What I don't understand is the response. The burden of this cost has entirely been placed upon US businesses purchasing products from (in many cases) the only place you can buy them and then assembling the completed product in the US with US labor.
As someone doing small-scale production in the US, the simple way for me to avoid these tariffs is to have China assemble everything. Finished consumer goods have been explicitly avoided in this list. Can you explain to me how this is helping US manufacturing?
In what way would you punish China for their bad actions regarding US technology?
(b) It actively harms some businesses, but also gives room for new companies to form where they wouldn't have been able to previously. It's wrong to claim this hurts 'business' in a broad sense.
>Sometimes doing nothing is better than doing something.
Perhaps but in this case better for who? It doesn't seem to me that - for most Americans - allowing the Chinese to steal our technology and then underprice our businesses with cheap labor is beneficial.
This tariff isn't preventing that, or punishing the Chinese companies involved.
> The reason they're the only viable place to purchase these items is because they're so cheap. Making them more expensive gives space for non-Chinese competitors to enter into business.
This tariff makes American assembly of Chinese components more expensive than it already is. Finished goods made in China are unaffected.
For example, an assembled-in-china iPhone will stay the same, but the moment this comes into effect, the cost of making the Mac Pro in the US will go up substantially.
To avoid this, apple can either:
1. Shift Mac Pro assembly to any other country.
2. Switch out all their suppliers and components to ensure that nothing comes from China.
Most products have done #1 without the tariff. The tariff just makes it harder to justify keeping anything in the US.
It's too late for IP on old products, China is becoming more and more interesting for european "brain" (or US is less interesting, i don't know), and China education have caught up to western education (at least in STEM) during the last decade.
The tariffs attack the wrong goods: Us manufacturers will still be buying them at 25% up, and chinese and europeans will sell finished products lower than manufacturers. And China can actually outsource the finishing touch of unfinished products in SW Asia or (even better for almost everyone) in Africa.
Honestly i don't really care but i am interested on how India/Indonesia (and some african countries i hope) will take advantages of Trump policies. To me this is a good thing for the world, general "comfort" of several countries could rise thank to Trump. I know it's frowned upon here, but i like several move he made, including this, and how he made european countries closer.
- China's labor prices are increasing faster than they are in the US. So fast in fact, people are automating factories in China and/or moving factories to other countries.
- Every country _except_ the US will continue to buy those goods at the real market price.
- This is just exporting US jobs to Mexico/Canada who will assemble and import into US via NAFTA. That is the best case.
- Worst case this sets off a permanent trade war with China and the US is forced to sever ties with every potential "cut out" through which trade can flow. The US would need to knife all of its allies in the back and impose these tariffs on all nations for this to actually work.
- The correct response to China's behavior was the TPP followed by multilateral action to punish China.
So subserving the US to a more ludicrous IP extension (both in duration and power) from less totalitarian (than china) nations (but still more than the US) is the solution? Laughable and misguided.
There's an important qualification: that's probably only true in the short or medium term. I believe the goal is that the higher cost would produce economic space for competitors to enter the market.
Ironically, I believe the WTO rules allow for countries classified as "developing" (like China) to maintain high tariffs to develop local industry for precisely this reason.
Exactly, except there is no long term because the following administration will undo all of what the current one has done.
I don't think that's true, which is proven by the fact that China is strongly opposed to the tariffs and plans to retaliate with their own. China's exports will go down, so it will cost them too.
This is imho the right thing to do: on the large volume, it might make it economic enough to just build such components in the us, recreating old jobs of the now lost middle-class.
Cheap labor is plentiful, there's only one US consumer market. China has no leverage here.
What if China just sells to other customers? What is China subsidizes it's manufacturers, so they get paid and keep their production capacity whether or not they're actually producing? Exactly like soybean and corn farmers in the US are btw.
The whole thing seems incredibly complex, and most of the economic opinions I read about don't say "markets are better when the goverment skims 25% off of all transactions".
So I'm curious how you immediately come to the conclusion "USA Wins, China has no leverage, game over".
The point isn't for the government to skim 25%, it's to get China to trade fairly or if worse comes to worse bring manufacturing back to the US.
In the event of a trade war US has leverage because we have the market and a essential product, food. US consumers can live without another 42in tv, Chinese can't live without food and they are entirely dependent on importing that food.
But they aren't dependent on importing that food from the US. Brazil, Australia, Thailand, Indonesia, Malaysia, Canada and Argentina are all happy to step up and take over for US producers who are now going to see demand fall through the floor and these producers have been preparing for the inevitable shoe to drop in retaliation for US tariffs for months now. Luckily most of the damage is going to be felt in those central plains red states, so we can all ruefully shake our heads and remind them that this is what happens when morons elect one of their peers.
But I am sure people are just going to be overjoyed when their Christmas electronics are significantly more expensive, and we will see how long they believe delusional statements like ones claiming that this action will "bring manufacturing back to the US" -- I am betting that line will get you a beat-down in the Midwest by next spring.
say what you will about trump and 'central plains morons', but last time I checked, NYC isn't in kansas so 'their peers' is a bit of a stretch..
If these tariffs are on components and not manufactured goods, then it seems like it would push manufacturing into China, not bring it back to the US.
Compare that to even cheap US labor rates and it's a no-brainer.
In 2018, it's a whole lot easier to avoid doing any manufacturing in the US than it is to avoid using any components made in China; and both approaches avoid the tariff as written.
If the goal is to bring back component manufacturing, they need to go back to the drawing board.
These whole shenanigans are quite transparent, really, aren't they?
All fair points, but can US politicians live with opposition from the agricultural lobby and/or rural vote? Political expediency beats long-term economic planning when politician's livelihoods are on the line.
How is it currently unfair?
Have you read the economic opinion on income taxes?
Hint: They also make markets less efficient. But nevertheless we think the trade off is worth it.
The rest of the world would actually prefer jobs for our own farmers and we would also prefer to not be eating genetically modified junk from America. It is theoretically possible to live without a Harley Davidson motorbike and whatever else America actually makes these days, as for food, that is vital. Therefore in places like Japan rice is given special protection.
I hope the Chinese respond by selling off the many trillions of US bonds/debt they have been buying over the years.
I also hope that the petro-dollar is no more and that the world can move to an era of genuine fair trade.
Sanctions in the US have been about avoiding wars, rather than trade. There are also other global reserve currencies... value of dollar was earned.
Invasions have been shady for raw materials, for sure. Chinese are getting that in smarter ways now, but building their new “Silk Road,” which is a way to ensure they get raw materials mined by Chinese labor by Chinese companies in foreign land by propping up existing corrupt officials. Basically they took a US playbook and made it “better.”
China has surely done all the things you're accusing the US of, but they aren't being punished for that.
Britain took steps as extensive as banning skilled people from travelling to the USA.
All this is just historic and doesn't necessarily feed into what should be done in the present situation, but it is useful to note that this is a common path that developed countries have followed in the past:
- ignore/steal IP
- protect and subsidise domestic equivalents
- upon domestic industry being competitive, reciprocally lower tariffs
- once fully developed, lobby for free trade and strong IP protection
(I'm not sure anything has been proven definitively in the open, but I'm not sure that applies to all these China allegations either)
Why not investigate which firms committed which crimes and punish those specific firms? It's a smarter approach that helps our justice system and China's.
But "smarter" isn't part of this administrations playbook.
You're talking about the entire supply chain, so you would end up punishing firms that are otherwise innocent because unbeknownst to them they bought resisters or capacitors or silicon plates from a bad actor.
A smart approach is just not feasible at this scale.
That's exactly what the current tariffs do. So I guess if it's too much work to vet individual firms, we just lazily start a trade war? Again, for this administration, sounds about right.
Everything else, sure. But national security, especially expressed like that, is just another "WON'T SOMEBODY PLEASE THINK OF THE CHILDREN".
I'm not a big believer in IP (go Free software!). I find though if we have to strictly follow IP, then the US would have to pay for the use of paper and gunpowder, and many other inventions originating in China.
What I hate so much about that it assumes it's all due to Chinese secretly stealing American IP. Nope - just go to China. People are working extremely hard and industrious. There is also 1.4 billion Chinese. And while there are good American products, there are also great German-made robots and tech, Korean chips, French nuclear reactors that Chinese would rather have than American products. Focus on building better products, work hard, and it will work out.
That is a funny line of logic that gets thrown around a lot, considering that the advocates' stated preference is for industries to move out of China. Isn't wide dissemination "about espionage, theft, forced technology transfers, and mandatory joint ventures" enough a deterrence for companies to stop going into China? Apparently not.
You're right, and at the same time, that's not the point. The USA has been granting China favorable deals, which has resulted in trade deficits. The expectation is that the China will at least follow and enforce international trade law. The USA decided that the Chinese government is not doing this and is instead actively subverting it at the expense of US companies. This is a response to that.
I feel like its more the other way round...the American IP system is overly expensive and outdated, and should be reformed instead. The repercussions of this are felt most heavily on domestic industries too.
It's like when someone loses their wallet, and their first instinct is to completely discount the possibility they just misplaced it, and jump straight to the conclusion that someone stole it.
Start at your only acceptable conclusion, and work backwards to construct a plausible scenario that you can parade around as the obvious culprit.
None of this is true. “IP” produced by a nominally US corporation with hundreds of offices around the world is not attributable to the US government.
This is just some super simplisitic nationalist BS masquerading as trade policy.
This appears to be done for political reasons: https://www.nbcnews.com/politics/white-house/trump-was-angry...
That's the best argument?
ZTE was literally being used to spy en masse. maybe start there instead of "general national security".
Care to explain Canada and the EU getting tariffs?
It's easy to let someone push you back inch by inch instead of fighting back, but eventually you're on the edge of a cliff and have nowhere else to go.
I'd take short term pain over one day waking up and realizing that China has total control over manufacturing for everything essential for modern life and in exchange we got cheap consumer goods for a few years.