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China Threatens To Cut Sales of iPhones and US Cars if 'Naive' Trump Pursues Trade War (theguardian.com)
US president-elect Donald Trump would be a "naive" fool to launch an all-out trade war against China, a Communist party-controlled newspaper has claimed. From a report on The Guardian:During the acrimonious race for the White House Trump repeatedly lashed out at China, vowing to punish Beijing with "defensive" 45% tariffs on Chinese imports and to officially declare it a currency manipulator. "When they see that they will stop the cheating," the billionaire Republican, who has accused Beijing of "the greatest theft in the history of the world", told a rally in August. On Monday the state-run Global Times warned that such measures would be a grave mistake. "If Trump wrecks Sino-US trade, a number of US industries will be impaired. Finally the new president will be condemned for his recklessness, ignorance and incompetence," the newspaper said in an editorial. The Global Times claimed any new tariffs would trigger immediate "countermeasures" and "tit-for-tat approach" from Beijing.
If a trade war occurs with China, consumer prices will significantly inflate. Tech company stocks will fall significantly, as a large amount of gear is sourced internationally. For those with an interest to keeping your 401(k) safe, I suspect the first thing is to consider which companies source to China, as opposed to countries that use Taiwan, Korea, Japan, etc. Hmm. I wonder if anyone has made just such a list; e.g. "How to prepare your 401(k) for a trade war with China"!
And we could kill off useless idiot-friendly devices like the iPhone which specifically enable American incompetence at the cost of Chinese citizens' lives and health, because they wouldn't be economical to produce anymore.
Because he will extract concessions. That's what you can do when you have a persistent trade deficit. The Chinese only understand force.
Americans already make cars. Even "Japanese" (Honda, Toyota) cars sold in the US are usually made in the US.
iPhones and other smartphones being made here will probably up the prices slightly, but most of the estimates I've heard are absurd. I'd also suspect that the increased wages (higher demand for employees = fewer minimum wage jobs) would more than offset the price increases you'd see.
(This is not to suggest that I welcome a fascist in the White House, or a trade war with China, obviously. I just wish we hadn't lost most of our electronics manufacturing capacity with the end of Commodore in the early nineties.)
You are not alone. This is not normal. None of this is normal.
China has absolutely no appreciation for how much of the Republican base and the blue dog democrats are at a total ZFG attitude toward free trade now. What are you going to do, China? Make my LG G5 that was made in South Korea more expensive? Make it harder for Hyundai, Kia, Honda and Toyota to produce their parts in South Korea and Japan and then assemble them in the American South for millions of Americans? Ford management is probably saying "yes, more please" as this will primarily hurt GM and Chrysler since Ford mainly outsources to developed countries and Mexico.
Our trade partners are probably splitting their sides over this. South Korea's response will simply be "we see China is acting like a crybully bitch. You want to trade with someone who ain't a bitch?"
Considering that Foxconn is firing their workers for robots, it wouldn't change prices or employment dramatically. It would however wreck the already precarious Chinese economy, and quite possibly the country as a result, especially with the 20+ million extra young men and exploding older population.
I don't know why people didn't see this coming. I suspect a lot of Americans have a rude awakening in store regarding our position in the world.
You missed the point. China buys large numbers of cars made in the US. The Chinese market is so large that if the US is restricted we will suffer loss of jobs as well as income. Apparently I phones are also popular products that we export to China. China has enormous economic power these days. If we get into a disagreement over tariffs the chances are that China will win.
So that's what the i stands for.
idiotPhone.
genius...
Science advances one funeral at a time- Max Planck
iPhones and other smartphones being made here will probably up the prices slightly, but most of the estimates I've heard are absurd.
No they are not. For one many/most of the key components for smartphones (and laptops and desktops and...) are made in China too. Where do you think you are going to get parts? The supply chain for these does not exist in the US or EU. Worse China has a monopoly on rare earth minerals without which you cannot build many modern electronics. The US has reserves of these but re-opening the mines for these would not happen overnight.
Trump starting a trade war would drive up prices dramatically on a huge amount of goods and would almost instantly trigger a recession or depression. It would be catastrophically stupid of him to do that. A trade war would benefit no one and it sure as hell would not increase net jobs in the US.
I'd also suspect that the increased wages (higher demand for employees = fewer minimum wage jobs) would more than offset the price increases you'd see.
No it would not. The number of extra people who would be employed by this wouldn't offset the extra cost of production. That is why it is being produced in China now. If that were not true then we would already see production happening here in the US. Furthermore having a few people making higher wages doesn't help the millions who would have to pay more for the product itself. I don't work for Apple or a smartphone manufacturing company so someone else having higher wages doesn't help me one bit.
Americans already make cars. Even "Japanese" (Honda, Toyota) cars sold in the US are usually made in the US.
iPhones and other smartphones being made here will probably up the prices slightly, but most of the estimates I've heard are absurd.
iPhones could be made completely in the US and Apple could charge the exact same price for them as they do now and the only difference is Apple's profits would go from ridiculously obscene to only slightly obscene.
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
This vote and the calls for protectionism in the USA and UK strike me as odd. Back in my day... it was the Conservatives and Republicans and similar parties defending trickle-down, supply-side, trade leads to growth, which leads to prosperity for everyone.
Now there's support for reducing freedom of movement in the UK (and other places in Europe), and for the USA to erect trade barriers. All this time, the official explanation was that international trade was not a zero-sum game, that if there's more trade, everyone eventually gains and that protectionism was BAD. I can't remember if state investment on infrastructure was even worse than protectionism, but in any case it was something that Chicago school/Republican politicians just would not have.
Sounds like now In Republican America, state interventions Trump China?
The trade deficit with China last year was $365 billion. With an all out 100% trade war, China loses $365 billion more than we do. How is that winning?
We have the upper hand since currently we are the ones giving them net money.
Any smartphone manufacturer who employs cheap (foreign) labor ends up with a competitive advantage over a domestic manufacturer, while still benefiting from the domestic manufacturer's decision to build in the US and employ US workers.
That is correct. As long as the US has wages that substantially exceed those of other countries there will be a strong pull to locate labor intensive jobs in places where labor costs are low. That is why most US based manufacturing is capital intensive instead of labor intensive.
It would be a very good thing if electronics makers were to start building in the US, but without being forced to as a group, it's not going to happen because while all of them building in the US together would have no negative impacts, any of them choosing not to participate would negatively impact those that do.
It would (probably) be a good thing but trade barriers will NOT accomplish that goal. Those industries will only come back to the US for one of three reasons. 1) Technological advancement, 2) Labor costs falling in the US relative to elsewhere or, 3) advances in automation turning labor intensive production into capital intensive production. But since the supply chains for electronics production have spent the last 3-4 decades moving to Asia they aren't going to come back quickly even if they ever do. Asian manufacturers have a currently insurmountable cost advantage so production will stay there until that is overcome. Trade barriers will not in any way erase the cost advantage.
The key word is: eventually.
In the short term during a trade war, everyone who works selling Chinese made stuff loses their jobs. Everyone who works making things which require Chinese made parts loses their jobs. Anyone who works making stuff that is exported to China (about eighteen billion dollars of manufactured goods) loses their jobs.
Meanwhile you can't conjure all that manufacturing capacity we had in the early 90s back overnight. It took China over ten years to replace that, and that was with government support. It's reasonable to assume it'll take us roughly as long, and with equal government support. The new factories, however, will be far more automated than the factories that closed in the 90s, so don't expect to get all those jobs back.
The unpleasant truth is that you can't make such a huge change in your economy and then just take it back because the change hurts. Undoing the change will hurt almost as much.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Heh, yeah. Although the petty property damage doesn't bother me all too much, I worry much more about the people getting beaten and dragged behind their vehicles like in Chicago because they were the wrong color in the wrong neighborhood. And people burning effigies of Trump in the streets. By goodness, grow up!
Being pissed because your candidate lost is one thing (even if the irony of their lack of self-awareness is lost on them), but trying to start a civil war because you've been mislead by the media is quite another, and it's one lesson everyone has to learn the hard way at some point in their lives or you never truly become an adult. Starting fires and killing people only gives the media whores what they want.
Donald is about to learn that running the USA is much more difficult than pretending to be a successful businessman on reality TV.
iPhones could be made completely in the US and Apple could charge the exact same price for them as they do now and the only difference is Apple's profits would go from ridiculously obscene to only slightly obscene.
Whoa, buddy. You're talking about affecting America's first class citizens: shareholders. What next? A decent wage increase for the middle class? You're mad!
We have sources of materials in our own country, we don't need the Chinese materials. Our mines for them are currently closed because the prices of those materials in the currency-manipulated China are so cheap that our raw materials are too expensive when mined here. Lowering the corporate income tax to 15% is likely to change that, and see those rare earth mines opened up again, and... presto, no more problem with raw materials in the USA.
With the pro-business administration that is coming into Washington, and the vow to "Make America Great Again", I'm expecting that much of what is made in China is going to be made in America after a while. It won't be 1000's of Foxxcon workers standing for hours at tables assembling them by hand for a dollar two nintety eight an hour, it'll be American workers tending 30 - 50 automatic machines, keeping them in raw materials, keeping them adjusted, lubricated, supplied with power, and checking for scrap, and they'll be well-paid, and the iphones shucking out the conveyor belt will be every bit as desirable as the ones from China, and about the same price. That's what I expect, anyway. There's lots of ways for America to compete if we stop allowing the foreigners to have the huge advantages of lower taxes and currency manipulation.
Bullshit. China has the capacity to replace all the manufacturing they buy from the US, if they want. Remember they have whole cities sitting empty.
We don't have an extra billion people to replace those purchases.
It's a very lopsided war, and we will lose if China wants us to.
There are two types of people in the world: Those who crave closure
Nope a country with 4 times the population will always be a larger market unless they are dirt poor. And countries stay dirt poor only so long. Eventually they have a revolution, kill the incompetent leaders and get competent leaders. So in the long run population always wins. China had its civil wars and then got the communist party leadership (that they were communist is pointless , the point is they became leaders after a period when incompetence was punished with revolutionary death)
The current batch is probably the first generation who havn't experienced the civil war and they may get sloppy but for China to become dirt poor again is not really possible.
**Life is too short to be serious**
China doesn't have the people to replace purchases either, at least not at the same price. They are poor remember? And they are too frugal to spend any amount of money on most of the cheap disposable crap we buy from them.
Look the math is simple and incontrovertible. We send $X worth of goods to China. China sends $(X + 365,000,000,000) worth of goods to the US.
A trade war hurts China more than it hurts us. Can you tell me what specifically you're disagreeing with? I really just don't understand. Give me some numbers to show that the US would be hurt more.
Or are you saying that Trump supporters are opposed to the free market?
I think Trump supporters (primarily though not exclusively working class rural white people) are absolutely terrified of a free market and a great many of them don't understand international trade at all. Sound bites are a lot easier than macroeconomics. Xenophobic sound bites that make foreigners scapegoats for their own failings and those of their country even more so.
Or maybe there coalitions that support candidates for a variety of reasons - and that not all the positions held by the supporters are in common?
Of course plenty of Trump supporters supported his lunacy for reasons other than protectionist sabre rattling. Some for reasons of racism, some for sexism, some for tribalistic loyalty to the republican party, some for pure amusement, some for unreasoning hatreds (KKK etc), some for misplaced fears ("2nd amendment people"), and plenty of other reasons besides. Most of them wrongheaded and ill considered but reasons all the same.
Therefore you agree that not all Republicans are for the free market.
Republicans have NEVER been for a free market. They just want a particular version of a capitalist market. Republicans have routinely been against "free" trade. If you recall during the most recent Bush administration they imposed steel tariffs which had the perverse outcome of reducing domestic steel production, increasing the cost of steel, and reducing employment in associated industries (like automakers).
By the NAFTA is not an example of free and open markets. Neither is TPP.
True but there is no such thing as a pure free market. In actual fact a pure free market would be a VERY bad thing. But those trade agreements DO reduce net trade barriers. Whether or not that is a net benefit to society is a separate question endemic to the particulars of the agreements in question.
China has much more to lose in a trade-war than the USA does. Their economy is tightly bound to exports. China knows this and is bluffing.
I didn't vote for Trump, but I hope he pushes this issue, and encourages China to shift more to a consumer driven economy rather than an export economy. They won't do it without pressure, and Trump's bullheadedness may be just the recipe.
China will make a lot of noise and initial threats, but after a while they'll have to change or risk an economic hit.
Factory workers have protested and rioted in recent downturns. Thus, a downturn big enough could bring serious challenges to leadership. Tienanmen Square was merely a preview of what could happen.
The leaders are worried they'll be overthrown, Kadafi-style, if the population gets angry enough. Thus, they don't really want an actual trade-war, and that's why they are using threats and bluffs early on to try to prevent one. They saw how Kadafi got Shish-kebabed by his countrymen and know they could be next.
The thing is, they don't have to depend on exports. Grow a consumer base. It works. But exports have worked so well that Chinese leaders don't want to risk change. If Trump puts enough pressure on them, they may change to avert the even worse option: Shish-kebabing.
Table-ized A.I.
Stop sales of cars and iPhones? The aftermath: tens of millions of Chinese are suddenly out of work, in big cities where they can cause trouble. Chinese currency flatlines. Financial panic, uprisings, revolution.
Go ahead, China.
Not necessarily. Your scenario is only if it becomes a full-out trade war.
It doesn't have to become a wide scale trade war for protectionism to be a terrible and self defeating idea. Tariffs almost always cause more damage than they help. Put a tariff on steel and congratulations, you've just made every car, plane, and machine that uses steel more expensive and less competitive.
Trump can play chicken to scare them to make changes.
That is a very dangerous game to play with global consequences if the Chinese don't blink. It's especially stupid given that such negotiation tactics almost certainly are unnecessary and stand a high probability of backfiring.
Because they depend on exports far more than we do, a game of trade chicken is riskier to them.
And we depend on imports more than they do. They hold a sizeable amount of our debt which is a danger to both China and the US. Any trade war would hurt both sides and it's not an exaggeration to say that we have more to lose than they do. We're the ones with the higher than average incomes. We're the ones who are living on borrowed money. Yes any trade war would hurt China too but like any knife fight we wouldn't come out unbloodied.
Let's give it a try rather than live with the status quo.
Trying something that is clearly dangerous and almost certainly counterproductive just to disrupt the status quo is idiotic. Different just for the sake of different isn't a sane plan. That's what people do when they don't know what the fuck they are doing.
The cards are on our side. It's an area where Trump's brashness may work to our favor.
That's simply not true. What we have is something of a standoff with both sides able to hurt the other rather badly. Trump's arrogant demeanor is FAR more likely to backfire than it is to help.
Maybe then people will finally come to realize what the iPhone really costs.
The labor cost of an iPhone is small, and going down as automation gets better. Most estimates put the labor cost of assembling an iPhone at less than $10. American manufacturing labor is about 5 times as expensive, so Americans will earn $50 assembling them, right? Wrong. Americans are more productive, by at least a factor of 2, and there will be greater incentive for automation. So the cost may be about $20, for a marginal cost increase of $10. But that will still lower unemployment in America, right? Maybe. If Americans spend an extra $10 on an iPhone, they have $10 less to spend on other things, reducing demand and lowering employment. These lost jobs will be spread through the economy, so you can't point to one person and say "this guy lost his job to protectionism", but the job losses are still real.
Then there is the issue of retaliation. If we put barriers on Chinese goods, they will put barriers on American goods. China is the world's biggest market for new aircraft, and a lot of Boeing jobs in Seattle will become Airbus jobs in Toulouse, and later Comac jobs in Shanghai.
So we will have fewer $80k/yr jobs making carbon fiber composite aircraft wings, and more $15k/yr jobs making plastic toys for Walmart. The $80k jobs support a lot more service jobs, as that employee spends his money. As production jobs shift to lower productivity and lower pay, many service jobs will disappear.
If a real trade war gets going, it is also possible that the US dollar will lose its status as the world's reserve currency, with big negative consequences for the American economy.
Protectionism is not a "new idea". It has been tried many, many times throughout history. It has never worked out well, and it won't this time either.