China has tons to lose, including their necks.
They have 1.3 billion mouths to feed. The US has been propping them up for a couple decades. Without us, they’re ****ed.
We on the other hand, can do just fine dealing with other countries.
China, they start seeing businesses move which aren’t coming back and they’ve got serious problems.
They’re an enemy... and should be treated as such. They take and don’t retreat. Trump is bringing them to heel. Something they are totally unfamiliar with.
This trade war would be good to win. For many reasons beyond those above. Easy... far, far, far easier for us than them.
You vastly overrates Trump's ability to inflict damage on China while underrating the damage China can do in return.
The second thing you need to realize is that China’s response so far has been modest. The US has implemented or announced tariffs on virtually everything China sells here, with average tariff rates not seen in generations. The Chinese, by contrast, have yet to deploy anything like the full range of tools at their disposal to offset Trump’s actions and hurt his political base.
Why haven’t the Chinese gone all out? It looks as if they’re still trying to teach Trump some economics. The message is: “You think you can bully us. But you can’t. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?”
By Trump backing off, it seems that this message is finally getting through -- fearing that the warning shots will turn into an all-out trade & currency war. There is no guarantee that he won't have a tantrum and reverse again.
To be clear, Trump’s views on this matter is incoherent. He's been complaining about the strength of the dollar, which he said puts America at a competitive disadvantage. He got the Treasury Dept to declare China a currency manipulator, which was true 7 or 8 years ago but isn’t true now. Yet the very next day he wrote triumphantly that “massive amounts of money from China and other parts of the world is pouring into the United States,” which he declared “a beautiful thing to see.”
Um, what happens when “massive amounts of money” pour into your country? Your currency rises, which is exactly what Trump complained about. And if lots of money were flooding out of China, the yuan would be plunging, not experiencing the decline that Treasury condemned.
Oh well. I guess math is just a hoax perpetrated by the deep state.
Still, even if Trump isn’t making sense, will China give in to his demands? In short, “What demands?” Trump mainly seems exercised by China’s trade surplus with America, which has multiple causes and isn’t really under the Chinese government’s control.
Others in his administration seem concerned by China’s push into high-technology industries, which could indeed threaten U.S. dominance. But China is both an economic superpower and relatively poor compared with the U.S.; it’s grossly unrealistic to imagine that such a country can be bullied into scaling back its technological ambitions.
Which brings us to the question of how much power the US really has in this situation.
America is, of course, a major market for Chinese goods, and China buys relatively little in return, so the direct adverse effect of a tariff war is larger for the Chinese. But it’s important to have a sense of scale. China isn’t like Mexico, which sends 80% of its exports to the United States; the Chinese economy is less dependent on trade than smaller nations, and less than a fifth of its exports come to America.
So while Trump’s tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall.
At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging.
And America’s ability to counter these moves is hindered by a combination of technical and political factors. The Fed can cut rates, but not very much given how low they are already. We could do a fiscal stimulus, but having rammed through a plutocrat-friendly tax cut in 2017, Trump would have to make real concessions to Democrats to get anything more -- something he probably won’t do.
What about a coordinated international response? That’s unlikely, both because it’s not clear what Trump wants from China and because his general belligerence has left America with few allies.
So maybe Trump has learned what China has taught him. But his administration has been steadily hemorrhaging people who know anything about foreign policy or economics, and reports indicate that Trump isn’t even listening to the band of ignoramuses he has left.
Stay tuned to see how this plays out.
