will be painful but it will also be beneficial to China in the long run.
At some point, European countries will ignore the U.S. embargo and start dealing with Huawei and targeted businesses in China.
That will be a real long term disaster for the U.S.
History shall not forget the Great Depression started with Hoover's protectionism and tariffs.
18
@Avi: And Hoover was way ahead of Trump in logistical expertise.
3
@Avi
"History shall not forget the Great Depression started with Hoover's protectionism and tariffs."
My goodness, this has been disproven by every serious economist, including Dr. Krugman.
https://krugman.blogs.nytimes.com/2016/03/04/the-mitt-hawley-fallacy/
I'm so tired of Mr. Trump and his supporters claiming the Chinese stole OUR intellectual property.
Does this IP belong to the U.S. government? No. It belongs to private companies. These private companies willingly made a business decision to play by the Chinese rules in order to do business there. Perhaps it was a bad decision, but it was theirs to make.
Mr. Trump acts like this is state-owned IP.
- Does he think that this is the Soviet Union?
- Well, maybe he does. With his $28 billion in socialist subsidies, paid by us the taxpayers, to the farmers whose markets he destroyed, in order to buy their votes.
25
@MidtownATL It isn't that simple. Was that technology developed with the help of universities, with government support at some point, NASA, the military? We can have a national discussion about whether CEO's for short term profit selling out America's decades long competitive advantage overnight to China is okay. I think your view will be in the minority
8
@Todd
I work at a major STEM research university.
If we follow your logic, then why should the IP supported in part by public institutions enrich anyone in the private sector -- regardless of whether the manufacturing is performed in the U.S. or abroad?
5
@MidtownATL Public-private partnerships have existed forever. In aerospace, biomedical, etc. They have made our country a leader in many fields. No one questions companies making money off this relationship. It is win-win. But giving out your country's secrets to a rival at best, a future enemy at worst to meet quarterly earning and max out your bonus seems a little treasonous to me. At the very least it is a farmer eating his seed corn.
3
As long as other countries can pay pennies per hour for their workers the USA doesn't have a chance at competing. We will never get back the huge manufacturing labor force we once had. What made America great in the past was our superior productivity of our labor force. Today, we still have examples of incredible productivity in manufacturing, it is just being pushed by technology (ie line robots) rather than human labor.
3
@Progers9
You should read some stories about how manufacturing is done in Shenzhen. Here in the USA, we must order our electronic parts by mail and it takes days or weeks to get an order filled. In Shenzhen, the factory is a few blocks away, and you can get your parts delivered in hours. There is no way that we can compete with this, not with robots or technology.
2
I can never understand why people who export agricultural goods vote for conservative parties such as Trumps party, as they usually cut back on infrastructure spending that would improve transportation of their goods plus most conservative governments of the right wing usually cut back on biosecurity and that puts agriculture at risk.
Farmers need to realise that liberal governments are your friend and government paying out taxes to improve infrastructure and BIOSECURITY are ensuring your product doesn't get diseases.
17
Although this article focuses on lost trade for China, trade wars work both ways. Imagine how Mid-western farmers will react when it dawns on them that China has moved on to other suppliers, such as Brazil, for agricultural imports and has no intention of returning to US suppliers because they get used to the products of a reliable, high quality competitor.
24
@tencato I am a Midwestern Farmer, and I didn't vote for Trump because of his wrongheaded economic beliefs. Tariffs are followed by deflation, just wait for it, farmers were targeted by the Chinese and look at what has happened. Your turn is next, I am not writing this out of anger at the Urban Dwellers, you are so far removed from Production Agriculture that you just see us as rubes who need to be taught a lesson. You couldn't be further off the mark. We use more technology daily with GPS in our Tractors and Combines to maximize our yields. Moving these computers from one machine to another. We check on Commodity markets our phones. All the while enjoying nature that surrounds us! While you live in concrete covered Hellscape of Glass Towers.
7
I guess they will be hooked forever on the agribusiness welfare system. The GOP is the real party of socialism.
3
@JohnMFarmer
Isn't is nice that farmers enjoy the backstop of the US taxpayer when their business fails?
I bet all small business owners would love that deal!
And those hideous "glass towers and concrete" that you detest created all that technology that you rely on every day.
4
Frontline: Trump’s Trade War. Check it out, it sheds some light on US Tech Companies and how they gave away their intellectual
Property.
5
@SystemsThinker: Patents are only a cause of action to file lawsuits against alleged infringers. The deepest pockets usually win. The little details of process that boost yields are often kept as unpublished trade secrets.
2
Universal price increases. That's how every single entity that imports or manufactures in China is dealing with the trade and tariff uncertainty. They are all raising their prices and regardless of the final outcome the immediate pain will be felt and held by American consumers. Expect everything from home improvement materials to consumer packaged goods to increase by a min of 15% in the next year. Everything will get more expensive quickly.
8
Corporations in the US are typically owned and operated staunch republicans. They were absolutely willing to allow the republicans to use their race baiting and vilification of government when they could get less regulations and huge tax cuts. It's very difficult to be empathetic toward those who are willing to unleash the hate of the republicans for their own benefit. The average Joe's who think the jobs will now be coming back are equally selfish and clearly delusional.
Small companies, large companies, publicly traded companies, I have no sympathy for their plight. They will always complain, and they will always whine about how everything is so unfair and how they are the jobs creators. It's cruel the way they abuse the system and the people by supporting the hate and anti-truth venom coming from the GOP.
10
@Chris: Interlocked directorships like the US are collusions of like-minded people.
People say moving suppliers from China to other countries won't bring jobs to US.
The point Trump is trying to achieve isn't so much bringing jobs back, but just anywhere but not China. Hurt China to get them to negotiate, not necessarily bring those exact jobs back.
The jobs can go to Vietnam, Malaysia, Thailand, India, or wherever. As long as China doesn't win, Trump reasons then that America wins.
One caveat, moving jobs to other countries is ultimately good for the world as it lifts more people worldwide out of poverty. We shouldn't be just focusing on uplifting average Chinese people but all people around the world. Moving supply chains to countries like India, Sri Lanka, Africa, I think can do more for global prosperity, in the ultimate big picture.
3
@df
"...Hurt China to get them to negotiate..."
That "strategy" will not work with China. And Trump Inc. doesn't realize it.
1
None of the countries you mentioned have nuclear missiles aimed at the U S.
Well, never thought I'd be saying this, but President Trump finally stumbled into success.
5
But Still tariff wars are not going to be permanent whatever the winds in western world?
Last 60 years global free market created giant economics in eastern Asia, China is one of them but not only one.
So we are calling that this trillions of dollar trade engagement is going to be reversed because politics requires.
That is false prophecy.
1
Another shoe that might drop any time is China's ability to essentially starve US manufacturers of so-called rare earth metals such as neodymium. We currently import about 80% of rare earth metals from China, and there aren't really any good alternative sources to switch to right now. China is, by far, the largest producer of these metals, which are indispensable for such items as supermagnets and certain semiconductors, i.e. vital components for those electric motors in Tesla cars or many generators, in addition to specialty electronics and many others. The (government-controlled) Chinese media have begun to mention that withholding these materials might be a good way for China to exert pressure on the US.
I wonder just how prepared the US government is to deal with a possible rare earth metals embargo by China. A strategic reserve for these essential raw materials would be a great idea, but, judging by the Trump government's past performance, I am not optimistic!
9
@Pete in Downtown. Hi Pete, yes, I agree. Might it be possible for us to start recycling rare earth materials out of trashed electronics? I don't know enough about it, but maybe if we can really recycle old phones, etc. there's a solution?
1
The US can produce rare earth supplies but the environmental restrictions make the cost higher than importing from China.
It might be useful to this discussion to remember that China has been buying our deficit spending for a very long time. How does that factor into a very complicated trade relationship? I don't pretend to know but I have to imagine not well.
2
@Mark All foreign countries together own about 20% of our debt. China owns about 5%. Most buyers of American bonds are American.
2
Based on the recent data, foreign countries own about 6473.3 billion dollars or about 30% of US debt. China has about 1120.5 billion dollars in holdings--the number one spot followed by Japan with about 1078.
Total US debt is 22.3 trillion...about 6 trillion is intergoverment.
1
They say economic expansions don't die of old age. Usually something causes them to end. Well, it looks like this one is coming to an end, and that's because we have an idiot as president.
If Trump is bluffing, his bluff has been called. My concern is that he thinks tariffs are a backdoor way to raise revenue--by taxing the American people as they pay the tariffs for imports.
As Einstein said, "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." Einstein was warning us about people like Trump.
18
There's no way the Chinese population could ever enjoy a living standard comparable to the US today, because the planet is finite and can only bear limited consumption of energy and materials. Either the US standards are falling, or the US decouples from China. War is inevitable.
"the electronics manufacturer that Mr. LaFrazia runs near Portland, is taking steps to protect itself, a strategic shift that has been repeated in boardrooms and executive suites around the world"
That is an important success for the idea of decoupling China from the US economy.
I oppose that idea, because it is founded on the idea of Cold War and Containment, with expected flare ups into hot war. That is not the world I want to see built.
However, it also is one way to get American manufacturers to bring jobs back home.
There are other, better ways to do that. It is essentially a tax question. No other country has done to itself what the US has done to itself regarding China. Germany for example is keeping its jobs at home even though China is a big market for Germany.
The US tax scheme favors offshoring not just of some of the work, but all of the profits of all of the work. It allows for and even encourages accounting games that move profit-taking offshore, and keep money away from the US tax man, which is exactly what we see happening.
If we cleaned up the corruption of our tax system, we would not need to use a trade war to force companies home to the US.
20
@Mark Thomason
Well Mr. Thomason, they'd best bring strategic-reserve-sized truckloads of rare earths when they DO!
Like it or not this is now more than ever a global. Ask any historian why Japan opted for a pre-emptive strike on US military resources. Answer: we progressively cut off its access to oil, rubber and steel and rightly or wrongly Japan felt it had to break out of a perceived stranglehold in a way that it thought could preclude a viable response.
Somebody had best give Trump a lesson in international economics...if he can stay awake that long.
4
@Mark Thomason: Here in the land of unequally protective and ambiguously interpreted law, one does not do anything without a lawyer by one's side,
@John Poggendorf -- Rare earths are not rare as in not present, they are rare as in only low concentrations anywhere. That means that refining them is messy for the environment, with something over 98% waste materials from the ore.
The US once refined its own rare earths, and could again. It has mines that ship ore to China, and has refineries that once did that refining and now sit idle.
We would need to do some extra work to clean up. China doesn't bother, just leaves the mess. So we exported the pollution to China. We can do better.
This won't break the economy, just make us clean up a process instead of dumping our pollution in other countries.
4
Somebody needs to break it down and do the numbers for me. I fail to see how it is much more affordable to ship parts overseas two or three times for manufacturing rather than just make the stuff here. Surely, just the cost of transporting the stuff by ship has to add to costs. In short, I just don’t believe these companies when they say they can’t afford to make things in the USA.
3
Let’s say it costs $1 (or $5) to ship a board in high volume. When labor costs $4 per hour in China and $40 here, it doesn’t take much labor for it to be cheaper to do the shipping.
8
And yet it is!
1
It often is, surprisingly. A product may even pass through the same factory multiple times before it’s complete. Modern supply chains are insanely complicated and transportation just isn’t a major cost center for many products compared to labor and materials.
4
"It is not unheard-of for a product or its components to cross the Pacific three or even four times before showing up on retail shelves."
It may not be unheard-of but the overwhelmingly prevalent model is for all the components to be either made in or sent to China and completely assembled there.
If the quoted Mr. Isaac says he doesn't see production returning to the US in "meaningful volumes", what does he mean by "going local?"
2
"It was also unclear which products were subject to tariffs. Mr. LaFrazia, a 54-year-old Air Force veteran, recalled spending hours poring over an online list of tariff codes to figure out which applied to his parts. When he called the manufacturers, they often didn’t know where they fell in the government’s taxonomy of tradable goods. Even the government’s experts can get confused"
Sounds like a lot of unproductive and wasted bureaucratic effort due to overbearing government policy. Time and resources the company could better spend on their core business.
I though Republicans were against excessive and arbitrary regulation. Navigating Mr. Trump's tariffs sounds like the worst kind of government red tape.
11
Another thing Trump likes about tariffs: they punish coastal states--the ones that didn't vote for him.
10
Are people really this NAIVE?
All China has to do is to set up shop in another country "other than China" and sell from there.
Kinda like how the ultra riches open an offshore account for tax evasion purposes. Get it? It's all legal, you know.
20
“There’s definitely lasting damage that has been done ... How competitive is America going to be in 10 or 15 years?”
Or, let's take a system that's generally working and overall prosperity, and totally trash it all to suit the whims of some ignoramus demagogue
12
Two problems here:
1. Trump did a terrible job of selling Americans on the importance of a trade war, if that was possible.
2. Given his inability to really think things through and play the long game, there is good reason to doubt how well this battle is being played out.
2
Conventional capitalism and orthodox GOP economic philosophies endorse free trade. So why is it that the Trump sycophants are so easily willing to abandon it in the blind obsequious service of Trump's biggest ever ego? Like Trump himself, it doesn't add up (though he knew what he could get for US $130,000). What is the magnetic allure of this fellow that he
can get capitalists not to object to his madcap tariffs?
Like Donald it does not make sense.
Of all people, he has no right to call people socialists? Will the sycophantic, quisling cultists swallow even that?
My bet is yes. He has them hypnotised; and by what? The only thing he ran on was giving people permission to be racist. Seems a pretty potent tool.
9
Nations trading within the confines of a free trade agreement will always be able to purchase goods cheaper than a nation that is not part and parcel of a free trade agreement. Why Trump withdrew USA from the TPP agreement is beyond comprehension as Obama had knuckled out a great deal for the USA without taking off tariffs for farmers. USA will never get the same agreement back again under our current government as this liberal Labour lot are tougher on negotiations than the Conservative party (National)
4
Even if jobs move from China to Mexico and not to the US, it will still be good for us. More employment in Mexico and Latin American countries means less migration to the US and less drug problems in those countries as well as in the US.
6
I think there are a lot of comments from self-righteous affluent social warriors who grouse that Americans want low-priced goods and that we won't pay for US labor.
Some of you don't get that many of us can't afford the US, that we need low-priced goods to get by. It's not a matter of paying a little more, we wouldn't be able to afford telephones. Look at medical care. Without our arcane system, only the rich could afford it.
Part of globalization was to break the US middle class, drain it. Some of you remained in the 10% but a lot of us learned a whole new reality.
Part of the whole globalization thing was breaking the US middle class. Some of you remained in the 10% but many of us didn't
7
@Benjy Cord
Sounds like you need higher wages. Unionize!
7
Give it time. The manufacturing industry, with is long-tail supply chains, doesn't change overnight.
2
Tariffs won’t move Chines manufacturing to the US. It may move it to Vietnam, or Korea, or Mexico, or someplace else, but not the US.
14
@Inigo Montoya
Good for them. Good for Chinese oligarchs, but bad for Chinese workers.
Then the tariffs are acting as intended and China has much more to lose than America. We really don't need any more cheap "stuff" than we already have; we have too much as it is. And, as usual, cheap is actually quite a bit more costly than first apparent.
4
Two points
1) money must go where the precious metals are
2) as long as consumers value low price over all else and companies are driving out costs to maintain profits, manufacturing goes where the wages are low. There’s no moral judgement.
6
@Brad: "consumers value low price over all else"
If that were true, then Apple would be out of business. Or, perhaps, you meant to say that consumers paid only $7.25/hr are forced to value low price over all else.
@Lamont MacLemore
fair point.
Although there are plenty of cheap android devices, the parking lots at Walmart are full and the cheap airline seats are booked.
1
@Brad
ps. great marketing at Apple!
1
Great news. We have helped support the brutal China government for decades hoping that economic success would bring politically liberalization. A reasonable idea. But it clearly failed. Economic success has just fortified control of the communist party who's latest leader has even gotten rid of elected and become president for life. So it is an excellent time for American consumers to stop helping to finance their forced re-eduction camps for ethnic minorities and their military which is trying to turn the South China Sea into an inland lake and cow their neighbors. Let's instead spend our dollars with the nations surrounding China and help them keep it at bay.
263
@Todd that sounds great, but the countries surrounding China are China's biggest trading partners. So don't look for them to play an us vs them role.
36
@Todd We were doing what you want with the TPP, but Trump scrapped it. So now instead of a united front against China we've taken a "divided we fall" approach. All Trump's doing because he has no idea how international trade works.
136
@Todd
That’s what TPP was.
74
Living in an area where both BMW and Michelin have established themselves in the US, and employing tens of thousands of employees, I can only see these tariffs as being the end of jobs.
8
I personally dislike President Trump and was so disheartened when he was voted in, but maybe America needed someone like him to buckle down and have companies diversify out of China. It may hurt us but if companies decide to stay within the Americans it would also help us to increase employment in our neighboring countries and possibly decrease illegal immigration. While decreasing pollution by not transporting material back and forth across the world.
181
@Sandra Marshall His actions are just driving up prices and making it harder for me and my company to compete globally. We aren't going to move manufacturing back to the US --- we can't afford the 5x increase in labor costs. And his actions aren't decreasing the amount of material being moved. If anything, it is adding more travel as we now move components and parts from China to a third country for assembly before shipping to the US
91
@Sandra Marshall
Sandra, Trump's policies may sound good to the unaware, but they are certainly going to wreck things; here and around the world. The economy of the 1950's isn't coming back to these shores.
64
Everything you’ve listed as a potential positive outcome is contradicted by the article itself. And where did immigration creep in this discussion?
33
Jobs are not coming back. Corporations are finding new suppliers in lower cost countries and as a result of the disruption prices are going up - on everything. The US is going to learn that the rest of the world can get a along very nicely without us.
Our massive investment in the military is our downfall as we are the only first world country that has refused to reinvest in ourselves. With the costs socialized and the profits privatized our wealth is now in the hands of globalists who can live and do business anywhere. We are just another piece on the chessboard who sold our children's future for a few pennies today.
650
@Deirdre
"The US is going to learn that the rest of the world can get a along very nicely without us."
And China and Russia are ready, willing, and able to replace us on the world stage thanks to trump ripping up every agreement not of his own making. Problem is, he's also a complete failure in the arena of foreign trade and foreign policy. He was a fire-breathing dragon during his campaign over all of Obama's perceived failures, but nobody can fail on the global scale that Trump has achieved. And the GOP sits on the sidelines, sucking their thumbs with their backs turned, trying to figure out how best to sell themselves as patriotic Americans.
94
@Purity of
Repeat, the jobs are not coming back. It was the large multi-national US firms that fully embraced off-shoring of jobs that enabled WalMart, Target, Home Depot, etc. to keep prices low for the past 30 years. The "little" firms followed suit just to keep up. There is zero chance these manufacturing jobs are ever coming back to the US. We have higher labor costs, a weak infrastructure, and significant gaps in our education system.
64
@Purity of, most US companies of any size do not view themselves as "American" because they compete in the global economy. The US has 4% of the world's population and 20% of the resources. Do you believe that the US can simply raise tariffs and drive companies to manufacture in the US no matter the cost? Consumers don't care where products are made as long as they can buy high quality products at reasonable prices.
Instead of focusing on education, global business, and becoming the best we can be too many Americans believe they can ignore getting either an education or job skills and believe they should earn $40 an hour doing a job done overseas for $1 an hour. I would personally love to employ everyone in the US and pay them a livable wage, but it will not happen unless significant changes are made! This means more money for education, infrastructure, and job training. Even if we drive a wedge in the US China relationship there are still many countries willing to export quality products to the US at prices lower than we can manufacture. The solution is for the US focus on high quality, high profit niche markets.
19
This had to happen at some point. American companies have been shut out of China for decades while China stole our technology and used it to build up its own industries, all behind a nationalistic and protectionist shield. Our relationship with China was akin to addiction - we being addicted to cheap products. I'm anti-Trump to my core but he'd doing now what presidents from Clinton to Obama repeatedly failed to do - checking China's annexationist and expansionist aims by using our most effective weapon - our markets.
280
@Shane. you need to follow the money. What you fail to realize is that China did not steal our technology, executives of US corporations gave it to them. This was an agreement that US corporations made so they could have cheap products and hence increase profits. The off-shoring of US jobs has been going on for decades, these jobs are not coming back, they will go to the lowest bidder. The trade war is not going to change that, the only thing it going to due is raise the cost on everything that's imported.
127
@TM China stole the intellectual property of a company I worked for in the Bay Area in 2016. They installed a backdoor on the laptop of our CEO during a trip to China or at a research conference. From there they forwarded a copy of every single email sent or received by our CEO to a server in China. All of our proprietary info and intellectual property was stolen and after the FBI came in they laid the finger directly on China. We didn't give them anything, they stole it from us. Zero sympathy for Chinese troubles and the US should have recognized the threat China poses and acted accordingly towards it decades ago.
79
@Shane - I'm not saying China isn't engaged in some bad trade practices. But you yammering about them stealing American technology is a bit rich: how do you think the US got to where it's at? As late as the turn of the last century, it was the one "stealing" technology from Europe!
The fact is that every developing nation goes through a phase in which it "steals" existing knowledge in order to bring its population to a certain level of prosperity. As they ascent the "food chain", they begin following the same rules as their more developed brethren nations - because it's in their self interest. China has simply been going through this cycle over the last few decades you reference. And it's actually accomplishing this at an astonishing rate, given the size of their population. It will get there soon - in the meantime, we just need to keep reminding China to begin living by developed-country rules.
47
I'm in the electronics business. ControlTek doesn't make consumer electronics. They make high end industrial electronics where there is a much larger profit margin to work with. No American company can compete with low cost Chinese consumer electronics. They can make that stuff over there at 10 cents on the dollar for what we can make it here. That production will never come back to the US.
Mexico has become a player in consumer electronics. But Trump keeps fighting with Mexico. Again, those are not US jobs.
Most of the parts I use in my products come from China. Why? Because China supplies the world with electronic parts. Everyone uses them.
Trump has given European electronics producers a huge advantage. First, they can get the parts without paying any tariffs. Second, when they export, no VAT is accessed. Third, the Euro has tanked against the dollar which makes our exports to Europe much more expensive and their exports to the US much cheaper.
Trump is then hammering our domestic electronics producers from both ends.
True, these global supply chains are being shifted, but moving production to Vietnam doesn't create any US jobs. Don't fall for the smoke screen here. China may still make the raw inputs for products, sell them to Vietnam which does final assembly and then exports as made in Vietnam. Besides, China may even own the Vietnamese plant.
817
Good comment except you misunderstand VAT. Suppliers in countries with Value Added Tax (pretty much everywhere except the US) pay VAT to their suppliers and collect VAT from their domestic customers. The difference between what they collect and what they pay is sent to the tax authorities. Basically they break even on VAT. By not collecting VAT on export sales, they decrease the amount they pay to the tax authorities but they still break even. They have not improved their financial position compared to what it would be if they had sold their product domestically.
16
@Bruce Rozenblit
nicely written.
but donnyfatass wouldn't understand anything you wrote.
71
@East Coast In other words Mr. Locke Trump and his trade people have absolutely no idea of what they are doing.
23
Maybe this will help us re-think global trade's status as a societal panacea. Buying more stuff more cheaply, at the devastating expense of our environment and underpaid workers, is not a recipe for a good life, no matter what advertising will tell you. More isn't always better. Just enough might be.
430
@Hammer
How true! Americans want good wages but then demand the cheapest price on goods and services. The two can't co-exist.
138
@B Dawson But that runs against America's highest ideal: smearing birthday cake all over its face while also demanding to save the cake for instragram photos tomorrow!
9
@Hammer This is the wallmartification of America and it is not changing without higher wages and different societal and environmental values. Since none of this is happening. Manufacturers will just move to the next best cheap place to produce, and it will not be here.
11
None of this will increase jobs in the USA for the types of people that need full low skill manufacturing jobs that pay solid middle class wages with full benefits. The assumption from the Trump base is that jobs will source here.
The jobs will move to other Asian countries like Vietnam, Malaysia, Thailand or Indonesia. If they can be located in North America, they will go to Mexico. Why? The labor and tax costs are multiple times cheaper than the USA and Americans of all income brackets are not willing to pay a premium for USA made goods.
Americans need to focus its education and infrastructure on innovation with green technologies, technology to reduce medical costs, skilled trades, advanced transportation and space. There are plenty of issues we should be leading on.
637
@Practical Thoughts
If anything, this will lower the manufacturing jobs in America because prices will increase due to added costs of new suppliers. American sales will decrease.
10
@Practical Thoughts
"Americans need to focus its education and infrastructure on innovation with green technologies, technology to reduce medical costs, skilled trades, advanced transportation and space. There are plenty of issues we should be leading on."
Those categories won't be nearly large enough to provide "..full low skill manufacturing jobs that pay solid middle class wages with full benefits" that you mention.
I'd prefer the jobs were in Mexico rather than China. At least Mexico is nominally a democracy and if their living standard even approached ours they might not be so motivated to risk their lives coming to the US.
27
@Practical Thoughts It is not just about bringing jobs back. It is about opening their markets to us, stopping them from stealing out technology and illegally dumping products here. All of these actions hurt us and putting a stop to it helps the US.
7
"It is really quite painful to be one of the pawns."
Tell that to the people whose jobs you outsourced.
1
Trump's strategy is cutting yourself in order to bleed China dry, which is against globalism and can be seen as a weird spirit of communism, sacrificing yourself for other countries like Vietnam and Mexico.
1
Why does it seem our media outlets are rooting for the Chinese to win?
3
I am refusing to accept that a 6-time bankrupt mob trader defines what the world economy is supposed to look like.
Remove this fool from office, now.
9
With all this Trump winning going on we'll be in a receivership before the election. Putin's plan is working out better than he could've dreamed and not one ounce of poison used.
4
Glad to see that Mexico is getting some of the business. Partly because of Trump's slander, but also because prosperity down south is good for all of North America.
4
The biggest loser in this trade war is the average consumer. The price of some things are going to increase to pay for the tariffs which is essentially a tax. It seems like this is one way for American consumers to pay for the tax breaks that mostly benefited the wealthy.
Since the jobs may be going to go to other low wage countries, they will benefit from this.
The unemployment rate is the lowest in decades, but that is a very deceptive number for many reasons. Obviously, if employment was so great here why would this tactic even be necessary, it would be absurd.
4
We have everything here ,most of industry originated here, and this cycle will return jobs home.The stock holders forced these corporate boards to get profits at any expense,well here it is.how many billions do these single individuals need ,how many mansions ,yachts ect. Then they are looking for ways to give it away dozens of people with hundreds of billions who have finally run out of toys.Well folks here it is Tim Bill ,Warren Jeff ,take a look at where your feet are standing ,good old American soil.
2
We will have to put up with the prices on the finished products.
Car prices could go up as could prices for gadgets, plane tickets and even beer.
The world's second-largest, China's, economy has taxed US agricultural and industrial products, from soybeans, pork and cotton to aeroplanes, cars and steel pipes.
China could also tax US tech companies like Apple. That would hit the tech giant, and it could be forced to raise its prices to compensate.
In the meantime, Latin American countries are rising their trade with China.
While Trumps keeps trashing out and losing ground on countries from Mexico all the way South. Bolivia, Chile, Uruguay, and Venezuela all joined China’s $1 trillion investment initiative known as Belt and Road.
China’s plans to finance billions in infrastructure across the region will update pathways and supply chains that facilitate Sino-Latin American trade.
The Asian giant has already supplanted the United States as the top trade partner for Brazil, Chile, and Peru.
Beijing also surpassed Brazil as Uruguay’s top trading partner and is the main importer for another handful of countries from the region. And, amid a U.S.-China trade dispute over tariffs, Latin Americans are reaching across the Pacific, opening up opportunities to trade more with Beijing as U.S. products become more expensive and less desirable.
In the end the rub is which side would have better capacity and determination to stomach the dire consequences if the war continued to worsen.
1
"GoPro, the camera maker, said this month that it was shifting some production from China to Mexico."
Wait! Trump said those jobs were coming to the US! Oh, sorry he meant corporate stock through buybacks were coming back.
My mistake.
8
Could be part of what Putin and Trump talked about with no witnesses--how to destabilize the United States and much of the West. Seems to be what Trump does best.
9
As soon as possible after we can crowbar Trump out of office —
Virtually everything he has done or signed needs to be reversed if at all possible.
Including the disaster and debacle of the trade war.
4
The shift of the supply chain from China to lower wage countries (lower than China) , has been under way for some time - driven by Chinese wages climbing to levels those above Vietnam, Thailand, Ethiopia, to name a few
1. "Apple assembler Foxconn considering iPhone factory in Vietnam -state media"
https://www.reuters.com/article/us-foxconn-iphone-vietnam/apple-assembler-foxconn-considering-iphone-factory-in-vietnam-state-media-idUSKBN1O3128
2. Portland ishome of HP printer division. It once made printers, but now only designs printers.
HP's supply chain for laser printers is Mexico (low end), Vietnam (middle end) , China (high end office copiers).The end model will simply move to Vietnam, already a cheaper place to manufacture than China
Finally, for those who understand French, I recommend to watch the link below, that shows how Chinese textile production is shifting to Ethiopia
https://www.francetvinfo.fr/economie/industrie/ethiopie-la-nouvelle-usine-de-la-chine_2764803.html
The proud Chinese owner explains that wages are 1/20th of that of China , but leaves out that he laid off the workers at home
As to competitiveness, Ms Peterson is wrong. Chinese competitiveness is based on low wages - eroding as PRC wages climb - US competitiveness on high value products and agriculture (a very high tech industry in the US)
4
We have the world's worst businessman wrecking the global economy with ideas one could find in any kindergarten class in the country. The Founders may have thought our form of government had enough checks and balances to protect against the actions of a narcissistic, simpleton, but they were wrong. Trump, and his Republican enablers must have those learned men spinning in their graves.
The only consolation is that Trump's actions seem to be hurting Trump-country the most. That's just-desserts.
4
Many of TRUMP's own products wouldn't fit that bill. The president and his daughter largely manufacture Trump-branded products in countries like China, Indonesia, Vietnam, Turkey and Canada and Israel.
So, YES! Trump is great at creating manufacturing jobs... in China, Vietnam, Israel...etc.
4
It would be lovely if the Times did a similarly wistful story on one of the many, many, many US companies that China has stolen intellectual property from.
@Eliza
Yes, let's.
Having scoured the web for exhaustively for examples, I found a SINGLE one. That's American Superconductor vs Sinovel (China).
The rest doesn't count... gossip, unproven allegations, unreferenced articles in newspapers. Nor did I count as 'Chinese theft' examples where American citizens themselves stole the IP and then approached Chinese companies with a view to selling it. Nor the same scam perpetrated by other non-Chinese nationals.
So, ONE proven case. Have you researched your claims - or do you just repeat what you heard?
1
Anytime we can penalize or eliminate China as a trade partner, the US is better able to resist their persistent incursions into our electronic business security. We, as a democracy remain at a deficit against a government dictatorship such as China that controls all economic functions.
3
On the surface Trump's tariff war is to bring jobs back to America, but the goal really is to stop the rise of China in the technology sector. It still meets that goal if this policy results in shifting of manufacturing from China to other third world countries that post no challenge to US leadership.
3
The United States mostly gave up on domestic manufacturing in the 1970s. By the time George H W. Bush became president the high interest rates, inflation and unemployment took its toll. Jobs in steel, tires, cars, major appliances, were not coming back. By the dawn of the Clinton Administration, consumers wanted more for their dollar, and whatever else was left of manufacturing moved off shore. The recessions of 2001, and 2007, took further toll. It did not help that US auto manufactures continued to create poor quality automobiles; despite bail outs.
Today, what is left of US manufacturing is a flash in the pan compared to 40 or 50 years ago.
Trump implemented protectionism, just like Hoover, in the form of tariffs. Hoover did it to save the economy; that moved resulted in the Great Depression. Trump is not only repeating Hoover's mistake, but like, the early 1930s, his move will crash the US and world economy.
What got the Us out of the Great Depression was manufacturing, steel and WWII. Guess what? The US today could not gear up for a small war; let alone another WWII.
Whatever comes of this, if Trump's "policies" continue, will create an economic downturn that may rival the Great Depression.
16
@Nick Metrowsky: The bottom fell out with Reagan. When the US pulled out of Metric conversion, it stopped making sense to manufacture for global markets here.
8
@Nick Metrowsky
We actually have more people in manufacturing than ever. We just don't have those big steel mills belching pollutants that are so obvious.
WWII was won because huge amounts of materiel' was necessary. Hundreds of bombers on one mission. Now, a few. Or, one.
If you haven't noticed, the war of the present and the future is cyber. No iron needed.
It's 2019, time to move out of the 1940's.
1
@Jus' Me, NYT
Sorry, MAGA Texan, maybe you should look around more closer.
Guess what? What happened in the 1930s and 1940s, led to the greatest economic expansion in the 1950s and 1960s. On top of that, taxes were much higher for those who earned more, and wage disparity was much lower. And, by the way, the minimum wage was a living wage.
The 1970s brought two oil embargoes, the first gave us called "stagflation"; the second started the fall of US manufacturing.
Before this, the US was self sufficient, it could not only manufacture products, but also had the raw materials to make them.
What you call "manufacturing" is getting parts from China and putting an end product together. If China cuts off raw materials, or tariffs are at 25%, and costs more to make the final product; guess who pays for it? You. And if you can not get the materials, "manufacturing" jobs go.
The MAGA president wants a war with Iran; it will not be a cyber war. It will be like any other war; boots on the ground.
By the way, based upon what I stopped coming into server I maintain, cutting off Russia and China, virtually eliminated denial of service attacks, SPAM and password smashing. China and Russia are already winning a cyber war, because US companies put profit over security and IT needs. Think about that the next time you hear of another breach.
I am glad FDR was at the helm during WWII, if it were Trump, we will be speaking German and Japan ese today.
3
This is a small step in the right direction that will get us to where we need to go; i.e., out of China.
It took 40 years to destroy our Made-in-America supply chain. It may take 40 more to rebuild it. And rebuild it we must. Our full-employment economy is a fluff of servile, low paying jobs. No one can afford to pay off debt, buy a home, start and support a family on service and gig economy jobs.
Shareholders wake up and do something for your country. Buy American and demand that your CEOs build American.
PS: Don't buy an Apple phone to start.
1
Trump has also upset the EU and is picking fights with leaders of European nations and hasn't signed any international commitments to reduce greenhouse gases and get rid of plastic. The Europeans are very eco conscious and have all these green policies written into most of their trade contracts.
I see NZ getting more trade from Europe because of Trumps attitude to reducing pollution and not wanting free trade deals.
It's not just China you're in a trade war with but also Europe from what I've read.
8
@CK
It's very hard to see why Mr Trump has started a war with the European Union - the largest single market economy on the planet.
There doesn't seem to be any reason for hostilities. Of course there are imbalances - on both sides. The sort that get ironed out over long periods of negotiations amongst friends, Everybody wins.
The downside of Mr Trumps pointless tariffs on steel (the EU makes tiny quantities compared with China) and aluminium, coupled with a general fear that America can no longer be considered a reliable partner is starting a big migration of EU love towards Beijing. Both Hungary and Italy (a big economic player) have signed major Belt and Road agreements and other countries will follow shortly.
Mr Trump's enmity towards the EU isn't easy to fathom. I think that phrase 'biggest single market economy' is relevant though,
1
"Economic growth has remained strong"
Can the media stop parroting the WH?
The economy is not "strong". It's percolating along at 2-3% growth in GDP per year, just as it did through most of Obama's two terms. No one ever applied the word "strong" to that economy.
Yes, unemployment is down. It is also calculated differently now. Wages are up only a bit, with dramatic local growth due to more jurisdictions adopting the $15/hr minimum wage, hardly a Trump accomplishment.
After a $2T+ stimulus, you'd expect it to be going like gangbusters.
14
Remember when business and the Chamber of Commerce attacked Barack Obama for “an environment of uncertainty” and now are amazingly forgiving and quiet about the uncertainty created for the last 30 months under Donald Trump? The business community is reaping what it has sown...and we are and will continue to pay the price.
10
So the republicans need to pick. Either free markets are a good idea (in which case, they should block trump on trade) or they just aren’t fair (in which case they need to start supporting domestic policies that address this unfairness).
7
China is not a free market. That is the basis of the trade war.
3
@mkm
The US market is not free, either. Oil companies get free security for their ships from the US Navy, our farmers get generous subsidies, and many companies are paid fabulous bribes to maintain real estate in particular places.
1
So these companies shift their supply chains to Mexico or Vietnam. I'm not clear how that will help the American worker.This will probably result in even more competition for US companies in the future as these other countries shift to high tech. manufacturing. Also... Chinese companies have a lot of profit margin they can cut into in order to neutralize the tariff burden.While Trump may then try and restrict these products from the US ,other countries will love the lower prices.Trump may be helping in ways he will never imagine.....just not the American worker.
8
@Iamcynic1
This may be Trump's way of getting Mexico to pay for the Wall, by goosing their economy. Mexico will want to keep out all the under-educated whites who voted for Trump.
4
@judgeroybean Great,great observation ...I never thought of that.....Trump really may be a "stable genius."
This is all good news. "Growth" is good for people with large amounts of money in the stock markets. For the rest of us, it's not so relevant. If China is replaced as a trading partner by neighbors and democracies, such as Mexico, we and the world will benefit. China is a totalitarian society, an economic rival and in the future may well be a military rival. We should be using our economic strength to lessen China's power and increase the stability in our own hemisphere. And as this article implies, more work will come home. The fate of a few tech companies is not the fate of the US or the world.
11
True, but before all of this other nations could side with the US while simultaneously selling to China. By bifricating the world economy, as Trump is on course to do, countries arounds the world will have to "get off the fence" and put the eggs in either the US or Chinese consumers, not BOTH.
China is no doubted totalitarian, but this is not news. Despite Trump's ego, he is not first to recognize this. If the last 20 yrs of globalization has proven is that profit comes before principal. Corporation and country will easily turn a blind eye for profit. They will even give up there soul (i.e. forced technology transfer) for a quick buck. As such, its not given that other nations will stick with the US just because of matching skin color if our consumer base is not thriving...ney actually shrinking.
Another words, money follows the middle class and China's middle class is acendent.
"The Jeep Toledo South plant needs just 13.57 employee-hours to assemble a vehicle"
Shifting production to the USA will barely make a blip in employment when it takes more labor to sell a car than to make one.
1
@Fran Taylor
Yes, that's how it is; how it will be. Frankly, your understanding on this matter far exceeds that of Donald Trump whose vision of US manufacturing practices is of the labor-intensive factories of 50 or more years ago, needing lots of workers.
The real reason Trump is doing this? Yes, it pleases his base, they think he is tough. But I think another big reason is to bring cash into the US, and pay for the huge tax break Trump gave himself, his cronies and the corporations.
@Susan... Tariffs do not bring cash into the U.S. It comes from the pockets of American consumers. You could argue it is a tax on goods.
1
There have been a bunch of studies on China's role in the deindustrialization of developing countries, especially in Latin America.
This "premature deindustrialization" can be viewed as an economic crisis.
China has been cheating at trade, so this movement of manufacturing out of China might be a good thing for the world.
And of course China has its eyes on advanced American manufacturing, so if we don't do something we might suffer the same fate as Latin America.
These moves will force American products to be more expensive. Competitors in other countries will continue to buy from China, putting US products at a competitive disadvantage (we are already at a severe disadvantage due to employer-provided health care).
China is already going elsewhere for soybeans; it is no longer buying any American soybeans.
Above all, trade promotes inter-dependency and peace.
4
I don't know why these changes would be hard to reverse. If/when the tariff is gone, the businesses will go through the process in reverse to maximize their profit. These are all tactical adjustment and the tariff will have to be in place permanently, thereby lowering our standard of living, to make it irreversible.
What will be really irreversible will be the strategic diversification away from what has been weaponized in this battle and what could be weaponized. Chinese process of weaning themselves off the US technologies will now get supercharged. And the standard making international bodies/consortia are now less likely to locate themselves in the US. Chinese are now also talking about limiting the energy import from the US before it can become weaponized. The US likewise will have to wean off from Chinese rare earths at the expense of bringing pollution back home.
3
It would be a terrific outcome if if companies diversify their supply chains as a result of these tariffs. So much reliance on China is not good from a strategic standpoint. It is also good to spread the wealth to South and Central american countries instead. They badly need some kind of pull given their dire situation. Would help our immigration crisis too over the long run.
1
I could support this if I thought that Trump had any long range plan beyond huff and bluster.
But he does not. Not any more than "putting the final touches on a beautiful heath care plan" or "A military option for North Korea" or his 'pump and dump' stock market schemes or Trump University ad nuaseam.
Every president has a chance to be a great president. Trump chose to waste his time cherry picking statistics and calling names in the rear view mirror while paying little attention to the road ahead. I thought maybe he could rise above his past , elevate to the office. But it still stands- a zebra doesn't change stripes.
8
Trump has declared bankruptcy at least six times, now he’s working on doing it to the U.S. The republican party is his enabler. Remember it at the next election.
6
The low-skilled, labor-intensive jobs won't come back to the US.
But it is still MUCH better to have these jobs in Central America, Mexico, and even other parts of Asia rather than China, which already dominates Asia, and is a totalitarian regime, diametrically opposed to the US.
7
@Scott China opposed to the US? It is doing the American dream; working extremely hard, sacrificing and hoping to get a better life.
3
This all sounds very good, but if one of the stated goals of the tariffs is to shift jobs back to the US, then it's not likely to succeed.
4
I read somewhere that Huawei is going ahead with its own smart phone operating system. So now, the whole world will be able to hack into Huawei phones, not just China.
If he’s re-elected, we’ll know how lacking our education system is (as if we don’t already know that)
13
ControlTek serves “defense, military, and aerospace customers” according to their website. I guess the US taxpayer gets to pay the tariff in this case.
6
This article and most of the comments say nothing about automation, which has been responsible for more job losses than offshoring. For example, a study cited here estimates that only 13% of manufacturing jobs were lost to imports, the rest to automation: https://money.cnn.com/2017/01/30/news/economy/jobs-china-mexico-automation/index.html Other studies provide somewhat different numbers. But, think about it. Every time you swipe a product over a bar code reader and then put your credit card in another reader, that is two tasks that a low skilled person has lost to machines. Some of those lost jobs are replaced by others, such as repair of those bar code and chip readers. What matters to the U.S. in the long run is whether there are a range of jobs available all healthy people of working age. And that, in turn, depends on the quality of our education system at every level.
3
@Professor M Simply not true. I worked in Mexico for years and can confirm thousands of companies moved from the US to Mexico. The job losses due to offshoring far outweigh those due to automation.
1
@Professor M Fair enough. But what about China not adhering to WTO rules? They steal American IP, don't allow many of our most innovative companies to compete in their domestic market, and they subsidize whole industries to a level that is borderline unethical. China does not play by the rules, pure and simple. Tariffs or other restrictions on trade are the only ways to penalize them for bad behavior. We also have to consider that from a geopolitical perspective, China presents an existential threat to the U.S. I have never understood why the U.S. government sits idly by while American consumers effectively fund the growth of our largest economic (and increasingly, military) foe. It just doesn't make any sense.
1
@Father of One
China steals intellectual property but this trade war will do nothing to stop that. In fact, it will make things worse because China will have less incentive to keep us happy, if they don't care about trade agreements. And if they give up the US dollars they hold, then we are in even worse shape. It's not over yet, and it's not looking good.
USA is the biggest importer of Chinese made stuff so there's lots of local businesses that, indirectly, are part and parcel of the supply chain, and if there's going to be less imports from China then those businesses, and there'll be lots of them, that will suffer if Trumps ideology of importing less happens.
Shouldn't he be working to a well thought out plan. Our government works to plans and thinks everything through to it's final conclusion from how it affects the big business down to how it affects the small importing businesses. Importing is just the start of the process of selling goods to consumer.
Unfortunately I think he doesn't care about USA citizens, and is just obsessed with his voters who are rural farmers. What about subsidies for other businesses affected by his tariffs. When Trump is obsessed with a idea, he won't compromise even if he sees he got it wrong. I think he has Attention Deficit Syndrome.
4
Farmers are getting a sixteen billion dollar bailout to make up for lost sales to China. Is this for every year from now on? What will they do for revenue when the Chinese market is gone for good? China had multitudes of bad trade practices that called for an aggressive response and a comprehensive long term strategy with a strong alliance of international support. Except Trump doesn't do strategy or build alliances. He likes loud threats and big actions. Remember how effective his government shutdown was when he wanted border wall funding? We're still in the early stages of this trade war. I don't know what there is to indicate this progresses well
9
@PeterKa: Chinese investors are probably looking for bargains in US farms now.
It's funny to watch how much GOP voters approve of socialism when they're the beneficiaries, isn't it?
@PeterKa
When your first action in a war is to shoot yourself in the foot, success isn't going to happen.
The Titanic took many years to build, but it took one wrong turn to become history. what is happening is unsettling.
15
Obviously, Trump is clueless about supply chain management. (I guess it was not a class at Trump University.) Some manufacturers can adapt quickly if their design and manufacturing cycle is relatively small, but heavy industries such as mining and complex manufacturing cannot simply switch to new suppliers. Such companies are probably going slightly off the rails in their supply management wondering what will happen next.
What can be assured is the continuing disruptions as Trump’s whims change. Starting and stopping abruptly with tariffs or embargoes without looking into the details is never a good business practice.
The ultimate oddity is how many conservatives now support tariffs and here on the NYT have posted accolades for Trump. Conservatives typically fought them for the past gazillion years as liberal plots trying to establish and control a new world order.
8
If the goal was to move manufacturing out of China to other Asian countries, couldn't we just have agreed to TTP and forgone the damaging tariffs?
53
@Robert
While Trumps keeps trashing out and losing ground on these countries, Bolivia, Chile, Uruguay, and Venezuela all joined China’s $1 trillion investment initiative known as Belt and Road. China’s plans to finance billions in infrastructure across the region will update pathways and supply chains that facilitate Sino-Latin American trade. The Asian giant has already supplanted the United States as the top trade partner for Brazil, Chile, and Peru. Beijing also surpassed Brazil as Uruguay’s top trading partner and is the main importer for another handful of countries from the region. And, amid a U.S.-China trade dispute over tariffs, Latin Americans are reaching across the Pacific, opening up opportunities to trade more with Beijing as U.S. products become more expensive. So, "we'll see what happens".... which side would have better capacity and determination to stomach the dire consequences if the war continued to worsen...
6
Trump has a 10-year-old's understanding of trade deficits and has based his trade wars on his juvenile beliefs. He's insane!
How could any of this end well?
Go to cash, folks. The market is extremely overvalued even without this idiot at the helm.
24
What?! The trade war is dragging on? I was assured that trade wars were EASY to win.
24
@Brian
Trump never indicated which side was going to win.
1
Good. About time.
4
@Kimbo
“The main effect in the markets seems to be that aluminum is becoming more expensive for the U.S. consumer” relative to people elsewhere around the world, said Kathrine Fog, the head of corporate strategy and analysis for the Norwegian aluminum giant Norsk Hydro, in an interview in the company’s Oslo headquarters.
While Trump diddle-daddled with his little trade war, the world simply moved on without him
Funny, that
14
@Rick
Yep!!! while Trumps keeps trashing out and losing ground on Latin American countries, Bolivia, Chile, Uruguay, and Venezuela all joined China’s $1 trillion investment initiative known as Belt and Road. China’s plans to finance billions in infrastructure across the region will update pathways and supply chains that facilitate Sino-Latin American trade. The Asian giant has already supplanted the United States as the top trade partner for Brazil, Chile, and Peru. Beijing also surpassed Brazil as Uruguay’s top trading partner and is the main importer for another handful of countries from the region. Latin Americans are reaching across the Pacific, opening up opportunities to trade more with Beijing as U.S. products become more expensive.
So, "we'll see what happens".... which side would have better capacity and determination to stomach the dire consequences if the war continued to worsen....
“...the decade-long recovery from the Great Recession.” One could expect the NYT to slip that in as if the economy didn’t stall during Obama’s last years in office and then picked up again only after Trump reversed Obama’s job-killing policies. But the “Obama economy” is one of the articles of faith of Democrats. Too bad nobody believes it.
5
Yawn. How many of them voted for this know nothing? The chickens always come home to roost.
6
OOPS "known"
Trump, doing his best to destroy:
a.) The Environment
b.)The U.S. and Global Economy
c.) Civility
d.)Honesty
e.) Ability to meet debt obligations
f.)The American social fabric
g.) Migrant families
h.) All of the above
Or in the words of Rick Wilson: "everything Trump touches dies".
27
China doesn't seem too worried and has some trump cards up it's sleeve, from what I've read in NZ newspapers.
Me thinks Trump has under estimated China and China will just do what NZ did when NZ got dumped by Britain when they joined the EU and NZ had to find new markets.
Trump is just giving China an excuse to exert it's power now and take on USA and not rely on USA to buy their product.
This article says that China produces 78% of rare earth minerals. (Article is titled, Don't say we didn't warn you!: China threatens trade war 'nuclear option'.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12235895
1
@CK
Not to mention, China controls about $1.5 trillion. If they decide this is all out do or die economic warfare, they could throw us into a recession.
1
Trump always has to have an enemy. In this case it’s China. It’s in his DNA.
Trade wars are easy! If you're Chinese.
3
I think Trump haters actually want America to lose to China. It won't happen. Look around your house and think about what's made in China. It's not your car. It's not the building materials that went into your house. It's mostly small plastic stuff. A bucket, a hairdryer, an extension cord, a door knob, a smartphone case. It won't be hard to get that stuff made somewhere else. American companies are tired of having their intellectual property stolen. They're tired of China. China is done.
8
@Mark
You may be tired but China isn't. They can cut off our supply of rare earth metals, close American business in China that fail brand-new health inspections and cash in their $1.5 trillion in US debt that they hold.
Hope you enjoy the coming recession,
2
@Andrew Zuckerman Sorry, but the balance of power is massively tilted in the direction of the USA. Your misguided affection towards China/dislike of America is clouding common sense; much like the extreme leftward bias of this "news" article.
1
Mark ... I wouldn't be that sure....While Trumps keeps trashing out and losing ground on China other Latin American countries, like Bolivia, Chile, Uruguay, and Venezuela all joined China’s $1 trillion investment initiative known as Belt and Road. China’s plans to finance billions in infrastructure across the region will update pathways and supply chains that facilitate Sino-Latin American trade.
The Asian giant has already supplanted the United States as the top trade partner for Brazil, Chile, and Peru.
Beijing also surpassed Brazil as Uruguay’s top trading partner and is the main importer for another handful of countries from the region. And, amid a U.S.-China trade dispute over tariffs, Latin Americans are reaching across the Pacific, opening up opportunities to trade more with Beijing as U.S. products become more expensive. So, "we'll see what happens"...., which side would have better capacity and determination to stomach the dire consequences if the war continued to worsen...
Even more now that China announced that they will cut off rare earth minerals as a countermeasure in the escalated trade battle...
What a thug you fanatics imposed on the rest of us...
2
Why is "Air Force veteran" relevant to this story?
A sop at patriotism, or an indication that he might likely have shot his own foot by voting for Trump?
4
I'm not a trade expert, but hasn't China been a bad player on so many levels? And wouldn't we be better-off if jobs went from China to the US? Or if that isn't possible b/c our costs are too high, then to Central and South America so that the economies in those countries can improve and then reduce the tide of illegal immigration? I know that the knee jerk reaction is to call Trump's policies stupid, but I'm fine with pressuring China to stop engaging in activities that are not helpful to us.
12
@Lj Sure, but jobs aren't returning to the U.S. Automation is and that isn't being addressed by GOP and barely by the Democrats. The Democrats at least will come around. The GOP will circle around its super rich donors.
1
@Lj
The thing is that while Trump does make valid arguments as to China as a trade partner, the inter connectivity of the world economy is a delicate and very complex machine. When you act the proverbial bull in the China Shop(no pun intended) there are serious global consequences. As the Wicked Witch of the West stayed: these things must be done delicately. As for manufacturing in South America, it sounds good on the surface, but they are ill equipped and in sore need of training, which means it would be too late by the time they could be ready. Any action taken against the second largest economy must be done with slow and deliberate care. At this point we stand to damage ourselves as much or more than China with an ill timed and poorly managed trade war.
All this lost business, all these growth opportunities stomped on by our next ex-president, who doesn't know how tariffs work or any of the thousands of other details of his current position. Letting Trump get away with his crimes right in front of our faces has caused enough pointless (and pointlessly expensive) trouble for the USA. And if there are any strong, smart and responsible Republican politicians ready to primary this fool, by all means step up.
2
Is everyone just going to wait till trump just destroys the economy like Bush and the republicans did that caused the great recession? Trump’s policies are worse than the bush, they are old and tired and do not work. Vote Blue in 2020 if it is not too late by then!
1
China is toast. Just as Mao destroyed the civilizing influence of the Chinese Nationalists and sent China half-way back to the stone age, so now President Xi (a devoted Maoist) is reversing the liberalizing influence of the recent Chinese leaders. Xi claims to be speaking for the Chinese people, but it's only his ego and a small group of deeply corrupt Party officials (are you listening Ren) who will benefit for his insisting that only he knows the truth.
8
I love the low prices that Chinese slave labor, IP theft, etc bring. And I'm so relieved that I don't have to see it up close. And I love a booming stock market. So, I wish that immoral president would just roll over.
It was about time.
1
@Ivan
What was about time?
Spoiler Alert: It’s the US consumer who’s going to lose in this trade war
3
News alert.... companies were already shifting supply chains BEFORE Trump pulled this latest nutty.
Reason: production costs in China are much less competitive than they were 10 or 20 years ago.
Companies shifting supply chains is a continuous business process. The tariffs on Chinese sourced products has simply accelerated some companies moves in this regard.
And let's not forget.... China is not materially hurt by US tariffs.. it is the US companies and consumers that are hurt as it is they that have to pay for the tariff impacts... NOT China.
10
I can still remember The first meeting in Seattle in the early days at 90's. It was all about globalization. I can remember the police reaction to protesters. Today we have a big mess around the world and right wing policies as new order at all. But I think we can't go backwards. The US have a Donald Trump government for the moment. The question is so long for?
1
Depending on Trump's political fortunes, this may only be Stage 1 in the realignment of supply chains. Let's remember necessity is the mother of invention. For the US, that might eventually mean substantial investments in robotics and AI to manufacture more parts domestically while reducing exposure to higher wages. The overall effect will strengthen America's manufacturing capabilities.
As far as the dire warnings from economists - many who earn handsome incomes for their punditry - they've been poor ambassadors for those who live on a wage based paycheck. Despite the rise of populism and social unrest they are remarkably ignorant of collateral costs - human and environmental - for our current economic models.
@Jeff C
And higher unemployment as robots replace humans! Great. What in the world...could go wrong!
I have a lot of Boeing & Google stock, so I am losing money every day this trade war continues. So be it . China has abused the goodwill of this country long enough without any payback. Now, while we have a relative advantage , we should force them to level the playing field. There are also vital security matters in play. Trump isn't wrong every time -just most of the time. I think he is right on this.
4
@jack8254 - I think the Boeing stock loss has more to do with their own business practice than anything China could do.
9
@jack8254
"...Now, while we have a relative advantage ..."
The shipping of jobs overseas started back in the 80s. The advantage was gone a long time ago---fostered by Reaganomics.
1
@jack8254
We're victims? looool
I mean, poor Americans are victims, yes, but it's not China to blame, but rather Made in China elites like Ivanka and her dad who export jobs and headquarters and keep the savings to themselves.
wayy back when NAFTA was but a twinkle in some peoples eyes, the future of globalization was expanded, Asian counties recognized the opportunitys being opened and WENT FOR IT. Many american companies, so comfortable in their 'positions', simply ignored the long term impact and the business strategies went from "production" to a incresing desire for 'profitability comes first", even at the expenseo of their own good. The glut of 'pleasure products' that amuse and drain the pockets of people worldwide, has led to economics that tilts budgets towrd non-essential needs rather than basic living necessities. the reaction to many of the inequities are often poorly crafted by lawmakers and policy to mend short term issues, rather than the very inevitable long term consequences. america needs to catch up.
My company moved manufacturing "out of China" a while back. Specifically, we moved it to Macau and El Salvador. Business owners are going to manufacture stuff wherever they can get the highest profit margins, which is never going to be the US unless we slap 50% tariffs on every single country outside of the EU, and a couple of the ones inside it.
Manufacturing is not coming back to the US. You need to let it go.
38
@Randall Manufacturing is coming back to the West. Job one is to restrain and reclaim our intellectual properties while leveling the playing field with any countries who wish to trade with us. There is nothing unfair or delusional about this.
Automation is coming and will serve well to return much manufacturing to the West, without the need for slave labor to compete with China. Leaving China free to embark on their own innovations and product developments so that they may cease thievery and build a future from their own developed technologies.
2
Adam Smith and David Ricardo would have knows very well what this all meant for economies and markets.
2
Just wait until China decides to put a squeeze on rare earths (used in just about every tech device - ergo, you're mobile phone).
7
We have multiple Rare Earth mines in the US and Canada. They are dormant because we could get those minerals cheaper if we imported them from China, and thus mothballed our mines. The US will never run out of Rare Earths Minerals. We will just have to pay a smidge more to mine them here.
2
@Dan S - :)) Or maybe they could just stop all shipments of products to the U.S. from this October 1 to January 1 thereby cancelling Christmas?
Picture the chaos of Black Friday at WalMart if the shelves are pretty much empty. What would we fight over to celebrate the birth of the Prince of Peace?
I can see China routing its exports to other countries and slapping that as the country of origin much like it does with its polluted seafood.
3
While Trumps keeps trashing out and losing ground on these countries, Bolivia, Chile, Uruguay, and Venezuela all joined China’s $1 trillion investment initiative known as Belt and Road. China’s plans to finance billions in infrastructure across the region will update pathways and supply chains that facilitate Sino-Latin American trade. The Asian giant has already supplanted the United States as the top trade partner for Brazil, Chile, and Peru. Beijing also surpassed Brazil as Uruguay’s top trading partner and is the main importer for another handful of countries from the region. And, amid a U.S.-China trade dispute over tariffs, Latin Americans are reaching across the Pacific, opening up opportunities to trade more with Beijing as U.S. products become more expensive.
So, "we'll see what happens".... which side would have better capacity and determination to stomach the dire consequences if the war continued to worsen.
2
@hilliard
I've read in a number of business sources recently that, because of its own rising labor costs, China is already moving manufacturing to lower cost southeast Asian countries.
1
@hilliard
Labeling alone won't do it. At a minimum, they would have to disassemble the product and reassemble it before they can put a label from a different country of manufacture on it.
Shifting supply chains out of China is a great idea, but China has a monopoly over rare-earth elements. The resources out of China are scarce.
The only american producer, at Mountain Pass mine, CA, file for bankruptcy in 2016, after extraction restarted in 2012 (the mine had closed in 2002).
The mine was later acquired and resumed operations in 2018. By the way, one of the shareholders is a chinese company.
Rare-earths are vital for the economy (for electronics among others).
China is now threatening to cut off rare earth mineral sales to the U.S.
But remember, trade wars are easy to win. Trump just didn't say for whom.
See also
https://www.cnbc.com/2019/05/30/if-we-cannot-challenge-china-no-one-can-warns-only-us-rare-earths-mine.html
https://www.cnbc.com/2019/05/29/dont-say-we-didnt-warn-you---a-phrase-from-china-signals-the-trade-war-could-get-even-worse.html
12
@Jean-Claude Arbaut The WTO needs to do its job and bring China to heel over IP theft and unfair trading practices. Then these annoying problems can go away without the need for more drastic measures.
1
Russian farmers are LOVING Trump's Trade War.
Ours, though?
Eh.... not so much.
I wonder when Trump will hire people in America to manufacture those suits he wears to his xenophobic rallies instead of his overseas sweatshops where people have to fill a quota or they don't get paid - pretty much slave wages if his fans ever were ever to bother to do the math.
When will Trump have his manufacturing facilities in America instead of China, Indonesia, Vietnam, and (yes, it's true) Mexico?
My guess would be never.
How about NEVER, Trump fans. That's my guess. What's your guess.
4
This is great. China does not play fair. Chinese Police shows up and takes away our Servers and Customer lists (see D&B Roadway). They lock up US citizens for 10 years for failing to pay bribes (see Jude Shao). The Chinese require US companies to enter JVs with their state owned enterprises, and turn over our blueprints and customer lists. Google and Twitter are prohibited from operating in China. Lets cut off these guys once and for all.
3
@MoneyRules Finally, the voice of logic and reason! The issues you point out supplant any of the doomsayer comments here. It's truly mystifying how people can't see China for what it is.
@MoneyRules
Was there some law that said U.S. companies had to do business in china?
1
@MoneyRules
Twitter is the official platform for White House communication so why would a foreign government allow it?
If you voted for Trump, then I have no sympathy. You got exactly what he promised. The rest of us were smart enough to see the freight train coming.
4
You are having electrical problems in your house. An electrician approaches you and says that he has done electrical work on 500 homes and has had only 7 complaints relating to electrical wiring issues, which he resolved with additional work. Then a truck driver approaches you and says “I have never had a complaint about my electrical work” because I am not an electrician. You put the job to a family vote. Your family bases it vote solely on the basis of customer complaints regarding electrical work. Your family chose the truck driver.
The truck driver proceeds to drive his 18 wheeler through your house making it unlivable. He then sends you a bill for solving all your electrical problems - as your house is gone, so too are your electrical problems.
It’s one thing to have the head of government thoughtfully review, based on expert and advisor input, the need for, the potential impact of, and the strategic advantage of putting in place tariffs - and then carefully, strategically use short term tariffs to benefit the American people.
It is another thing to have the head of government be absolutely clueless, and proud of his intentional ignorance on most subjects, decide from his “intuition” that he’ll start a trade war.
Truck drivers should be hired to drive; electricians should be hired to do electrical work, and those who celebrate ignorance and self-important grandstanding at everyone else’s expense, should never be put in public office.
152
@Other Totally agree, and those who have never had a proper job outside of being a professional politician should never be allowed to make decisions involving our country's business interests.
5
@Other - Nice:)
3
My Fortune 100 company is moving manufacturing out of China — to Mexico and Taiwan.
8
@Norwester Excellent. Taiwan is a wonderful place to do business, with great moral values similar to our own.
2
The anti-WTO protesters in Seattle Nov. 1999 were right all along. 20 years later we are finally starting to get the picture.
It is so funny to see Trump use his small hands to shape and mold the global economy for the future!
4
Changing supply chains to weaken your biggest enemy is smart politics. The US , through our trade deficit, has financed China's military buildup. Left unchecked, the US economy would have been completely under China's control in less than 5 years.
Trump is standing up for America's future. If you want to argue with that, good luck.
1
There's a lot of gloating at the hit to China. But not a lot of people are thinking about $2500 smartphones or $1700 televisions that are markedly worse than $350 TVs available today. There are no outright winners and losers in a trade war. Rather, it's simply that the winning and losing is shifted around. In a consumer-focused economy like ours, making consumers into losers is not a politically winning strategy. My guess though is that, as usual, a Democratic will clamber into the White House as soon as the economic chaos and foolishness that a macho Republicans initiates reaches its fruition.
12
@RS. most TV's today are already made in Taiwan, Korea and Mexico. Some of the guts are Chinese but that is shiftable. Your numbers dont remotely reflect the discount value of Chinese manufacturing. It is all of $50 on 500.00 TV.
1
Exactly how Trump wants it play out and China dosen't. Shift the American supply chain out of China.
2
@mkm Bbbwaaaa Hhhaaaa, you actually think there was a strategy behind tRUMP's tariffs. That is so cute.
1
Designing China out of the supply chains is clearly the way to go. By keeping dual-use products and IP out of Chinese hands, we protect American national security.
And when you shift those supply chains to Mexico, Vietnam and Malaysia, among others, you grow the economies in those places -- where American companies CAN sell their products and services, unlike China which discriminates against American products and steals American IP.
That is a positive for the American economy and American workers (Mexico buys much more proportionally from the US than does China). It also employs Central Americans in Mexico, so they don't compete with American workers.
This sure looks like a win-win scenario for America and its reliable trading partners and allies, and a lose-lose scenario for the Xi dictatorship.
And if at the end of the day the rich, elite readership of the Times needs to pay more for consumer products to keep America safe and to grow the American economy, I think it's worth it.
3
@Frank Eloquently put and 100% accurate. Surprising that some here don't seem to back our country in the competitive world of commerce.
"But it really is quite painful to be one of the pawns." Especially when you're being moved around on the board by somebody who hasn't a clue how to play chess.
11
Companies talk about moving manufacturing and suppliers to other countries. Something to consider, are these other countries capable of doing so?
Population in 2019:
China 1.3 billion
Vietnam 97 million, 7% of China
Malaysia 32 million
Mexico 124 million
United States 327 million, 25% of China
China's land mass is about the same size as the U.S. but has 4x the population. It has a large and willing labor force, many of whom come from rural areas, willing to work hard and for much lower wages. It has a rising middle class looking for a better life. The U.S. is #1 in millionaires, but China is #2, and a million dollars goes much, much farther in China than the U.S.
And China's explosive growth has happened since 1980, less than 40 years!
All things considered, it would be tough for the U.S. to bypass China.
6
@David2017 China is a perfect base for manufacturing goods that we don't want to handle. Dirty and dangerous chemicals, cheap throw away items with no profit margins etc. Keeping our IP out of their hands will help restore balance and relegate China to being the factory fo the world to make our nasty and cheap stuff.
@David2017
I understand your point about the massive amount of cheap labor in China.
But if we add India, Indonesia, and the Philippines to your list, we can have access to even more cheap labor than in China.
Also, automation may enable some higher end products to be manufactured in the U.S. at a near-comparable prices, once logistics and quality costs are included.
How many nations in this modern day and age have tariffs. Tariffs are a backward step and even if you want tariffs it doesn't have to be everything or nothing.
Most nations are tolerant and respectful of other nations trading patterns and do business with countries that have tariffs as well as being in free trade organisations.
USA government is scared of change and if they don't join free trade agreements then they're going to be left behind.
NZ's main trading partner is China and we also trade with USA and pay tariffs. Our product sells because we are GE free nation without all the chemicals and genetic modifications that goes into USA product.
You learn about new business cultures like China by making mistakes and learning from them. You don't do what Trump did and insult a nations leader who has no control over how individual businesses operate. Like any transaction, it's buyer beware. Our main milk company learnt that to their detriment when they trusted a Chinese research company when they said go ahead with a particular Chinese company buy. The Chinese research company just made up lies. lol! The farmer shareholders in Fonterra paid for that one. Due diligence is required in any business deals.
It's not the Chinese governments fault if USA hasn't done due diligence in it's dealings with China. USA just scared of changing over to free trade agreements.
4
You notice that nobody in this excellent article is saying that they’re shifting supply chains and production to within this country.
Nor are they going to.
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You’re right. And with the DJT Tariffs, American companies just raise prices....because they can. How does that help the everyday American?
2
I just called Apple to order a I pad pro. As a retired disabled veteran we use to be able to go in the store and get our Apple discount upon showing our retired I’d card. Now you can’t get the discount it is only if you sign up on i.d me and you are lucky enough the password goes through. I am now a disgruntled Apple customer and i hope millions of vets run into this and complain loudly. I had a Mac book Pro in 2016 . By 2017 the battery was recalled and a new key pad put in . Recently an update came up and when i thought it was ok to use it a emergency message came up and said update will be ready in 2 days. Make the computers in America no more Chinese junk.
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@D.j.j.k.
I feel ya. This is not Steve Jobs' Apple. Their products were once superior; now they're just a different flavor of ice cream. And we all are the cows, trust me.
1
@D.j.j.k. Wrong website? This is a newspaper article about trade tariffs. And it sounds like you might want to upgrade from dialup.
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@D.j.j.k. The keyboard you dislike isn't a manufacturing issue. It's a design issue (the design is done at Apple HQ in California).
1
Globalization the way it was implemented was never a good thing for working people in the western developed world. It was of course great for corporations and all those who had a stake in their profits. Protesters in Seattle already realized that in the early 90ties!
3
Can the United States replace China as a source of components? No.
Rare earth elements? No.
Will China replace the U.S. as a source of components? Tomorrow.
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@Lawrence
There are plenty of rare earth elements available in the US. The problem is their refinement which is typically highly toxic.
1
@Lawrence
Trump himself has his Trump trademark on clothing, luggage, beauty products, footwear, furniture, and computer parts.
Shhh. Don't tell his fans that the suit he's wearing to his rallies was manufactured in his overseas sweatshops or they might - eventually - one of these days - maybe when they're in their 80s - finally catch on that he really is NOT their "friend".
2
@Lawrence will china replace the United states as their biggest customer? No
The decoupling of the US and Chinese economies is a necessary pre-condition to war. The war will be fought in the mid-western Pacific Ocean and will involve nuclear weapons.
The US will prevail, but at a horrific cost. The US will retrench and for sure South Korea will be left alone, maybe Japan too.
The bamboo curtain will be on water. Welcome to the new world order.
Emptying The Core Through Unemployment: the Plutocratic Way
There is no democracy, without an economy flush with employment. A society which doesn’t employ people disempowers them: they can’t even go on strike. Thus those who don’t want democracy, can destroy the economy first. That’s sneaky, and most efficient,
This is exactly what has been happening in the last three decades, as employment and economy has been sent increasingly from the wealthiest countries to developing countries… This brought decreasing employment in those wealthiest countries. Thus it disempowered workers while empowering the investors, owners and managers who employed dirt poor workers overseas unprotected by social laws… basically slaves. The more the owners and the international elite were empowered, by this displacement of the economy overseas, the more they manipulated the ruling ideology which they controlled through the media they own and the universities they finance.
We saw it all before, with Rome. The Republic waned when its elite escaped the absolute wealth limit taxation by going overseas, and sending the economy there, while controlling the political process. This voided Rome, and later Italy, of employment, thus power. They remembered that, early in the Roman Republic, to protest the elite, the Plebs had gone on strike, forcing more equalitarian laws.
China can self develop now. Time to bring jobs back to US and EU. That will bring back not just employment, but democracy.
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Well, it is good to hear that an American Company is relocating its manufacturing from China back across the Pacific.
Of course, it is less good to hear that it that said company will be building its new plant in Mexico.
What was that trumpian slogan?
MAKE MEXICO GREAT AGAIN?
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@Lefthalfbach
Perhaps “less good”, but still “quite good”.
We should all welcome a stable and prosperous Mexico.
We should also hope that some of the Chinese production could be moved to Central America, which might reduce the current immigration surge across the U.S. southern border.
So this article proves that Trump’s tariffs are working. The jobs are moving out of China. Eventually the inconvenience of constantly figuring out where to source will mean the jobs will come home.
Quote Adam Smith all you want but the US government was primarily funded by tariffs until WW 1 when we needed more taxes to go to war to bail out the English bankers.
When tariffs were were first proposed as a way to punish China, NYT and other left-leaning outlets were quick assert that this would be ineffective as a way to hurt China, because American consumers would continue to buy all of the things we have come to rely on from China, just at a higher price. The critique was that the American people would burden all of the cost of the tariff, while China would be largely unaffected. Now we find less than a year after the first mention of tariffs that supply chains can very quickly adjust, such that American avoid tariffs, China is punished, and other smaller, poorer countries are getting more economic benefit. Obviously there is some upfront cost in making this change, but long term the tariff would be quite effective as a way to return balance to global markets and curb China's draconian control over business.
4
@Jon: The US has about 5% of the global population. Its capacity to impoverish China by closing its markets is limited.
4
The bottom line is that China has abused our markets, WTO rules, and stolen markets with fraudulent products, and stolen our technological innovations in an ongoing massive transfer. They also claim territorial areas associated with past empires as if Italy was claiming the Mediterranean basin in the name of ancient Rome. When they go to other parts of the world for resources, they don't buy the resource, they buy the country and the land. Yes, it hurts to change. And yes, Americans pay the tariffs. However, resulting production changes to places that don't do those things, in the longer term, that is a better outcome.
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@James
You might want to let Trump in on that since those suits he's wearing to his rallies were made in his overseas sweatshops...
... including the one he has in CHINA.
Also, since he's become president he's registered quite a few more "Trump" trademarks from China, including trademarks he was turned down on prior to his becoming president.
So at the same time he's ranting xenophobic slogans at his rallies, he's not only wearing a suit made in one of his overseas sweatshops, he's also been keeping China's Trademark Office BUSY!
That includes footwear, clothing, golf balls and golf tees, luggage, furniture, and beauty products.
Some are
3
@Jbugko Couldn't agree more. 'Hypocrisy 'R US ' is his main brand. I'm sure Ivanka has an exemption from the tariffs.
1.) “Communist” China is not just a trade-economic partner-rival but an eventual military enemy. Trump’s ‘trade-war’ is not only correct but well timed --- he chose the time, not let her do it!
2.) U.S. victory is assured but the war would be prolonged and the pain considerable. The war would last through many Presidential terms! On the other hand, Joint action by the Atlantic, Indo-Pacific and NAFTA allies would browbeat China and shorten the War.
3.) Apparently, China gave the same penultimate warning she did to India (1963) and Vietnam (1978). Those two were tactical victories but strategic blunders. This time, this action by President Xi represents his desperation and possible internal political instability.
6
In short, companies are increasing their costs.
" If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage."
-- Adam Smith, 1776
Wharton owes this country and the world an enormous apology.
5
@Ken sounds great but if you create unemployment or drive wages lower who does it benefits?
1
He’s only Wharton undergrad. Not graduate. Huge difference.
3
@Ken
It's not cheap if the China steals both the jobs and the company.
I have been advising my clients for a while now to source it from other places.
Let’s face it, low duty and free trade were meant to help downtrodden countries succeed economically, by opening our market to them.
The side effects are that the local manufacturing died as a result, the big companies instead financed the raise of China.
Another side effect is that even with free trade very few countries used this to improve, corruption instead kept them broke.
China in the other hand took the chance and became #2. But then after they grew, we kept their duty low, and manufacturing did not come back either.
So what I tell the clients is to go source the same from other countries still covered under duty free agreements, VietNam, Korea, India, and a whole lot more.
It could benefit those countries, and people would still import duty free.
But even though VietNam and Korea offer a lot of the same as China, people still stick to China for some reason. Cheaper ocean freight as well and less red tape.
Low duty from China is gone for ever. Source it elsewhere, that’s what way you get it duty free and maybe even help them too.
1
@AutumnLeaf: Relocating factories is expensive, and their trade secrets go with them.
President Trump pufferizing. (Pufferizing – a fictitious word, meaning to engage in puffery)
If the current tariffs stay in place, this is how the current $540 billion (2018) of Chinese exports will be distributed in the future.
20-40% of current Chinese exports will continue to be made in China and simply be subjected to tariffs
50-70% of will shift to other low wage countries
10-20% will move back to the U.S.
Our national trade deficit will narrow a bit, but not too much. Some higher value production will move back to the U.S., but not too much.
The biggest win is that our low wage imports will be distributed among several countries that are allies or friendly toward the U.S., including Vietnam, Malaysia, Philippines, Mexico, and others, instead of supporting China’s expansionist policies.
Thankfully, we didn’t move forward with the a complex, unwieldy TPP. We now retain the ability to move quickly, adjust/eliminate tariffs, and determine other terms of trade on a country-by-country basis depending on their strategic interest to the U.S.
8
@John
Here in Canada where most of us live within a couple of hours of the US border, cross border shopping has been a regular occurance for my 7 decades. We cannot afford Yankee dollars and what they will buy. When you eliminate the cheap Chinese goods from your shelves those of us who do not fly will save the cost of passports.
It is easy to be the American President when you do not have either the ability nor the desire to consider the unintended consequences.
Reagan taught you not to worry about the red sky in the morning and today in Kansas where there should be solar panels on the roofs there are no roofs. Carter was not the first scientist President but he was your last.
Science is about observation, and analyzing data but is about probability not eliminating doubt.
Ambrose Bierce defined FAITH as Belief without evidence in what is told by one who speaks without knowledge, of things without parallel.
4
@John
The TPP was meant as a counter to Chinese influence in Asia, even if it was never sold that way, for obvious reasons.
2
@Professor M
Agreed.
But my point is that we can achieve the same results without the downsides of the TPP.
This works both ways. In response to tariffs, the Chinese are currently setting up new long-term supply chains for Brazilian soybeans and Canadian wheat. Once set up, American farmers will have tough time getting Chinese markets back. But then these farmers voted for Trump, so its doubly justified that they reap what they sowed.
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@Dan
If they lose a big part of their market, they won't bother to reap or sow. They will just go BANKRUPT with a whimper.
Donnie is a specialist when it comes to bankruptcy - he has been there at least 6 times, 4 of those running money machines ... er ... CASINOS.
Now he is about to teach his CULT OF TRUMP farmers how you do that.
Are we winning yet?
16
Nah, those farmers will become even bigger welfare queens with larger subsidies, more interest free loans, and monthly welfare style checks as promised by President Fraud.
12
@Dan
My heart bleeds for American farmers. Just bleeds. No, seriously, I mean that. I swear. On the Bible!
2
Passive SMB components - caps, resistors, and the like, even discrete transistors like a PN2222 in an SOT-23 case, these parts are a commodity and you can source them from just about anywhere. China does not have a monopoly on such parts.
It is when you are designing in something like a microprocessor, nonvolatile memory, or other component with a single source (and that source involves fabrication in China) that the problem arises.
Generally we try to stay away from single-source components in our designs. There is no point in putting ourselves at the mercy of a single vendor. But if you want the functionality of that particular component, and there is no other package that will do the job, there is no choice.
And if that single-sourced package is fabricated only in China, and you can't get it because of the trade war, and the design it is going into is part of your core business ... quite...
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@Alternate Identity
If you steer toward commodity components then your products are more easily cloned and copied.
5
@Alternate Identity: Much modern electronics is fully integrated on chips designed on computers and custom fabricated in silicon foundries.
“It is shifting supply chains out of China where possible, and redesigning products to avoid Chinese components where it isn’t”
Uh, wasn’t that Trump’s objective in the first place?
5
@Norm Vinson
Those shifts are NOT coming to manufacturers in the US (which was the object) but to other manufacturers in other cheap labor areas.
So to answer your question (which the article does also), NO, that is NOT what Delusional Donnie had in mind (and I use the term "mind" rather generously).
6
@Norm Vinson
Resourcing to Vietnam or some other nonUS location will not result in any decrease in US trade deficit. Tariffs will just move US deficit to other countries. We will not be bringing any production home.
TariffsRStupid just like Trump. He knows nothing about world trade. End result is price increases to US on imports and gov't subsidies to US farmers etc who lose export markets. We pay for both. IDIOTIC!
1
I don't understand the issues involved in international trade. They are complex and experts often don't agree. Unintended consequences abound.
What I do understand is that Trump doesn't read and can't sit through a briefing. His appointees to major economic posts include Stephen Moore, who is the subject of derision in the field. Please read his wikipedia page for a review of the things he's been wrong about.
Trump appears to be incapable of understanding the issues.
The facts suggest that he didn't like TPP because Obama liked it -- and for no other reason. Having withdrawn from it, he needed to do something different about China. He has one trick in his bag - belligerence - and he applied to a situation he can't begin to understand.
I don't expect Trump to accomplish anything positive. Rather, he's going to hurt a lot of people and walk away. Ask his suppliers in New Jersey.
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@RickP
"Trump appears to be incapable of understanding the issues. "
Not exactly. Trump does not EVER admit a mistake. Even when it is obvious to everyone else that he is incorrect. he is too pigheaded and egotistical to admit that he is less than perfect.
He just thinks he knows better - than anyone, even the generals.
3
@RickP: Trump expects everyone to capitulate to have him leave them alone.
2
This is a global clash of cultures. America should ONLY do business with countries and other businesses that openly and formally endorse the U.S. Bill of Rights and Constitution. Period. For example, women are equal citizens in their countries and the companies they work for have women executives and board members. America can win if we invest in education (not indoctrination at betsy devois charter schools), fully fund research, stop voter suppression, unleash entrepreneurs to solve climate change and embrace our strengths (Bill of Rights and Constitution).
3
@Mark Clevey
First, women would have to explicit rights in this country. So far, we're left out of the Constitution.
11
@Mark Clevey: The "Bill of Rights" is actually a list of restrictions on the use by Congress of the powers delegated to it in the Constitution it amends.
1
@Regrets
Are you saying Women in China,Saudi etc.. have the same rights there than in the US?
1
Heard about cosmetics companies moving production (filling) out of the USA so they can keep the Chinese packaging. Packaging is only a negligible part of the finished product, so could be imported without charge when filled.
Coupled with the loss of trust in government, it will be easy to see the USA as the big loser in the long run.
6
Mercantilism is an historical failure. Hasn’t led to prosperity and fueled tensions between nation states, sometimes toward a violent end. We should be negotiating real and perceived violations of free and fair trade, not slapping on tariffs like political bumper stickers. That will not end well.
10
The US-China trade war has negative and positive aspects. It forces to redefine our manufacturing industry and economy. If companies re-invest in domestic facilities here in U.S., in the end, we will win.
3
@Trassens
How will they win when they must pay the world's highest prices for employee health care while their competitors in other countries pay nothing for state-sponsored health care?
1
As long as the supply chain is not moving back to the US, it sounds like the trade war is actually spreading globalization. Trade that used to be China<->US is just becoming China<->a third country<->US.
That might be great for the third country. But not so much for China and the US, since each party in the transaction has to take a cut.
5
@William Fang yes, everybody loses. That's a trade war. US imposes tariffs on some products of China, China imposes tariffs on some products of China. The US bans companies from doing business with Huawei, so US companies selling to Huawei will be hurt (and Huawei).
3
@William Fang. Mr. Fang the other countries will be free to implement the "comparative advantage", we learned well in Business School, without the gaming of the free market, as practiced by the cheating Chinese leadership for 20 plus years, and as thoroughly documented by many Western thought leaders. Very good for the US and good for smaller developing countries, looking for a leg up! I hope the NYT will please post this.
I would like to know about the Chinese response to the trade war. Are they starting to develop more of a domestic consumer market, rather than export to the U.S.? Can they become less reliant on imports from the U.S., i.e., manufacture in China for their domestic market and export to countries other than the U.S.? The U.S. response is only one part of the equation. If there are fundamental shifts taking place in our business community, what fundamental shifts are taking place in China.
3
@Martin Altman
The problem China faces is to develop a domestic market, you need to have a broad base for consumer spending. Like many countries, China to a large extent has depended upon being a low wage country in terms of producing things. The plus side of that is that companies can manufacture things at really low prices, and increase their profit margins, by shipping it to China, but on the other hand, the workers making the product and the components in it, can't afford it. I saw some puffed up idiot on Faux News the other day claiming China's manufacturing workers are 'middle class", but even with the rise in labor costs there, they are not middle class, not by a long shot. The problem china faces is that they haven't made inroads enough with higher level products and services to have built a big enough consumer economy. Like in the US, there is a concentration of wealth at the top and in the middle, where most consumer power is, there is too little.
That said, I don't think production is coming back to the US, I think the kind of stuff we are talking about is going to end up in other third world cheaper labor markets. Sadly, these tariffs won't address the real problem, that China (and other countries, including India) have barriers against the services and goods the US produce. I suspect that both China and the US are going to find this 'war' ends up like the end of World War I, with all sides decimated and hurt.
1
Meanwhile Trump is pouring billions into farming communities to counteract the tariffs.
7
@Kristine:
Wait, isn't doing a bailout of American's collective farms called Socialism?
1
We import costumes and misc items for Halloween and we're considering relocating our factory out of China so that we don't have to increase prices to our customers by 25%.
But given Trump's erratic behavior, it's impossible to make a long term decision. Plus, real estate prices in Saigon (the most popular China alternative) have gone thru the roof making relocation an expensive proposition. If we move our factory and Trump changes his mind, our real estate purchase will tumble in value.
As you can see, this situation is untenable. The US and its trading partners had a means of working out their differences and it was known as the WTO. It wasn't perfect, but it was better than Trump's hardball routine.
While hardball may impress Trump supporters, it's anathema to business so this erratic nonsense has to stop.
Trump needs to research the ramifications of his "gut feel" decisions that are wreaking havoc on my business and countless others.
105
China has not complied with WTO rulings against it.
1
@CEO in NY. Of course you should know that this is in fact NOT just a Trump action, but rather a general consensus understanding that the Chinese leadership will continue on it's Mercantile-stealing ways, as now understood by diverse, bi-partisan, and international leaders. So plan on it for the long term.
Please post NYT.
@CEO in NY
As China moved from state Communism to more of a market economy, one of the complaints from small businesses and entrepreneurs was that they couldn't find industrial space.
The mayors, and the central government, started building incubator buildings, in towns like Shenzhen, where small businesses could get spaces to work, from a small retail storefront for to an entire floor for circuit board manufacturing, at low rent or free. It's like a food court for digital electronics.
It looked like Canal Street in NYC, when that area was a center of light industry.
The Chinese are overbuilding industrial space, worker housing, transportation, and the entire industrial infrastructure. They have empty cities connected by high-speed trains without passengers. It's a WPA-style government employment projects, but that excess capacity will come in pretty handy when the Chinese want to expand production or develop a new industry -- say, specialty chemicals.
In NYC, in contrast, we followed free-market incentives, destroyed our light industry (like printing), and used the land for luxury housing. This made real estate developers (like Trump) rich, but it surrendered entire industries to China.
The Chinese beat us fair and square. Chinese scientists and businessmen are smart. I read their articles in scientific and trade journals. I read their textbooks.
Anyone in his right mind would want to cooperate with the Chinese, not compete.
7
For the people saying China has a brutal government they are starting to know the value of lifting their citizens out of poverty and have a social programme to improve the lives of the rural poor underway.
China's middle class is growing as they're consumers as well; whereas USA middle classes are shrinking.
I think China might see NZ as it's poster child and is slowly changing into a secular democracy, without it knowing it.
4
@CK. Yes middle class shows a shrinking, but a slight majority is moving up, while still though a disturbing amount is slipping down. This may objectively might to stabilize soon with the high employment rate now. To soon to tell. Study the objective data. By the way....New Zealand may not be so fat and happy now that we are beginning the start of the Chinese downshift in GDP--starting soon. Your economy is rather niche. Time to align even more with US. Lovely country though!
@CK
There is a difference between lifting citizens out of poverty, which obviously the Chinese government wants to do, and building an economy that includes a middle class that includes both white collar and blue collar workers. One of the big problems is that China relies on being a low cost labor market where there just isn't the gains in productivity that can allow workers to move into the middle class. This is made worse by the nature of Chinese businesses, they are not truly free enterprise, people in the Chinese government are 'silent partners" in almost all businesses, which is why working in Chinese government is one of the most lucrative professions there is, and like CEO's of companies here and the well off here in the US, they don't want to share that wealth.
As far as being a secular democracy, they are going the other way, China doesn't allow labor unions, there are few laws protecting workers, and in recent times the Chinese government has become even more controlling of its people and economy, and one of the reasons they are doing this is because people in China aren't stupid, they know that much of the wealth is flowing to the very top and that there simply isn't much growth in the middle class.
@CK, China brutally suppresses dissent and diversity. Uighurs (a Muslim minority) are placed in internment camps for “retraining/re-education”, and their communities are under a dense big-brother surveillance network that tracks the daily activities of individuals. Democracy my foot.
1
Perhaps "global supply chains" are not inherently a good idea for the people of all the countries involved.
2
@Mike McGuire
The world has had global trade and supply chains for over two thousand years. That is what the Silk Road was, a system of trails (and some sea lanes) and trading posts for exchange of goods between the Middle East and Europe at one end and Asian countries including India and China at the other. There were many intermediaries, and very few end-to-end transactions.
This is just a form of war, and like any war has casualties. The wars so far in Afghanistan and Iraq have disproportionately affected a small number of people. This one will hit more people in their pocket books. However, I believe that this economic war is more important than any of the prior ones as it comes down to who will be prosperous in the future. The answer can't be both, because China is already in a economic war with us and this is the first time that we have decided to fight back.
1
@John
We just aren't "fighting" in any coherent or strategy-based fashion, and so it's not very much like a real war. Those have plans, and the current administration doesn't do plans. Or thinking. It's going to hurt, and you and I are very very unlikely to benefit.
4
Your refrain sounds like 19th century Europeans frowning on doing business with/in the USA because they were getting ripped off all the time.
China has 4 times as many people as the USA. For US companies to grow they need to do business with China, now and in the future. All sides can prosper. Long term the USA has no way to win an economic war. Short term it might win a few elections.
Unless of course you think running trade surpluses are the key to a vibrant economy: just like in India, with their super high standard of living.
@Brad Price. Right on JOHN! Actually Brad, lots going on behind the scenes, and I assure you their is a well thought out strategy. Although I do agree that sometimes WH can be very counterproductive,. This from a person who is NOT a fan of this Administration in general & voted for Hillary in 2008 & 2016. Some policy issues are so important as to go way beyond who occupies the WH presently.. NYT Please post this thoughtful "free citizen" comment!
If it makes manufacturing more local, it will be a good outcome. I'm sure that wasn't an intended outcome. In fact, I'm not sure Donald ever has in mind intended outcomes when he flails his policy to exert his emotional expression. It will all get passed to the customer but if it means fewer large transport vehicles across oceans, then I'm in.
1
@RCJCHC Nothing will make manufacturing more local except robots. The jobs aren't coming back. Why does this sentiment keep getting echoed? Americans are expensive and we have environmental protections. China has neither.
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@Barnaby33
Actually, China has been heavily automating as wages have grown. One of the reasons the Chinese government has clamped down the way they have is they realize that they cannot deliver on promises to have workers move up the food chain, and automation is a way to cut their labor costs to stay as the low cost provider. Keep in mind the Chinese leadership is not elected, and most of them are getting quite wealthy from being 'silent partners" of chinese companies, and they don't want to upset their gravy train.
These companies will change to getting stuff from other totalitarian countries, and then we will be battling them with tariffs (remember Tariff Man?) and they will have to re-adjust again and again. With Trump this will never be over...
2
When two elephants fight it is the grass which is hurt the most.The trade war that Trump unleashed will prove to be very expensive in the long run.The motivation of the hardliners may be good and honorable I will agree.But whom should we blame when millions of hardworking Americans are pushed into poverty and the stock market loses trillions in valuation ?Navarro and Lighthizer may have won a pyrrhic victory with their principles and ideology intact at the cost of the ordinary citizen.I hope they realize that and are held to account for their botched up negotiations.The prez should have listened to the likes of Gary Cohn instead of getting rid of him.The approach to the negotiations should have been an incremental one - you just kick cannot around a mammoth like China but I suppose hubris got in the way.
5
@bananur raksas. Thoughtful analysis. Not sure I agree though. Don't see a big medium or long term stock reaction. The Economist quoted in this article highlighted that in 10-15 years we would see the error of our ways, but then she really didn't lay out credible analysis of why that would be the case. Also, the negotiations were going well from our US perspective, and XI seemingly got cold feet from internal domestic pressure. We also tried really hard in last Admin. to no avail.
Changing supply chains was the whole point...
5
@asdfj. Negative. The whole point was to reduce imports and invigorate the American manufacturing sector. Hasn’t happened and won’t.
20
I am the CEO of a medical imaging startup. I have worked in corporate America much of my career and find this article spot on. It's clear these consequences on the supply side are intended with the trade war. I am not a Trump supporter, but in this rare case I support this action as I have seen up close the brutish attempts by the Chinese government-industrial complete to abscond with western technology in exchange for market access in China. I have wished for a more sophisticated approach to this trade war but in the end, this has been tried for decades with administrations much more intelligent than the current one to no avail. Finally it must also be considered the huge impact to small companies like mine and large alike on the sell side of the trade war as there is a huge appetite by the consumers in China for western technologies given the historically low quality of domestic suppliers. The economic impact of this may be bigger than the sell side......witness Apple. Looking forward to the NYT companion article
16
@Andrew Levien
I agree with you about China, but the trade war Trump is waging, I can guarantee you, isn't about intellectual property or about China stealing technology, whether via "joint ventures" or through outright theft via computer hacking (China stole the plans for the F35 fighter by cracking into systems at the company building it). These Tariffs are basically Trump playing to his base, the blue collar workers who really believe all those manufacturing jobs they once had are coming back home, that this is going to force GE and Apple and Stanley Tools and KitchenAid and other companies to make their stuff in the US, which is an outright lie. This is about theater, and Trump doesn't care whether China steals technology or won't allow Cisco routers to be sold in the country, what he is doing is showing his base he is a tough guy (unlike that 'wimp' Obama), it is all theater about getting elected in 2020. His base doesn't care about Cisco or Amazon being able to see there, they don't care China stole things like Toyota's synergy drive, they want to return to something that isn't going to happen, and cheer Trump on with this.
1
I agree with Dorn. The carbon footprint on cross-ocean trade to a single product is too high. Containerized shipping of consumer products around the world must represent a major portion of air and water pollution in the world.
Also, over time, product quality and reliability of supply might best be assured if those products are manufactured and assembled closer to home, whether in Mexico, Canada or the U.S. A healthy Mexican economy may also reduce pressure on immigration by reducing the wage disparity between the U.S. and Mexico.
13
@Citizen
Must it? Carbon footprint of shipping from China to the west coast is about equivalent of 1,000 miles of trucking. So, say, Denver to LA or SLC to Seattle.
Now, most shipping is intermodal and often repetitive, but you cant just assume overland supply chains are efficient, especially if we start going to northern Mexico. Shipyards also have good rail connections which is 3x more efficient than trucking. Good luck getting rail to carry things onsie twosie from Denver to LA.
2
They might be if the US actually had a regulatory system that wasn't in the pocket of US companies. Sadly I avoid US made cars. Boeing Jets and more and more US made pharmaceuticals, food and wine.
Little noticed is the drilling regulations for offshore oil has gone back to the pre-BP oil spill.
After what happened in Flint with the water supply, CA with the wild fires, drug companies with opioids I have very little trust in US manufacturing, utilities or our drug companies.
The idea that the US is a quality producer of goods and services is highly over-rated.
2
@ND- Now that we have gotten rid of that pesky arctic sea ice China becomes much closer in terms of shipping. The arctic route once sea ice is gone will reduce the distance from Shanghai to NYC by 2000 nautical miles.
2
Having bankrupted his own companies, Trump is now doing his damnedest to do the same to domestic manufacturers. As an owner of one such enterprise, I can assure you that there are few or no U.S. suppliers of the products that are needed for U.S. assembly and that few customers are willing to take the price increases reflective of the additional costs due to the tariffs. Thanks, Donald, for taking my business down with your own!
49
I must be missing something. If unemployment is at its lowest rate ever, cough cough; why do we need these low paying jobs to return to the US?
23
Interesting the Trump administration is not bailing out these tech industries but is all in for a second round of, "socialism" for farmers. Hmmm, could it have anything to do with politics and needing votes from certain regions of the country?
40
As someone employed in the domestic manufacturing sector we have indeed had to change our “hard to reverse ways.” By not being able to fill orders in a timely fashion and keep the shop reliably running.
My employer sells goods to infrastructure projects funded by tax dollars, so we’ve always had no choice but to purchase anything other than US made steel and aluminum. Problem is, the few mills that exist in the country can’t keep up with the new orders placed by industries who hadn’t previously been subject to Buy America restrictions.
It would have been much more prudent to have given more tariff exemptions to firms who had previously purchased from overseas so that domestic mills could have caught up to the new demand. Instead, firms like mine who have been buying US metals for our entire existence are being punished by a run on a strained domestic supply chain.
15
@Ben L
Last year we purchased some rectangular tubing, 10x12 I think. The usual 3 or 4 day lead time was pushed to 12 weeks, and we had to delay projects. Design had already gone through seimic checking and stamps or we would have tried to change the tube shape.
2
As much as I dislike President Trump and his tariff scheme, I think that there is something terribly wrong with a system that has products/components crossing oceans multiple times. Perhaps in the long run an unintended consequence will be goods manufactured in a more concentrated area, saving the environment some stress. One can hope....
16
@CD
While we're all worrying about tiny electronics parts filling up and riding around the high seas on container ships, you might want to check the labels on the clothing you're wearing, the towels and linens you're using and the source of that tuna you're ordering in your favorite Michelin starred restaurant. Also, your car, bike, scooter or motorcycle. Electronics would seem to have a much smaller environmental footprint than any of these higher tonnage products we consume like mad and don't derive from the US. Not to mention our solar panels and iPhones, pet food, purses...
Meanwhile, does China really have to steal stuff from us, or are we giving it away? What portion of science and business degrees, internships and post doc opportunities are being granted to Chinese students by our elite universities? It seems like we're bedazzled by shiny trinkets en masse at one level and only too delighted to sell our intellectual assets without restriction at another. And I say that with a whole lotta love in my heart for the Chinese students I've known...
I have no answers, and I wonder about solutions that seem too simple...Global sourcing of electronics would seem to be the tip of a much more complex iceberg.
1
The only positive to this situation is that it will cause, hopefully, massive headaches and problems for the Chinese Communist Party. It is a totalitarian government, guilty of mass imprisonment of political enemies feared or imaginary, and is intent on becoming even more so as it implements any and all technology to the totalitarian goal of a completely subject and docile population.
China is not our friend, and never should have been considered as anything close to being so. It is a vicious state. But profits beckoned for the past 20 years or so, and so our capitalist elites fell silent as their eyes bulged at their quarterly forecasts.
Trump needs to be gotten rid of as soon as possible. But disrupting China's power and ambitions is an example of a broken clock being right twice a day. We should fully realize the Chinese model of society is totalitarian, and should therefore be no friend of American -- and liberal democratic -- interests.
21
@pjc
I just hope we can prevent Trump from emulating the Chinese"leadership" model...
2
@pjc Agree....along with many other nations, particularly Saudi Arabia where the Trump administration just sold billions in weapons of mass destruction. But, hey, death and destruction around the globe is now our main jobs program.
1
The rhetoric from Washington shows that it is no longer working for a fair trade deal; it is working to hobble China as a national security threat. That’s why administration officials cheer the news in this article that supply chains are avoiding China and moving to Vietnam at an increased cost to us: the goal is no longer the win win of trade but to hurt China. The goal is no longer bringing prosperity or manufacturing to the US, it is to make that leave China so that China stays a distant second in power.
Next week Pence is going to have a speech on China. Listen to it: I bet it’s going to be chock full of complaints and reasons why China must be opposed. He will not call for fair trade with China any more than he’ll call for fair trade with Iran. He’ll be calling for sacrifice in opposing trade with China.
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@Yeah Given the innumerable human rights abuses committed by China against their own citizens, it is completely reasonable to ensure China remains 'a distant second in power.'
1
It seems that there will be some winners in this trade war: Mexico, Vietnam, Malaysia, and others. Yes, disruption, but perhaps this is a good thing for balancing the global economy.
7
Isn't the same true for US agricultural exports to China?
Trump may provide immediate subsidies to US farmers to "make up" for lost sales to China today, but as Nixon's soy bean embargo to Japan showed years ago, new suppliers are found and the markets don't return to what they were.
27
The basic position of the Trump administration is based on the premise that a negative balance of trade in goods are bad for the USA and needs to be addressed and rectified. They are dealing with this issue through tariffs, classifying countries as currency manipulators or through punitive measures on countries or products based on national security.
The USA has abandoned leadership in a multi-lateral world where the rules of trade where created by US leadership and essentially followed by all major economies including China. Yes there is cheating at the margins including by the US and US companies and China. There are also mechanism for correcting this.
Any company that invests in any country, including the US under the current policy is at best a guess and at worst malfeasance. It would be absolutely crazy to make any investment decisions as long as Trump is President.
Smart companies will hold their powder until we have restored sanity to US policy. Investment is failing across the globe and bond rates indicate deflation and declining economic activity across the world. The US has the biggest and best house in a neighborhood that the US is gutting.
15
Even when Trump tries to do a positive thing for our country, he does it in a ham handed destructive way. The Trans Pacific Treaty was designed to contain China's growing influence on the world economy, and he unilaterally pulls out and causes the current chaos. Subtle is not a word in his vocabulary.
He is one of those people who think that difficult and complex problems have easy and simple answers. Unfortunately they are always wrong.
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@Harry said about Trump that "Subtle is not a word in his vocabulary."
Neither is "logic" a word in his vocabulary.
9
@Harry Trump is simple minded and does not understand economics, or much else!
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@Harry I don't think he has any idea other than to do what big corporate and global actors tell him to do. If they gave him money, thank you Citizens United (I mean big corporate interests, like Mr. Steel), he does their bidding. If they helped him politically, like Putin, he does their bidding. Trying to make sense of any of his action as economic policy is pointless. There is no logic to it at all. And at times these different players collide. That is pretty fun to watch.
1
We want it all, cheap prices and America made. Can't happen as long as employee based healthcare has to be included in the price of production.
22
@Foxrepublican Correct. Need to move to single-payer federal Medicare for all to reduce health care costs for individual employers. Employer self-insurance is no longer affordable to small and medium sized companies.
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@Citizen
I work for a very small company that not only supplies health insurance but pays all of the costs for employees. I am not required to provide any funding for myself.
It can be done. It just depends on how much employers want to do it.
5
What are the long term consequences of these two global superpowers who were once closely linked economically and making efforts to avoid military aggressiveness toward each other becoming much less economically linked? What pressures will there be internally in China to act when the US military does a legal flyby of one of their new islands in the South China Sea? And just to throw it out there, what effect does a souring U.S.-China relationship have on Russia's place in the world?
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@Bry
Cheap labor/manufacturing is fungible. There is no shortage of other countries clamoring to take China's place in our supply chains.
China needs American investment a LOT more than we need their fungible labor.
3
Do you really believe the alternatives are free of China's influence and power? China has an ocean of cash. It will use its resources to acquire what it has lost. It will adapt. Until we can restore the loss of manufacturing capability in the the US, all we're doing is playing chess with someone who has already taken our queen.
20
@kob China also has trillions in bad loans from the state to government-run companies and an almost complete lack of the experience and knowledge required to set up chip manufacturing and other elements of the information-based economy. China isn't even close to holding all the card here.
6
@kob
What doesn't ever seem to be mentioned is that many of these manufacturing plants in China are American owned. I constantly run into companies you would think would be too small to have divisions in China but they do. Same with India. They may be working there, but there is an American company behind the scenes moving American jobs to some place cheaper.
7
The instability and unpredictability of US will ensure that companies will set up non-US supply and production lines. Only a company which sell the majority of its products in US would move in the direction of producing in US. Most companies that have substantial sales both within and outside of US would set up two production lines and only make products for US within US.
The realignment of multinational business will mean that their previous exclusive concern with low cost, will change. Productivity, efficiency and price will be influenced. The losers will be consumers who will pay more for the same product. Not clear that there will be a lot of winners because new production lines are likely to be manned with robots (not expensive humans).
5
"the unemployment rate last month hit a 50-year low."
Really doesn't mean much when you're still not making enough to afford rent, never mind vacations or a 91.1 million dollar bunny.
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@jay AND - the labour force participation rate has not budged one iota since Trump took office. There are still a large number of people sitting on the side lines with no job.
16
It appears that some industries have already figured it out: "
Design China out!" Hopefully the Trump tariffs and other combined actions will have the effect of shifting manufacturing and sourcing of materials closer to home. That would mean more high-tech and more general production jobs could return to the United States, Canada and Mexico. Another effect will be that China can no longer export its low cost unemployment projects that help reduce unemployment without imposing internal taxes on its working population. In other words China will have to become a consumer driven economy like the United States or watch as their own unemployment grows exponentially. For the last 30 years the U.S. has effectively paid China's unemployment taxes by buying cheap labor from China and causing our own unemployment to rise.
I don't support Donald Trump. He should not be president. But, in the case of trade with China and others he is 100% correct. We can no longer sacrifice our industry, research and technology while creating vast swaths of unemployment and loss of technology leadership in the U.S.
My great fear is that the next Democrat elected will take us backwards and give away our industries and jobs once again while promising us "New Green Jobs".
The Democrat that will run against Trump must be willing to continue to stand up to China and bring our jobs back. If not the America voters will "Design the Democrats out".
China is reeling. Keep it that way. Employee us.
26
@Jay Did you read the article? It clearly stated that the trade deficit has not gone down but the sources for imports have changed. I don’t know how many articles have to be written that restate that manufacturing is not coming back to the U.S..
74
@Jay The article does not support your conclusion. The third to last paragraph states that while imports from China have fallen, they are offset by imports from other countries. The solution companies are taking is not to buy American, but to buy Mexican, Vietnamese, Malaysian, etc.
The astronomical tariffs that would be required to make fully American-made goods the cheaper alternative would hamper the quality of living for American consumers who have easily afforded cheap goods for decades. That's a choice you can make, of course, to be able to afford fewer things in order to buy them locally, but you can't have your cake and eat it too.
32
@Jay
It seems that the Democrats are more supportive of Trump's war with China than Republicans. That is what I read. But there is no way those jobs will return to the US in any meaningful numbers: high cost and low education is a severe problem in the US. (I recall when Samsung opened a plant in Austin, TX it had to start a remedial school to teach high school level reading and arithmetic to enable it to hire locals; I knew the man who ran that school, a Canadian.)
I don't think Trump considers manufacturing in Mexico or Canada as an improvement. I don't see why you do, either. Mexico has the same problem as the US in terms of an educated work force, though it is cheaper. Not sure, but I believe that high school and college graduates in Canada can still read, write and do some basic high school arithmetic (which, by the way, includes algebra and trigonometry).
7
Trump's trade war with China may spin out of control despite Trump's personal charm with Mr. Xi who is president for life while Trump may lose in 2020. Despite Trump's insistence that China is paying the tariffs is not true but Trump lies about most things so it gets ignored. If that was the case why is Trump giving farmers his voters 28 billion to keep their votes. I suppose if he could he would issue a $1000 payment to all republicans who vote for him same idea. Rare earth elements are controlled by China and Trump is disrupting the industry dependent on them will they get 28 billion too from this endless fund Trump has access to.
13
GDP, inflation, and unemployment rates don't tell the full story. 70% of Americans don't have enough savings to afford a $1000 emergency expense. When most people are living paycheck to paycheck, we're clearly on the edge of a precipice.
34
@Victor I.
Yes- And as I just realized how many thousands of baby boomers are retiring every month. Clearly the employment rate is not as rosy as he boast!
3
@Victor I. Luckilly nobody has ever 1000 dollars in medical costs....
Xi should have signed. I don't think the political elite in China fully understand the power of good PR and bad PR. I can't imagine any USA company opening a factory in China after today. And as far rare earth minerals go - well it looks like California, Australia, and maybe Afghanistan are going to profit from this trade dispute going forward. It's a different world.
6
@P&L
Xi understand it MUCH better than Trump. They know that with an economy that is about to get bigger than US (currently more new cars are sold in China than US) they have no choice but to shift into a lower growth consumer driven economy. They have 4 times more people than US and therefore the potential to have an economy 4 times bigger than US. But only if they switch from export driven to consumer driven economic growth. The pain of that switch would be politically dangerous to Xi and his gang. Now Trump has offered himself as the big outside enemy causing that pain (with Xi the courageous leader standing up to the great Trumpish enemy). By goading Trump into this trade war, Trump/US gets the bad PR and Xi the good PR in China that its leaders need for their long-term survival. Who is the stable genius?
10
@P&L - I don't think the average reader in the US fully understands the power of propaganda - despite President Trump's team giving us daily lessons. Our president isn't the only one that can rile up nationalistic feelings in its populace. As the trade war continues, Chinese consumers - the 1+ billion folks American companies are trying to sell to are becoming more and more anti-American.
How will American companies grow in the future? American and European markets are saturated; African consumers are too poor to afford our goods; India is barely able to afford our stuff.
Trump is right to push China on various bad trade behaviors. A trade war is the dumbest way he could have found to try to solve it. The US is an 800lb gorilla - but that doesn't help when the other side is too. Bullying tactics don't work so well then.
3
@P&L
I can’t imagine a single American company not wanting to sell products and services in China, the biggest and fastest growing consumer market in the world.
Hurting China by hurting our economy is not a viable option for our future.
1
Dont be fooled, these companies are not moving production back to the US. For US companies, "Out of China" means Vietnam, India, Indonesia, Bangladesh, Nigeria, Mexico... For European Countries, it will be Eastern Europe, Turkey, Moldova... This trend is not new, it was already in motion since a couple of year, as China's wages have increased so much that other less developped or closer-lying countries became competitive again. Trump's trade war just gave it a boost.
Also, what China cannot sell in the US anymore, it now dumps at lower prices in Europe and the rest of the world, just like US soybean producers have been forced to lower their price to get rid of their stock while Brasil saw its exports to China rise both in price and volume.
217
@SJP
Still a lot better than China, which is our #1 geopolitical rival whereas most of the alternatives are allies.
15
@Keith It's far better for world peace that great powers become economically interdependent. Such interdependence is the counterweight to the military hotheads on both sides when geo-political frictions arise. What do you think restrains China in re Taiwan? And what restraints are left when China sees no value in the economic side of its relationship with the US?
36
@Keith let’s see how many “allies” (vassals) will be ready to do the dirty work for the US in a Sino-American Cold War 2.0.
3
It’s not unheard of for a product to cross the Pacific three or even four times while being manufactured?! Well, now, that’s a pretty big carbon imprint. In setting up new processes and partnerships, perhaps you can keep your environmental footprint in mind too. No reason to ignore that, and every reason not to.
50
The trade war will be worse for China than the U.S.. It won't take very long for U.S. manufactures to switch supply chains to countries like India, Mexico, Vietnam, and Indonesia. Once they make the change, they will be unlikely to return to China.
12
@Mark The basic problem of losing jobs here is buying stuff from low wage countries. Getting stuff from India, Mexico or Vietnam isn't going to bring any jobs back to the US, as Trump promised. Other trade disputes with China are peripheral.
9
@Doug Lowenthal
And the US is at full employment so where would the workers come from for these 'jobs' brought back to the US?
Curious?
2
@Mark-Who will they sell their goods to?
Diversify! This has been my rallying cry for more than twenty years, but nobody listens to me because I'm not influential. Our problem with China is not trade. It is too much trade (namely imports) from one country called China. Our country should NEVER concentrate trade with one country, especially a totalitarian country bent on global dominance with little respect for intellectual property rights. We should diversify our trade around the world, with particular importance given to our immediate neighbors to the south. Use their cheap labor and produce a better economy. That will result in fewer illegal immigrants -- just by favoring diversified trade in places other than China.
81
@The Weasel
According to US census for this year, China is #3. Mexico and Canada are number 1 and 2 respectively. 75% of US trade is spread over 15 countries. Mexico's share this year is about 15%. Here's the link: https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html
1
@The Weasel 100% right! I am a long student of China- I have been saying the same thing as you- we should do this out of strategy- never mind a little short-term pain in costs of cheap goods.
2
@The Weasel I doubt Donald could see the long term advantage of spurring Central American economies and hopefully alleviate the violence and suffering of its citizens. He does not play well with others.
1
Of course, this process runs two ways at least
While we stiff China on semiconductors, China is building up soybean supplies from Brazil and elsewhere.
These changes will not vanish when Trump finally comes to his senses, like that's going to happen..
Farmers waiting with baited breath for things to get back to normal are in for an even greater shock.
Our President makes clear the US is not a reliable trading partner (or partner of any kind); markets around the globe have taken note and moved on.
We'll paying for this for decades, and farms in flyover country are about to turn corporate at a record rate.
Which will be interesting because, as foreigners buy up American farm land with increasing regularity, we are going to find more and more of our too-liberal agriculture subsidies flowing to foreign hands, who will use them to drive more Americans off the land.
Good plan, Mr. President.
170
@oogada My thoughts exactly. While it take a growing season or two to shift agriculture sources and for countries to ramp up production, I am sure it is much easier to find another source of soybeans or pork than to find another supplier of a custom made part, or electronics. I would be interesting to see the numbers from the China side.
I also wonder how many countries not named China are now questioning trading with the US and are instead looking for other options. Donald Trump has demonstrated a willingness to launch trade wars against our closes allies. I know I would at least be looking around for a non-US supplier.
29
@oogada
America will take those lemons (unsold soybeans) and make lemonade (biodiesel). Going forward, American farmers may then diversify into other crops or they may find a new market for their existing crops. For example, nearly the entire output of grain farmers in tidewater Virginia is barged across the Chesapeake Bay to Purdue chicken farmers in Maryland.
2
@Brent Many Canadians, annoyed by Trump's fake "national security" tariffs on our steel and aluminum (still not completely removed) ,disparagement of our Prime Minister, and bullying USMCA negotiations, are shopping with non-US suppliers.
We have found products as good as, or better than, US made; and often less costly. So, why would we return, as consumers?
21
“We’ll design China out,” Mr. LaFrazia said.
China continues to balk at the West's decades old request to operate and follow the guidelines of the WTO. On insisting that will do whatever it wants it is designing the beginning of its own ending.
17
Remember: ABC (Anywhere but China)
Short-term pain, but good for the long-term to disentangle from China.
Xi overshot his "China invincible/ super-power" theory. I hope we have the patience to see this through.
73
@MS
Tell that to the farmers who are losing out on their market for soybeans, corn, hogs and other products. Once a new supplier starts to take that business, the old supplier may be out of luck for a long time,whether the tariffs stay or disappear.
10
@MS
Through to what? Ah, yes, another republican recession. They do them so well.
16
@MS perhaps Americans should boycott Walmart and Hobby Lobby. It’s really hard to apply the “ABC “ strategy particularly at those stores.
8
A large amount of U.S. trade with China began at least as far back as 1980. U.S. manufacturers apparently had NO problem shifting their supply chains back then, and outsourcing their fabrication (and American jobs) to China and the rest of Asia.
Why is it such a problem for them now to bring that manufacturing back to the U.S. ? Could it be that corporate greed is the obstacle ?
37
@Iman Onymous Costs are much higher in the US, that's the main reason—e.g. the reason Trump goods themselves are Made In China. If quality were much higher in the US, it might justify the higher costs, but where quality is equal or lower in the US, no rational person in business would relocate to the US. The key really is for the US to outcompete the Chinese either in cost or in skill. Cost would be hard, skill might be possible, but it would require a level of strategic investment and leadership this country has not seen since WWII.
25
@Geoff Knauth I absolutely agree with : " it would require a level of strategic investment and leadership this country has not seen since WWII." And given the level of willingness by our "leaders" to let the 1% off the hook for their improper (and some would say "anti-American") business behavior, I don't think we'll be seeing that WWII leadership any time soon. But then, we're swimming against a tide of bloated plutocrats in the U.S. Senate and the Oval Office.
10
Can American companies remain profitable if they move production here and pay workers American wages? It's a good question and should have a simple answer. I doubt it.
4
"Shifting supply chains away from China." Apparently tariffs (which everybody says are bad) are beginning to accomplish this. It seems as though tariffs are aways bad except when they aren't...
21
@Tom - How is moving suppliers from China to say Vietnam, or some other low-cost country, bring jobs back to the US? It ain't!
323
@PS Vietnam and Ethiopia, two states where many previously Chinese-based supply chains will now be anchored, allow American companies to compete on a level playing field. They also do not require the US to hand over intellectual and proprietary technology for access to their markets. Furthermore, neither of those states is militarizing large stretches of the open ocean and making claims on other states' sovereign territory, like China is doing in the South China Sea.
31
@PS Of course we know those jobs are not coming back to the USA. I wouldn't say that they were.
The reason it is good is because it hedges our bets and spreads our action, and prevents us from becoming too reliant on the Chinese behemoth.
24
We should sharply distinguish between trade with China (which is fraught with risks) versus trade with our neighbors such as Mexico and Canada. NAFTA is a good thing. We've got to find a balance between unalloyed free trade (which has been destructive) and total economic nationalism and isolationism.
If this trade war does end up shifting manufacturing to cheaper regions in the Americas, or to countries that do not seek to export an authoritarian model, that might be an unintended positive benefit. We should be looking to reward firms that move their manufacturing from authoritarian regimes to relatively liberal ones in South and Central America.
13
@Dhanushdhaari: Trade war is not in process for any "humanitarian' reasons or to fight with authoritarian regimes. You have gotten all your concepts confused here especially "unalloyed free trade", there isnt any.
1