• frank
    1.8k
    Trade war was a factor in the development of the Great Depression. What will the effects of the present trade war be?

    I think a prediction will come down to an assessment of the health of the global economy.
  • frank
    1.8k
    Here's an outlook that predicts smooth sailing without a trade war and China stepping up to act as an integrating force for the global economy.

    With trade war? Per the same article, China and the US are the two engines of the global economy with the EU crippled by Brexit and a weak German government. If China and the US start strangling one another, optimism might start to decline. And with glaciers of debt leftover from 2008, the scene is unstable.

    It really comes down to what China decides to do. The US has limited options due to lunatic presidency (see same above article).
  • frank
    1.8k
    Why China would be confused right now:

    In a variety of ways the Chinese had signalled that they were prepared to negotiate and offer concessions to the US. Their approach is callwd integrative negotiating, which means ita done with an expectation of a future relationship.

    Trump's preferred mode is called distributive negotiation which reflects no common interests and no expectation of a future relationship. It ignores the capacity of each negotiator to harm the other and is a total win/lose style.

    Trump's actions are therefore more in keeping with a desire for a trade war rather than just positioning.
  • frank
    1.8k
    Strangely, American soybean farmers are standing by Trump even though some of them will probably go out of business due to tariffs.

    That's some powerful allegience.
  • Bitter Crank
    6.8k
    Oddly, no one but the author has added to this thread. Is a trade war too remote to think about? The state and region I live in grows most of the US soybean/corn production. Stable and strong agricultural income is a key element in the region's economic health. Industrial production is a second critical piece, along with mining. A drop in exports--no matter how it unfolds--will affect quality of life.

    On the other hand... tariffs are not going to bring back mass production of consumer goods like fabric, clothing, shoes, household goods, electronics, and so on which once were a large component of the US, British, and European economies. For one thing, it would take decades to rebuild the manufacturing and supply chain infrastructure to restore basic goods production. We can all rebuild national industries, but it won't happen unless trade becomes physically impossible (as it does in a hot war), and even then, it would be difficult.

    Manufacturing independence as an alternative to free trade, where low-wage workers in Asia or elsewhere produce our "stuff" fairly cheaply, would require a reorganization of the world-wide economy. Even if that were a good idea it would probably take 50 years to accomplish. (We didn't disestablish our manufacturing base over night.)

    And China, Vietnam, Malaysia, Pakistan, India, et al want a bigger share of all the "stuff" -- and reasonably so.

    Strangely, American soybean farmers are standing by Trumpfrank

    I don't track soybean futures, but presumably the futures market will soften and distribute the blow to the producers -- for a while. Eventually, this season or next, they will definitely feel the pain.
  • ArguingWAristotleTiff
    3.2k
    What I know about trade wars could fit in a thimble. Having said that: what I would like to know is what is unfair of having no tariffs?
  • frank
    1.8k
    Manufacturing independence as an alternative to free trade, where low-wage workers in Asia or elsewhere produce our "stuff" fairly cheaply, would require a reorganization of the world-wide economy. Even if that were a good idea it would probably take 50 years to accomplish. (We didn't disestablish our manufacturing base over night.)Bitter Crank

    Exactly. The global economy is like an ecosystem that developed organically over decades. Trump wants to force a retrogression. A time machine is what the job calls for.


    We haven't had a state of "no tariffs." This article explains the recent history.

    China makes the US pay for access to their markets. We've been the good citizen setting the example of open markets. Trump says: 'good citizenship is for suckers.' Do you agree with that?
  • Akanthinos
    1k
    Having said that: what I would like to know is what is unfair of having no tariffs?ArguingWAristotleTiff

    Because the world is already unfair. Canadian dairy does not survive 6 months in an unregulated market shared with american products. As it is eminently unwise to not have basic productions of subsistence goods, it's better for us to be unfair to Americans then be reckless about our essential products and services.
  • Bayaz
    3


    A trade war is kind of oxymoronic.

    If you look to the likes of China they are very much aware of this "trade war". They build ghost cities hundreds of miles wide, and only the rats are in occupation.

    Trump is a businessman. Most politicians aren't. This is why Theresa May (in the UK) will lose her post , and very likely SHTF and a labour government will follow.

    Trade is always positive. That is if you want to purchase something.
  • wellwisher
    163
    America has a huge trade deficit. This is due to other countries having more protectionism and tariffs on international trade, than the US. Trump is trying to level the playing field. Countries, donors and middle men who benefit by this lopsided trade status quo, from the US and other countries, don't want to give up their advantages and are portraying fairness as unfair, and unfairness and fair.

    Trade is currently set up like the game of golf, where players of different skill levels all play together using a system based on the handicap. In golf, lower skilled players get extra strokes taken off their score card. If you have a handicap of 10 and you shoot 90, your score is 80. This allows you to play with others of higher skill, and still be close, on paper.

    Trade has been set up using the handicap method of golf. This was fair during and after World War II when countries were broken by war. Many countries needed some extra advantage to play with the better trade players. But now many of the larger players; China, Germany and Japan, are shooting 80, but still want to have a 10 handicap. This makes good players like the US, without any handicap, look like amateurs; trade deficit. Trump is renegotiating the handicap system so all finish closer together.

    In most other sports, players of various skill levels play in leagues for their skill level. If their skills improve they move up. Baseball has major-league and several tiers of minor leagues. There is no handicap system since less killed players don't play with better skilled players. This may be something to look at in terms of trade.

    The left likes the handicap system. This is the template for quota systems. This is where less skilled players can create an illusion of more competence, on paper, based on a handicap scoring system. Trump's targeting of the trade handicap system, has a potential ripple effect into social engineering handicapping by the left. Trade is being fought for reasons other than trade.
  • Benkei
    1.7k
    Why don't you read up on Triffin's dilemma, have a think about this and try posting again?
  • praxis
    881
    I was reading today that China is strategically targeting red states with their retaliatory tariffs, and as a consequence Trump will bailout the farming industry in those states with $12 billion of USA tax dollars. Only the biggest corporations will see any of the relief, it's said. In any case, it's only a band-aid, but will arrive just in time for midterm elections.

    Four months of solar panel tariffs has hurt the US industry with billions in lost contracts and reduced R & D. No bailouts for them.

    Aren't conservatives supposed to believe in a free market economy???
  • VagabondSpectre
    1.2k

    Trump doing a 180 on the value of tariffs?

    EDIT: yep

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