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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsBeijing has more weapons to use against US in a trade war, Chinese analysts say
On Thursday, the White House announced plans to introduce tariffs on US$60 billion worth of Chinese imports. The following day, Beijing hit back, saying it would levy 15 per cent tariffs on 120 types of US products, including fruit, wine and steel pipes, worth US$977 million, and 25 per cent tariffs on a further eight other categories of goods, including pork and recycled aluminium, worth US$2 billion, if the tit-for-tat spat was not resolved.
On Saturday, Chinas former Finance Minister Lou Jiwei said Beijings retaliatory measures were relatively mild and that tougher steps should be taken.
If I were in the government, I would hit soybeans first, then cars and planes, he told a forum.
Here we look at why Lou suggested soybeans and what other American goods Beijing might target to cause the most damage to its rival:
Soybeans
Motor vehicles
Aircraft
Electronics components and semiconductors
Treasury bonds
http://www.scmp.com/news/china/diplomacy-defence/article/2138763/china-has-more-weapons-use-against-us-trade-war
Each category of US exports to China is described in detail at the link.
Hoyt
(54,770 posts)safeinOhio
(32,688 posts)and we will be back to 1970s inflation. Im sure the smart guy thought about that. Might make Mexico pay for them.
Wellstone ruled
(34,661 posts)Mosby
(16,319 posts)What else will they feed their livestock?
And they won't stop buying bonds, because they have to shovel their insane profits into something.
FarCenter
(19,429 posts)Mosby
(16,319 posts)In order to ensure a year round supply China need American soybeans to feed their pigs and make cooking oil.
World demand is way up for soybeans, and China is the single largest importer. Because of that the elasticity of demand is low, so tariffs WILL be passed onto the Chinese buyers and their people will suffer as a result.
I found this recently, pretty interesting:
The U.S.-China Economic Relationship: Separating Facts from Myths
Myth No. 1: Washington has limited leverage because China is the main "banker" for the United States
Myth No. 2: The United States is heavily dependent on cheap Chinese goods
This is not really true. Only roughly 15 percent of U.S. imports come from China. Moreover, all of the basic types of manufactured consumer goods that China exports to the United States (clothing, textiles, footwear, toys, small appliances, etc.) can be imported from other countries or could be produced domestically. [high elasticity of demand, aka we don't really need the shit] The prices for goods that could substitute for products from China would be higher, but the difference in costs would be relatively small. Competition among producers has become fiercer, and as a result cost differentials between goods from China and other suppliers are narrowing.
Dependence actually runs the other way. China is highly dependent on U.S. demand for its products. Economic growth in China is heavily dependent on exports. Although China has been able to achieve its 8 percent GDP growth target in 2009 owing to the stimulus to domestic demand provided by government policy actions, the country will struggle to meet this objective in 2010 and succeeding years if demand for its exports in the United States does not pick up.
Myth No. 3: External pressure on China for policy changes is counterproductive.
Myth No. 4: Instability is bad for China
https://www.cfr.org/expert-brief/us-china-economic-relationship-separating-facts-myths
FarCenter
(19,429 posts)The bearish factors are the size of the 2016/17 Brazilian crop, how much is still unsold by American and Brazilian farmers, and the size of the 2017/18 American soybean crop.
Last year, Brazils soybean crop hit a record high. Local prices collapsed. And farmers around the globe were highly concerned about news that Brazil would set another record in 2017/18.
Perhaps that is why one of my favorite titles about Brazils crop was from Reuters.
Brazil farmers hope for a miracle, hoard soybeans.
https://farmlead.com/blog/insights/most-bullish-thing-about-soybeans-isnt-china/
That is a 2009 article you are citing.
In January, China accounted for 16.9% of US imports. Canada and Mexico are next with 14.9 and 14.5% respectively. Fourth is Japan at 5.2 and then Germany at 4.3%.
https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html
But what we import from each country differs a lot, so targeting China actually targets a specific thing -- especially computing and electrical equipment that is made in China, in many cases by Chinese factories owned by American companies.
Here's what the United States imports from these five countries and why they're the best at producing these goods for the U.S. market.
China: China primarily exports electrical equipment. This would include computers and optical and medical equipment. It's also a big exporter of low-cost apparel, fabric, and textiles. A lot of China's exports are manufactured products made for U.S. companies. These companies pay to ship raw materials to China. There the low-cost factory workers process the materials into the final product.
Canada: Almost 75 percent of Canada's exports go to the United States, thanks to the North American Free Trade Agreement.
Since 1994, trade between the NAFTA partners has tripled. Canada has abundant supplies of oil, gas, and uranium.
Mexico: The other member of NAFTA sends even more of its exports to the United States (78 percent). Mexico's No. 1 export is manufactured products, for many of the same reasons. If it weren't for the drug cartels, Mexico could become the next China.
Japan: Japan's biggest export to the United States is fuel-efficient and reliable automobiles, like Toyotas and Hondas. It also supplies machinery, medical instruments, and aircraft. Japan supplies a lot of parts. Japan's earthquake and nuclear disaster created a global economic slowdown due to a reduced export of parts. To make its products more competitive in the U.S. market, Japan's central bank keeps the value of its currency, the yen, low. That's contributed to the yen carry trade and made Japan one of the largest holders of U.S. debt.
Germany: Germany's biggest export to the United States is high-end automobiles, like BMW, Porsche, and Mercedes-Benz. It also exports pharmaceuticals, machinery, and equipment.
https://www.thebalance.com/u-s-imports-by-year-and-by-country-3306259
We could import more computers and electronics from Japan and South Korea. In many cases these would actually be made in China and then moved through Japan and South Korea.
It's interesting to contemplate that Apple may be severely hurt by tariff son iPhones from its suppliers in China, while Samsung and LG can shift production for different countries among its Chinese and South Korean factories in order to avoid the US tariff. Others like Motorola division of Lenovo might shift final assembly to Malaysia or Indonesia, i.e. put it in the box with US graphics on it.
Mosby
(16,319 posts)If he was serious about trade guidelines he wouldn't just be focusing on China.
It just seems to me that we are being gamed by multinational companies, who know they can move production to countries with no worker protections, no workplace safety, no environmental standards and no building codes in order to maximize profits. Eventually everyone will suffer, and it's possible that the US could become a third world country [but with more guns] as wages decline vs inflation and the cost of living goes up.