The reason China cannot match the US in tit-for-tat tariffs

[bbpp]

1.What China imports from US are high tech products which have higher profit margin.
2.What US imports from China are labor intensive products which have lower profit margin.

Suppose 1 has 50% profit margin and 2 has 10% profit margin, even US raise tariff on 150 B China import and China raise tariff on 50B US import, US is still lose more profit on this trade war.

 

[Error Correction Funder]

Then the yuan appreciates against the USD, and China's imports like oil, iron ore, and soybeans become crushingly expensive.

Correction: the yuan appreciates against the USD, and exports to the US collapse.

 

[Humpy]

Q. And just who pays for this ?
A. The ordinary consumers. US made washing machines if there are any will cost considerably more.
The US workers won't accept wages similar to Asia workers and the bosses want to keep their 7 or 8 figure salaries.

 

[LacesOut]

This is part of the grand rebalancing that needs to take place.
Let’s hope it can be done without boots on the ground, though I have my doubt.
President for Life Xi and Trumpy are not likely good bedfellows.

 

[lovethetrade]

1.What China imports from US are high tech products which have higher profit margin.
2.What US imports from China are labor intensive products which have lower profit margin.

Suppose 1 has 50% profit margin and 2 has 10% profit margin, even US raise tariff on 150 B China import and China raise tariff on 50B US import, US is still lose more profit on this trade war.

Probably not when you factor in all the intellectual property China steals.

https://www.bloomberg.com/view/arti...ellectual-property-and-trump-s-next-trade-war

 

[Sig]

Probably not when you factor in all the intellectual property China steals.

https://www.bloomberg.com/view/arti...ellectual-property-and-trump-s-next-trade-war

Well you hit, perhaps inadvertently, on a problem with the whole trade balance concept, and that is that intellectual property isn't properly accounted for when calculating it. As a result, the imbalance the U.S. faces isn't nearly as big as it seems. Of course one wouldn't expect Trump or his MAGA supporters to be able to process something as nuanced as that, after all it does include the word "intellectual".

https://www.forbes.com/sites/timwor...-deficit-simply-does-not-matter/#118b19033934

 

[destriero]

The only things that they buy is grains and Treasuries. The only thing that they can dump are bonds. Trump is a functionally-illiterate sociopath. That being said, there is virtually no risk when isolated to import-export mechanics.

 

[Alexpung]

Q. And just who pays for this ?
A. The ordinary consumers. US made washing machines if there are any will cost considerably more.
The US workers won't accept wages similar to Asia workers and the bosses want to keep their 7 or 8 figure salaries.

This is false dilemma as you have plenty of countries to choose from.

 

[Sig]

This is false dilemma as you have plenty of countries to choose from.

That brings up a good question as to what the dilemma actually is? Is it that the U.S. has a trade deficit with countries that make cheap stuff for us? If so, then shifting that trade deficit to Vietnam accomplishes exactly what?

 

[Jzwu2017]

That’s the conundrum. You either run a trade deficit with some country, be it China or Vietnam, or make stuff at home and expensive.

Then it alludes to another point of the benefit of global trading - making stuff cheap where it is cheap to do it, anywhere.