Other nations weigh in on effects of possible US-China trade war

[Stevicus]

U.S.-China trade war: Other countries worry there's "no greater threat" to global economy

Global stock markets were mostly higher Friday morning in volatile trading as investors appeared to hope that the United States and China might yet reach a deal to solve their escalating trade war. The big European markets were up around a point while Chinese exchanges saw gains of around 3%, with traders noting an increase in Chinese institutional investors buying to support the country's financial markets.

China's Commerce Ministry said the nation would take unspecified "necessary countermeasures" after the Trump administration raised duties on $200 billion of Chinese imports to 25% from 10%. The tariff hike came just after 12 a.m. on Friday, hours before Trump administration trade officials were to resume negotiations with their Chinese counterparts.

Other nations said it could have a serious effect on global trade beyond just the US and China:

French Finance Minister Bruno le Maire told the CNews television network on Friday: "There is no greater threat to world growth… to the standard of living of everyone listening to us, than a trade war between China and the United States.

British Finance Minister Philip Hammond told Sky News that he was optimistic, but that an escalated U.S.-China trade war would have a "very serious" negative effect on both the U.K. and global economies.

Deputy Chief Cabinet Secretary Kotaro Nogami told reporters that Japan hoped the U.S. and China would resolve their trade disputes through dialogue. He said an escalation of trade restrictions would not serve anyone's interest.

Japan's economy has taken a hit from lower Chinese exports to the U.S.

I heard some of Trump's comments the other day about how he was just trying to get a better deal from China and that China had been taking advantage of weaker past administrations.

In some ways, I can see his point, especially when looking over the past few decades, some countries are getting incredibly rich, while much of the US population languishes in stagnation and even noticeable decline in many areas. One might well ask: If free trade and globalism doesn't benefit the masses in any measurable, tangible way, why should we do it? What's in it for us?

Some people say it would be "disastrous," but disastrous for whom?

 

[David1967]

I think this is very shaky ground at least in the short term. Being in retail it has negatively affected my business due to increased prices on products. Also, many family farms, (especially soybean) have been forced out of business directly due to the new tariffs. So (short term at least) I see a lot of damage to people here just trying to make a living. Long term? To early to tell, but hopefully some good comes of it. But for now, lots of folks, myself included, feeling the negative effects.

 

[Lyndon]

I just drove by the 99c store and now its the $1.25 store!!

 

[Stevicus]

I think this is very shaky ground at least in the short term. Being in retail it has negatively affected my business due to increased prices on products. Also, many family farms, (especially soybean) have been forced out of business directly due to the new tariffs. So (short term at least) I see a lot of damage to people here just trying to make a living. Long term? To early to tell, but hopefully some good comes of it. But for now, lots of folks, myself included, feeling the negative effects.

I think we should look at this long term. I mean, with the amount of money we borrow to sustain the Federal government, producing a huge national debt, along with such lopsided trade imbalances, it's clear that America is losing a lot more money than it is taking in. We just can't go on this way and expect something good to happen.

 

[Revoltingest]

Some people say it would be "disastrous," but disastrous for whom?

I can't give any specifics, but in general....
Abrupt changes in price don't allow economies time to adjust.
Companies who might benefit would likely....
- Have insufficient time to get products on the market to avoid shortages.
- Not trust Trump & China enuf to invest in gearing up production to meet newly increased demand.
Companies who might be harmed would likely....
- Have difficulty finding new markets for their products.
- Face hardship, & perhaps dissolution.

A classical economist say that the market responds perfectly.
But this is only when given adequate time to respond.
(And even then, it's a tendency....a trend with variations.)

 

[Revoltingest]

I just drove by the 99c store and now its the $1.25 store!!

It used to be the "dime store".
I even remember the "five & dime" stores.

 

[PureX]

I think one of the problems is that Trump had to make a big stink about it, calling out the Chinese, and bad-mouthing them to inflate his own ego. If it's true that we were being taken advantage of, then it would have been far wiser to just quietly, and gradually (incrementally), correct the problem. No accusations, no insults, no chest-thumping. And no need to make the Chinese have to 'save face' by retaliating. But, of course, Trump couldn't to do that, because everything has to be all about him.

 

[David1967]

I think we should look at this long term. I mean, with the amount of money we borrow to sustain the Federal government, producing a huge national debt, along with such lopsided trade imbalances, it's clear that America is losing a lot more money than it is taking in. We just can't go on this way and expect something good to happen.

I agree with what you are saying. I'm just not sure this 'sledgehammer' approach is the best option. I think post #5 by @Revoltingest says it best.

 

[David1967]

I just drove by the 99c store and now its the $1.25 store!!

Hilarious. Next week it may be the $2 store.

 

[David1967]

I think one of the problems is that Trump had to make a big stink about it, calling out the Chinese, and bad-mouthing them to inflate his ow ego. If it's true that we were being taken advantage of, then it would have been far wised to just quietly, and gradually (incrementally), correct the problem. No accusations, no insults, no chest-thumping. And no need toe the Chinese to have to 'save face' by retaliating. But, of course, Trump couldn't to do that, because everything has to be all about him.

That would be my biggest problem with President Trump. Even if he does the right thing he tends to be so arrogant.

 

[sun rise]

China has been using nefarious tactics for quite some time now including stealing our intellectual property or making companies hand it over as a condition for doing business in China, not allowing the market to work by various tactics to benefit Chinese companies.

This is one area where I invoke the "stopped clock" image. I think Trump's right about the problem and China deleting what they offered at the last minute proves it.

I think we need to do something and the tariff increase is the only thing I can think of short of war.

I don't like it, but I see no alternative outside of us surrendering to China and it's tactics.

 

[joe1776]

The Chinese leaders don't have to worry about reelection, so an economic downturn wouldn't affect their political futures. In their shoes, I'd expect Donald to cave in under pressure. He doesn't have the character to hold out.

 

[Shad]

Some people say it would be "disastrous," but disastrous for whom?

It can be a problem for economies and people that use the cheap products of China, and nations like it. How much do you think a PC would cost if PCs were being made in America? Toss in the whole min wage issues and other factors attached to employment.

 

[Shad]

The Chinese leaders don't have to worry about reelection, so an economic downturn wouldn't effect their political futures. In their shoes, I'd expect Donald to cave in under pressure. He doesn't have the character to hold out.

Trump does not know how to pick his battles so ends up with at best Pyrrhic victories or outright routes with large issues.

 

[joe1776]

Trump does not know how to pick his battles so ends up with at best Pyrrhic victories or outright routes with large issues.

Right. He's not seeing the whole board. Global Chess is proving more difficult than Commercial Real Estate Checkers.

 

[Stevicus]

It can be a problem for economies and people that use the cheap products of China, and nations like it. How much do you think a PC would cost if PCs were being made in America? Toss in the whole min wage issues and other factors attached to employment.

I don't think it's so much a matter of cost. It's more a case of how many hours does the average worker have to work in order to buy it. Let's say the cost of a PC right now is $750 (just to pick a round number). A worker earning $15 per hour would have to work 50 hours to get it. Assuming that wages also go up with prices, then the PC might cost (with tariffs) $1500, while the worker's wages go up to $30 per hour. It would still mean 50 hours of work.

So, it would work out largely the same, except that the money would stay within America. It would not go to benefit some other country. That, in and of itself, is even more important than lower prices.

 

[Shad]

I don't think it's so much a matter of cost. It's more a case of how many hours does the average worker have to work in order to buy it. Let's say the cost of a PC right now is $750 (just to pick a round number). A worker earning $15 per hour would have to work 50 hours to get it. Assuming that wages also go up with prices, then the PC might cost (with tariffs) $1500, while the worker's wages go up to $30 per hour. It would still mean 50 hours of work.

So, it would work out largely the same, except that the money would stay within America. It would not go to benefit some other country. That, in and of itself, is even more important than lower prices.

You are ignoring the wage difference between nations.

 

[Shad]

Right. He's not seeing the whole board. Global Chess is proving more difficult than Commercial Real Estate Checkers.

Not even globally. Take the spending Bill veto for an example.

 

[Koldo]

I don't think it's so much a matter of cost. It's more a case of how many hours does the average worker have to work in order to buy it. Let's say the cost of a PC right now is $750 (just to pick a round number). A worker earning $15 per hour would have to work 50 hours to get it. Assuming that wages also go up with prices, then the PC might cost (with tariffs) $1500, while the worker's wages go up to $30 per hour. It would still mean 50 hours of work.

So, it would work out largely the same, except that the money would stay within America. It would not go to benefit some other country. That, in and of itself, is even more important than lower prices.

Why would the wages go up with the price ?

 

[Stevicus]

Why would the wages go up with the price ?

Tariffs would produce a greater need for workers within the U.S., which would put upward pressure on wages.