Real Analysis......

[SnowRider]

And not just info from a blow-heart like @f7ben

 

Why Donald Trump's China tariffs are likely to be a bad thing for him

(CNN)On Thursday, President Donald Trump announced a series of tariffs totaling $50 billion against China, the second time this month he has instituted tariffs. (The first were on steel and aluminum and not specifically directed at China.)

Why is Trump doing this? And will it trigger a trade war with China? I reached out to my friend Patrick Gillespie, an economics reporter for CNNMoney, to get some answers.

Our conversation, conducted via email and lightly edited for context, is below.

Cillizza: Are these tariffs against China unprecedented? If not, have past tariffs succeeded?

Gillespie: The scope and breadth of these tariffs is unprecedented for US-China relations. But we already have hundreds of tariffs and trade barriers on China for other exports, such as steel and aluminum foil.

Trump is dusting off a very powerful trade tool that grants him authority to slap tariffs on China without congressional approval. It's called the Trade Act of 1974 -- specifically section 301. The law fell out of use in the early 1990s with the creation of the World Trade Organization, which is intended to be the global police on commerce. The Trump administration argues the WTO is ineffective and that it needs to take its own action.

US tariffs on China have not succeeded, in terms of protecting [American] jobs -- Trump's ultimate goal. For example, the US continues to lob tariffs on Chinese steel, and it's set to impose a global tariff on steel Friday. Yes, Chinese steel exports to the US are way down, and they only make up about 2% of all steel shipped to American shores. But the US is already investigating whether China is shipping its steel to Vietnam, then to the US, to evade US tariffs. Vietnamese steel exports to the US surged nearly 300% in 2016 -- the same year the Obama administration slapped a large tariff on Chinese steel.

More broadly, global steel prices have been kept down by China flooding the market with its cheaply made steel. US steel companies struggle to compete -- and maintain jobs -- when global prices are kept low.

Cillizza: Do we know what specific products the tariffs are aimed at? And how those were chosen by the Trump administration?

Gillespie: As of Thursday, we do not know which specific products will be targeted. Trump is expected to put tariffs on about $50-60 billion Chinese exports to the US. That's a little over 10% of what China sends to America each year. A senior official at the US Trade Representative declined to tell reporters during a background call Wednesday about which products, the number of tariffs or how big each tariff would be.

However, Politico and The New York Times have both reported that it's expected to be about 100 tariffs on a range of Chinese exports, from toys to electronic goods -- the things American consumers buy. We don't have the full list yet, but expect prices to go up for some everyday consumer items. How much and which ones -- that's what we all want to know.

Cillizza: There is much worry stateside of a trade war. How aggressive has China been in terms of potential retaliation?

Gillespie: China isn't mincing words. They say they will retaliate, but they won't show their cards until Trump's tariffs come through. No action yet, but it could come as soon as Thursday.

Fears of a US-China trade war are rising. On Thursday, the Dow was down as much as 500 points -- and it was down even before the news about Trump's lawyer resigning. These are the world's two largest economies. A trade war between them runs the risk of embroiling large swaths of the US economy. The size of these tariffs -- $50-$60 billion -- is more than double what we import in steel worldwide. So while the steel and aluminum tariffs are global, this China-US case is, in fact, much bigger in many ways.

China could hit American farmers hard. Over 60% of American soybeans goes to China, according to the US Soybean Export Council. China also buys lots of American pork, sorghum and other products. The real concern is the domino effect for farmers. A tariff on soybeans means farmers would have to sell more soy in the US -- at the expense of other crops. Farmers have told me [that] one tariff can actually lead to a lot of pain, and lower prices for other farmers, even if they don't grow soy.

Cillizza: What's the effect -- if any -- on the American economy -- of these tariffs, particularly in the wake of the steel and aluminum tariffs Trump recently out in place?

Gillespie: A full-blown trade war would, over time, wipe out any gains of economic growth from the tax cuts. It would also wipe out a year's worth of wage growth. That's according to analysis last week by UPenn's Wharton Budget Model. It's unlikely we'll get to that extreme, but a US-China trade war would raise prices for consumers, cost jobs in both countries and risk ruining a really sweet moment in global growth. Right now, almost every major economy is growing. That hasn't happened in a decade, and it's a sign of how healthy the global economy is 10 years after the financial crisis.

About two-thirds of the US economy is driven by consumer spending -- you and me buying stuff on Amazon and at Walmart. If prices for consumer goods rise, spending will dip. There's already a small slowdown in consumer spending -- it's declined for three straight months on a monthly basis. It's never a good time to raise prices on consumers, but the engine of the US economy is already showing signs of a slowdown.

Good news on the steel and aluminum tariffs: The Trump administration announced Thursday it will exempt the European Union, Argentina, Brazil, South Korea and Australia. Mexico and Canada were already exempt. That excludes the top 4 steel exporters to the US, and four of the top 7 aluminum exporters. So the steel and aluminum tariffs won't deliver the death blow to global trade that many people feared. They will still hit Russia, China, Japan and all other nations.

But with all the exemptions on top exporters, it raises the question about the effectiveness of the tariffs. Trump argued that US national security is at risk from imported steel and aluminum. So by that thinking, Japanese steel poses a threat to America, but not European steel?

Cillizza: Finish this sentence: "In a year's time, we will look back on these tariffs as a ____________ thing for Donald Trump's political future." Now, explain.

Gillespie: "Negative."

The irony is that tariffs will hurt the red states more than blue states. Farmers across the Midwest could face Chinese tariffs. Steel and aluminum tariffs will still likely cost jobs at auto manufacturing plants in the Rust Belt. Even in the South, lots of foreign car makers, such as BMW (Spartanburg, SC) or Volkswagen (Chattanooga, TN) or Toyota (Georgetown, Kentucky) will be adversely affected by the steel and aluminum tariffs. Lots of steel goes into making a car, particularly the engine.

What's key: It's not just that imported stuff becomes more expensive. American companies take advantage of less foreign competition and raise their prices to maximize profits. Prices for American-made steel and aluminum are already up since Trump made the initial announcement on March 1.

Trump's campaign rhetoric on trade certainly struck a chord. The consequences of his actions now may not draw the same cheers.

https://www.cnn.com/2018/03/22/politics/china-tariffs-q-and-a/index.html

[racer254]

Summarize the article for us toolkit.  Or do you only want to say it's "BAD FOR TRUMP"

[SnowRider]

9 minutes ago, racer254 said:

Summarize the article for us toolkit.  Or do you only want to say it's "BAD FOR TRUMP"

Take a look......and ask yourself......if slapping broad tariffs on countries and materials was so good and easy....why hasn’t it been done to this extent before.....and Dump is no genius...........so it appears the negatives outweigh the positives.......which means it’s no time s good move.....and now that the job participation numbers and unemployment numbers are real  .......and the global economy is growing for the first time in 10 years ........what is the end game.......

[Edmo]

“This may reduce the gains from the tax cut”

Are they actually admitting the tax cut was a good thing?

Poor CNN, can’t keep the phony narratives straight.  

[SnowRider]

13 minutes ago, Edmo said:

“This may reduce the gains from the tax cut”

Are they actually admitting the tax cut was a good thing?

Poor CNN, can’t keep the phony narratives straight.  

 Intellectual dishonesty from the Dumper  We are not in a recession.....so why the deficit spending?   

[racer254]

The end game?  To stop letting other countries take advantage of the US.

 

[SnowRider]

14 minutes ago, racer254 said:

The end game?  To stop letting other countries take advantage of the US.

 

 Is it a net negative or positive? 

 

Doe Dumber is balls deep in Dumps Rump  

[Mainecat]

This fails as it always has. If Trump actually knew a little about history.

[Snoslinger]

1 hour ago, racer254 said:

Summarize the article for us toolkit.  Or do you only want to say it's "BAD FOR TRUMP"

over your head? you, ben, and many others are completely clueless on this topic. if what you think is possible, was indeed possible, why wouldn't others prior to trump have done it? trade is a finely tuned machine, assembled by many experts over the years. is it perfect? no, never could be. is it working well? I'd say so, look at the wealth our country has, ESPECIALLY THE CORPORATIONS. we live in homes, neighborhoods, school systems, own toys etc etc etc that other nations and citizens would LOVE to have. yet here you are crying. the corporations are the root of your problems, not the countries we are trading with. they have abundant wealth and you fucking dipshits keep thinking the more they get, the more you'll get.

do you really consider many of the countries we trade with as "living it up?". would you like to be on the other ends of our trade deals? I'm all for trying to reel china in on some of their practices, but it must be done with surgical instruments, by surgeons who know wtf they're doing. trump, with a chain saw in hand, isn't that. the unfortunate part of all this is that trump will likely be gone by the time the effects of his chain saw really hit home. I'm sure you'll manage to blame the carnage on someone else though, you always do.

 

[racer254]

28 minutes ago, Snoslinger said:

over your head? you, ben, and many others are completely clueless on this topic. if what you think is possible, was indeed possible, why wouldn't others prior to trump have done it? trade is a finely tuned machine, assembled by many experts over the years. is it perfect? no, never could be. is it working well? I'd say so, look at the wealth our country has, ESPECIALLY THE CORPORATIONS. we live in homes, neighborhoods, school systems, own toys etc etc etc that other nations and citizens would LOVE to have. yet here you are crying. the corporations are the root of your problems, not the countries we are trading with. they have abundant wealth and you fucking dipshits keep thinking the more they get, the more you'll get.

do you really consider many of the countries we trade with as "living it up?". would you like to be on the other ends of our trade deals? I'm all for trying to reel china in on some of their practices, but it must be done with surgical instruments, by surgeons who know wtf they're doing. trump, with a chain saw in hand, isn't that. the unfortunate part of all this is that trump will likely be gone by the time the effects of his chain saw really hit home. I'm sure you'll manage to blame the carnage on someone else though, you always do.

 

Ah yes, the intellectual elite such as yourself, mc, toolkit are the only ones that can understand this.  Yet when asked to summarize, the best you can come up with is questions about why others have not tried it and blame all the problems on corporations.  United States based Corporations, right?  Damn you intellectuals sure have a screwed up way of thinking. 

[Anler]

2 hours ago, Edmo said:

“This may reduce the gains from the tax cut”

Are they actually admitting the tax cut was a good thing?

Poor CNN, can’t keep the phony narratives straight.  

I'm not sure what point they are trying to make. Trump is doing something that is going to hurt his bottom line? Are they worried about Trump's income all of the sudden?

 

[Highmark]

Some interesting pieces from the article.

Vietnamese steel exports to the US surged nearly 300% in 2016 -- the same year the Obama administration slapped a large tariff on Chinese steel.

 

[Zambroski]

2 hours ago, Edmo said:

“This may reduce the gains from the tax cut”

Are they actually admitting the tax cut was a good thing?

Poor CNN, can’t keep the phony narratives straight.  

That’s a good summary.

10 minutes ago, Nazipigdog said:

I'm not sure what point they are trying to make. Trump is doing something that is going to hurt his bottom line? Are they worried about Trump's income all of the sudden?

 

They don’t know either.  But your girlfriend thought he had a “gotcha” thread.  Because he’s so smaaaat!

Tool Kit the Idiot.  There’s a song there somewhere.  Kind of a children’s warning type song.

[Edmo]

11 minutes ago, Highmark said:

Some interesting pieces from the article.

Vietnamese steel exports to the US surged nearly 300% in 2016 -- the same year the Obama administration slapped a large tariff on Chinese steel.

 

Obama’s tariff was toothless, they just rebadged it and kept it coming. 

[Anler]

15 minutes ago, Zambroski said:

That’s a good summary.

They don’t know either.  But your girlfriend thought he had a “gotcha” thread.  Because he’s so smaaaat!

Tool Kit the Idiot.  There’s a song there somewhere.  Kind of a children’s warning type song.

They just throw everything at the wall to see what sticks. 

[Zambroski]

12 minutes ago, Edmo said:

Obama’s tariff was toothless, they just rebadged it and kept it coming. 

Obama’s whole administration was economically and  business inept but brilliant propaganda strategist with the help of their media.  Problem is, the working class just kept looking around and asking themselves...”how is this getting better?” As companies and jobs were shipped out of America and a pace never seen before.  Stupid deplorable Trumpers!!

#AMERICAFIRST 

 

[Zambroski]

7 minutes ago, Nazipigdog said:

They just throw everything at the wall to see what sticks. 

They should try to just throw a few things that are sticky.

It’s as if nobody ever read “The Boy  that Croed Wolf.”

The Russia thing is dead.  It’s over.

[Anler]

25 minutes ago, Highmark said:

Some interesting pieces from the article.

Vietnamese steel exports to the US surged nearly 300% in 2016 -- the same year the Obama administration slapped a large tariff on Chinese steel.

 

 

12 minutes ago, Edmo said:

Obama’s tariff was toothless, they just rebadged it and kept it coming. 

No it wasnt, it was an economic leverage move on China. When the oil cabal sank the commodity prices on oil to fuck with Iran, Venezuela, Russia (for interfering in Syria), etc.. and also currency manipulation, the Chinese and Russians started dumping US treasury notes. Not too many people/places/countries can pick up that kinda scratch. TPP and the tariffs were an effort to fuck China on trade and leverage them into playing nice. Economic extortion, its what we do!

[Ez ryder]

6 minutes ago, Zambroski said:

”

The Russia thing is dead.  It’s over.

did I miss the mid terms? 

[Zambroski]

1 minute ago, Ez ryder said:

did I miss the mid terms? 

No.  Look for mass suicides.

Ughhh....I hope I didn’t jinx it.

[T1R9sledder]

1 hour ago, Snoslinger said:

over your head? you, ben, and many others are completely clueless on this topic. if what you think is possible, was indeed possible, why wouldn't others prior to trump have done it? trade is a finely tuned machine, assembled by many experts over the years. is it perfect? no, never could be. is it working well? I'd say so, look at the wealth our country has, ESPECIALLY THE CORPORATIONS. we live in homes, neighborhoods, school systems, own toys etc etc etc that other nations and citizens would LOVE to have. yet here you are crying. the corporations are the root of your problems, not the countries we are trading with. they have abundant wealth and you fucking dipshits keep thinking the more they get, the more you'll get.

do you really consider many of the countries we trade with as "living it up?". would you like to be on the other ends of our trade deals? I'm all for trying to reel china in on some of their practices, but it must be done with surgical instruments, by surgeons who know wtf they're doing. trump, with a chain saw in hand, isn't that. the unfortunate part of all this is that trump will likely be gone by the time the effects of his chain saw really hit home. I'm sure you'll manage to blame the carnage on someone else though, you always do.

 

I hope it's a Stihl chainsaw....US made product causing carnage!!! 

[Highmark]

32 minutes ago, Edmo said:

Obama’s tariff was toothless, they just rebadged it and kept it coming. 

They just sent it thru other countries like Vietnam and Canada.  

[revkevsdi]

Do any of you think you can win a Trade war with China?  Their leader just got elected for life. That’s a bad thing in general but it means China can play the long game. 

They don’t have to worry about the stock market during mid terms or and election two years from now. 

When farmers start going tits up because the price of their products tanked, they may not be so sure of their Trumped up President. 

[SnowRider]

1 hour ago, Snoslinger said:

over your head? you, ben, and many others are completely clueless on this topic. if what you think is possible, was indeed possible, why wouldn't others prior to trump have done it? trade is a finely tuned machine, assembled by many experts over the years. is it perfect? no, never could be. is it working well? I'd say so, look at the wealth our country has, ESPECIALLY THE CORPORATIONS. we live in homes, neighborhoods, school systems, own toys etc etc etc that other nations and citizens would LOVE to have. yet here you are crying. the corporations are the root of your problems, not the countries we are trading with. they have abundant wealth and you fucking dipshits keep thinking the more they get, the more you'll get.

do you really consider many of the countries we trade with as "living it up?". would you like to be on the other ends of our trade deals? I'm all for trying to reel china in on some of their practices, but it must be done with surgical instruments, by surgeons who know wtf they're doing. trump, with a chain saw in hand, isn't that. the unfortunate part of all this is that trump will likely be gone by the time the effects of his chain saw really hit home. I'm sure you'll manage to blame the carnage on someone else though, you always do.

 

Way over the Clown Posse’s Head  

[Snoslinger]

2 hours ago, racer254 said:

Ah yes, the intellectual elite such as yourself, mc, toolkit are the only ones that can understand this.  Yet when asked to summarize, the best you can come up with is questions about why others have not tried it and blame all the problems on corporations.  United States based Corporations, right?  Damn you intellectuals sure have a screwed up way of thinking. 

no, I am not an economics nor a trade expert, never claimed to be one. neither is trump. but I'm smart enough to know that if that was easy peasy as trump and you think it is, it'd have been done a long time ago. dipshit.