As for consumer goods, the Chinese didn't raise their prices, they ate the cost of that tariff. The price increases we are seeing are almost entirely related to shipping costs. Manufacturers who have long term contracts or their own leased vessels (Walmart), are still able to deliver and keep prices in check.
I personally haven't had any vendors in China eat the cost of tariffs. Export terms are often FOB or EXW which means variable tariff costs get eaten by the importer or distributor. Even if a large buyer like Walmart owns/jv/leases a facility in China, to say the tariff is borne by the China entity is like saying money in the left pocket is different from money in the right pocket... eventually the cost catches up to them. It'd be helpful to share citations on arrangements where the manufacturer simply ate the cost of the tariff, it could help to educate a lot of struggling importers and small businesses.
Biden has doubled down on Trumps trade policies to the extent that he appointed a Taiwanese-American trade lawyer, Katherine Tai, as US Trade Representative. She has no experience brokering trade deals but lots of experience suing countries for trade violations. Anti-globalism is now bipartisan in America.
Globalism is fantastic for business and stocks, but horrible for the American worker.
Now dozens of countries can do what we can do, and our labor and talent is expensive.
We eroded a lot of our capabilities to chase after higher value of being the final step in production. Now we see how fragile that makes us. And everyone is gunning to compete at our level.
Globalism within the EU seems to work really well for Germany, even though there is far cheaper labour in the EU.
I am way out of my depth here, so I could be wrong.
"American" companies aren't always entirely owned by Americans. Sometimes they get purchased outright by foreign conglomerates or shareholders (eg. Anheuser-Busch) or take on foreign investment (eg. SoftBank). Once they're public, lots of entities can own the stock.
Labor doesn't have to be based in the US. Wages go overseas all the time. Your iPhone is manufactured abroad. Amazon hires lots of non-American programmers.
Is the only difference here that there is a possibility of federal tax revenue being distributed throughout one country? You can even go one more level down to cities and states rather than states and country.
You couldn't stop that, the rest of the world was going to catch up one way or another.
Often claimed, hard to prove.
In fact, isolating your economy to protect increasingly ineffective industries is the exact opposite of what is good for the avg. worker.
It sure helps those industries that are specifically. protected.
> We eroded a lot of our capabilities to chase after higher value of being the final step in production. Now we see how fragile that makes us. And everyone is gunning to compete at our level.
And the solution to this is exactly not to try to use restrictive trade policies.
America chose Wal Mart and then regretted it. The death of Main Street and the associated economic insecurity was a contributing factor to Trumpism, even if the people voting that way didn’t explicitly realize it.
Even more of a risk is that we can be strong-armed once we no longer have leverage. This is a reason to onshore critical pieces. And we can't have a fledgling domestic industry be cost competitive without tax and trade incentives.
The trade war needs to be an investment. Otherwise we'll just continue to cede ground.
A trade war might hurt, but an America without exports will hurt worse. As will an America that has to take what's given to it.
The US is a massive importer and exporter but as a percentage of the US economy it’s relatively small compared to export lead economies like China, Japan, Europe etc. It’s not that being globally competitive isn’t an issue, it’s just not an immediate existential issue for America. Especially as we continue to have the biggest most productive contiguous agricultural region in the world with the cheapest transport and no major security concerns; close to the cheapest oil and nat gas which has lead to the cheapest global production of many industrial inputs. Combined with the global baby bust leading to record rapidly aging population means that the US is on top for some time.
Biggest sure, but the most productive is in the Netherlands. And y'all produce huge useless quantities of corn that are killing your population.
That both depends on how immediate "immediate" is and how the US will react. When CPU/GPUs have nothing made or designed in the US in them any more and the Google/Microsoft/Facebook/Amazons of the world are all non-US and the US is no longer in the top of military and GDP then the US will no longer be in a position to lead anyone anywhere. It might not become a existential problem for the US economy -who knows- but it will most definitely crush any belief in The American Dream or that the US is some kind of world leader. Without a way to steer technology or force other nations to do what it wants by power, in my opinion, the US will go the route of ancient Rome by trying to hold on to what is lost. So maybe not an immediate existential issue but likely an existential threat to the Union nonetheless.
Broadly speaking if countries are able to feed their population, keep the lights on, and protect their borders, regardless of access to global markets then they have relatively few existential worries. The USA is one of a few in this category.
> but it will most definitely crush any belief in The American Dream or that the US is some kind of world leader.
The US is currently re-industrializing as globalism is crumbling, so the long term forecast for the American dream is bright. Globalism is crumbling greatly due to the bipartisan sentiment in the USA being not wanting to police, “lead,” the world any longer. The global population will crash in the coming decades, secessionist movements will rise up in many countries, famine, and resource wars will ensue, and the graphs of global development will go south very quickly. All except in the USA and a relatively few other countries which will feel pain but be able to recover relatively easily. The USA has been artificially propping up vast regions of the globe by making global shipping the safest it has ever been in history; that is ending and no one is going to like the result.
US is the second biggest manufacturing nation after China, but only on paper because of funny accounting, and statistical standards of America economists.
China beats the US in funny accounting by orders of magnitude!! China’s economy is a massive works program so a large chunk of their manufacturing ends up being trash essentially as there’s no requirement to produce products that people want.
China is about to run straight into a population wall, and is a kleptocracy that has funded itself off of the economic boom of transitioning from developing to developed economy - but it never developed the type of institutions to limit corruption which are needed to be a rich, developed economy.
Everything you see with censorship and social credit scores is geared towards one thing: pre-oppress the population to try and not be annihilated when the growth rate slows down to the point the trade off in freedoms is not worth it. The move towards a dictatorship is also a problem since dictatorships generally perform extremely badly economically if they're not resource economies that are independent of the treatment and quality of the labor.
America has much less key industries than China has. Any discussions about microchips are silly when much bigger elephants in the room are not talked about.
https://www.steel.org/2021/07/steel-imports-up-18-5-year-to-...
America is dangerously dependent on imported steel — all at the same time while having the best iron ore deposits, and coke deposits, and cheap energy.
Now, prepare for a total despair if you haven't seen this graph before:
https://thephillypi.com/wp-content/uploads/2021/06/162277872...
The situation across dozens more key industries is equally dire.
93% of North American steel produced each year is from recycled products [1], and 98% of products are recycled [2]. There is no reason to use either iron ore or coke for steel production when the vast majority of it is produced in electric arc furnaces from scrap steel. It's better economically and better environmentally.
This is also why Nucor has been eating U.S. Steel's lunch for about 50 years, long before China entered the steelmaking business.
[1] https://cssbi.ca/mid-rise-construction/sustainable-steel
Efficiencies of scale achieved by megamills cannot be achieved by small in-situ smelters, simple economics
Is there any way we can build them domestically again?
2. Nickel
3. Fertiliser https://static.nationmaster.com/assets/1ccceff/charts/rankin...
4. Non-ferrous alloys
5. Machinery parts, especially consumables like things (i.e. electrodes)
6. Powerplant machinery
7. Electrical distribution equipment, especially transformers
8. Merchant marine (even tiny Greece is ahead of US)
9. Shipbuilding, and naval engineering at large
10. Railways equipment, and vehicles
11. Pharma, with medical consumables, antibiotics, and other essential medicines in particular
12. Heavy industry in general
13. Chromium
14. Manganese
15. Vanadium
16. Chemical catalysts
17. Cobalt
I find it more surprising that even the 25% tariff is not enough to make American MNCs to move from China.
I am watching how the supply chain moves from China to South, and Southeast Asia. Koreans are moving to Vietnam, Japanese to Bangladesh, Taiwanese back home, and to Indonesia. But American companies in their majority keep clenching their teeth, and staying in China.
I guess, they really like it there
Moving to China would force the American MNC to pay the tariff on the full value of the product sold to the US market rather than on just the foreign components.
Is it just that we forgot that these cost increases and trade barriers are still in effect, or is it that the trade war is so politically popular that even the suggestion of perhaps suspending it for a couple of years is simply unmentionable?