Trump Officials Planning Escalation of US-China Tech Trade War (arstechnica.com)

An anonymous reader quotes a report from Ars Technica: The Trump administration is looking to widen its trade war with China by restricting Chinese access to U.S. technology, according to reports from the Wall Street Journal and Reuters. "The Treasury Department is crafting rules that would block firms with at least 25 percent Chinese ownership from buying companies involved in what the White House calls 'industrially significant technology,'" the Wall Street Journal says. A separate proposal would institute beefed-up export controls preventing Chinese companies from buying these technologies from U.S. firms. The policies could be announced as soon as this week, the Journal says. In the past, the Trump administration has blocked multiple attempts by Chinese companies to buy U.S. semiconductor firms and imposed a sweeping export ban on Chinese smartphone maker ZTE after ZTE was caught selling U.S. technology to Iran and North Korea -- though the administration recently lifted the ban.

Comments

I smell a recession coming on.

[Anonymous Coward]

It remains to be seen who will bear the brunt of it.

Re:I smell a recession coming on.

[Anonymous Coward]

Ultimately, the rest of the world is going to be very happy that Trump is working so hard to confine the recession to the United States.

Re:I smell a recession coming on.

[Anonymous Coward]

The analysis of which states are being hit hardest by Chinese tariffs make it very clear where China wants the hit to be. Texas, Louisiana, Alabama, South Carolina, Kentucky, etc.

Oil, gas, coal, auto, food - who do you think will hurt the most?

$8 billion of Texas exports fall under the first rounds of tariffs and $0.12 billion of New York's. Is that more clear?

The combined hit on the tiny little economies of Alabama and South Carolina beats the hits on the California and Washington mega economies. Maybe that helps make it clear.

Re:I smell a recession coming on.

[Tablizer]

I smell a recession coming on. It remains to be seen who will bear the brunt of it.

Usually the 99%. The rich can afford to wait out storms, and even get richer from recessions by buying low and selling high: be it stocks, co's, or real-estate. Recession bargain-hunting is Warren Buffett's main financial weapon, and he's arguably the richest dude on the planet.

But even without trade-wars, we are statistically due for a recession based on the length of the current upturn. The fact the yield curve is inverting is yet another warning sign. Based on past yield curves, we got roughly 18 months until it "hits".

Trump may unfairly get the blame for a slump. Don't get me wrong, I'm NOT defending his overall economic policy, but generally the sitting President's popularity is largely tied to the current economy, and it has been this way for more than 100 years.

Where he might have legitimate blame besides trade wars is the debt: the larger the debt, the smaller the possible stimulus when a slump hits. Even among Republicans, giving personal tax-cuts to the rich in exchange for debt is not popular. (The corporate tax-cuts and middle-class tax-cuts score better with Republicans. They believe US corporate tax-rates were higher than other nations'. Whether that was true is debatable.)

Re:I smell a recession coming on.

[AvitarX]

If they were being strategic, they'd try to hit the rust belt, democratic strong holds that went for the protectionism hoping for some type of change.

Maybe that's round two though, or maybe they want Trump in power, as it helps them exery power in Asia.

Re:I smell a recession coming on.

[jriding]

Sooo. China is applying tariffs intelligently. Their tariffs directly hit and hurt Trumps main voting base. To maximize the pressure on him to remove the tariffs.
Some how is this is the liberals doing?

 

Re:I smell a recession coming on.

[youngone]

Get out of here with your well-argued and well-reasoned discussion.

Like everyone else, I come here for CAPITAL-laced flamewars.
Oh; and, bad: punctuation,

Re:I smell a recession coming on.

[ShanghaiBill]

Some how is this is the liberals doing?

At least in America, protectionism is popular with the left, and much less so with conservatives.

Trumpism is a blend of the stupidest policies from both left and right.

Re:I smell a recession coming on.

[tsa]

The EU does the same thing.

Re:I smell a recession coming on.

[tsa]

Trump may unfairly get the blame for the slump but he is the one who tells everybody he sees that he singlehandedly made the economy boom. He did nothing of the sort, in fact he made it boom slower and less, so he deserves the blame for the slump.

Re: I smell a recession coming on.

[Anonymous Coward]

"Ironically, the biggest supporters of free trade were the Big Cotton slaveowners."

Right, the Democrats.

Correct, the right-wingers. Until the 20th century the Democratic Party was the right-wing conservative party. Left-wing liberals favoured the Republican Party.

Re:I smell a recession coming on.

[Peter P Peters]

At least in America, protectionism is popular with the left, and much less so with conservatives.

Left, right, liberal and conservative are meaningless in America. Democrats and Republicans have a mish-mash of policy that seems to only exist to satiate their need for power than actually improve the outcomes for the people.
United we stand, divided we fall. Ask yourself which direction we are going in and if you choose to continue down that path....

Re:I smell a recession coming on.

[Peter P Peters]

The rich can afford to wait out storms, and even get richer from recessions by buying low and selling high: be it stocks, co's, or real-estate. Recession bargain-hunting is Warren Buffett's main financial weapon, and he's arguably the richest dude on the planet.

Trump himself said the same thing back in 80's when discussing his wealth. NYC in the 70's was in a slump, and he knew that slumps are the best time to buy.
It could be that he might even engineer a recession in order to get some more bargains. He only cares about himself so anything is possible.

Trump may unfairly get the blame for a slump.

It's only unfair if it happens in his first 1-2 years like poor old Obama who inherited the country one of the worst positions in a decades. After that it's all you. You are the boss, you take responsibility.
FWIW, Australia with a mix of conservative and liberal leadership is currently into it's 26th year without a recession, the Dutch managed the same thing until the GFC screwed things up. So if Trump can't make the good times last a piddly 8 years he deserves blame.

Re: I smell a recession coming on.

[aquacrayfish]

More ridiculous, I think, to apply labels without historical perspective.

Re:I smell a recession coming on.

[Type44Q]

Yup, Russian trolls all the way down...

Re:I smell a recession coming on.

[Dzimas]

The US economy will slip into recession this summer, and Trump will angrily state that it's because the rest of the world is ganging up on the USA after 8 years of weak government under Obama. He'll use Twitter to single out and humiliate opposing politicians - preferably female - and use anger and hatred to ride easily into a second term in office.

Re:I smell a recession coming on.

[kellymcdonald78]

I'm surprised that Trump doesn't understand how these things work, this is literally first year global business and trade strategy. So much for the quality of a Wharton education. Its simple, go and look for vulnerable Republican politicians, districts that could easily flip, look at the key industries in those districts and target those. This either forces those politicians to push back against their own party, or the district goes to the Democrats diluting Trumps ability to maintain these tariffs. This is why you're seeing tariffs on such odd things like felt markers and motorcycles and bourbon. As per usual the Trump administration is being outplayed by people who actually know this stuff

Clearly, the inmates are running the asylum

[rmdingler]

Protectionist trade policy is the knee-jerk reaction of the weak. Retaliation by not just the Chinese, but America's traditional allies in Europe, Canada, and Mexico will cost US jobs, not create them.

Re:Clearly, the inmates are running the asylum

[hey!]

Well, I'd be open to at least hearing a rational argument in favor of pursuing more nationalist trade policies. But starting a trade war with everyone clearly isn't rational. It's the policy equivalent of a temper tantrum.

A trade war with China hurts US exports to 20% of the world's population. Starting a trade war with everyone but the US hurts US exports to 95% of the world's population.

Re:Clearly, the inmates are running the asylum

[Peter P Peters]

If you look at the trade balances between the U.S and the countries/blocks Trump has so far threatened or actually started a trade war with you can see that they all have a trade imbalance in their favor.

But it doesn't work like that. Because you're talking millions of businesses that are all interdependent, when you turn the tap off they all suffer.
Global prosperity increased massively with global trade, the only result of closing that off if is a reduced overall economy. ie Nobody wins.
Remember Xi is there for life, he knows he can simply wait Trump out and allow him to squander the US's position in the world. The Chinese probably can't believe their luck. They will already have a strategy in place to drag this out for 6.5 more years ready to pounce once Trump leaves with the US in tatters.

Protectionism is fine

[rsilvergun]

when you have an industry to protect. China has leverage because we've let them take over virtually all our manufacturing. We've kept a few of the heavy duty stuff in case we need to spin up for a war.

Thing is, Trump's base wants action and they want it now. Given that wages keep falling (inflation's 3%, wage growth's 2.5%, do the math) and 40% of Americans don't have $400 bucks in the bank I can't blame them.

This is what happens when you ignore a sizable portion of the country. They find somebody who'll listen. If you happen to be doing pretty well in this economy and don't want the boat rocked, well, tough shit. If you don't want desperate people destabilizing the world then you need to do something about their desperation. You'd think we'd have learned this from WWI and II.

Re:Protectionism is fine

[PopeRatzo]

This is what happens when you ignore a sizable portion of the country. They find somebody who'll listen.

Did you know that the average wages for someone in non-supervisory jobs has gone down under Trump? Have you seen the price of gasoline? Know anyone who works at the Harley-Davidson plant in Wisconsin (I do)?

The problem is that those people who were being "ignored" have now shot themselves in the foot and are starting to feel the fallout, as are we all. Maybe there's a good reason those people were being ignored, if their solution was to elect this jackoff.

Did you know that only 4% of US workers got a pay raise since the Republicans passed their tax bill 6 months ago? That's why we've got this whole hard-line immigration bullshit going on, because the biggest things Trump has done have been unpopular with real Americans, and all he can hope is that he can gin up enough White Extinction Anxiety to get the oxycontin-dosed disability-collecting racists to act as his human shields.

https://jamanetwork.com/journa...

Re:Protectionism is fine

[chill]

How are those Harley-Davidson people doing? I'm curious considering HD just announced they're going to move some manufacturing in Europe to avoid the tariffs.

That falls on the heels of their January announcement of closing a Kansas City, MO plant and consolidating work in York, PA. But overseas...they just opened plants in India and Brazil, with another opening in Thailand this year.

Any decent sized "American" company is a "global" company, but this President doesn't get that at all -- nor does his base.

Re:Protectionism is fine

[Namarrgon]

US manufacturing output has nearly tripled since the 70s, so China's manufacturing has taken apparently hasn't harmed the local industry much at all.

US manufacturing jobs have declined sharply, however - and this is what Trump's base is concerned about. But since the local industry is quite healthy, blaming China for killing it is misguided - blame the rise of automation instead; output per worker has risen even faster than total output.

I certainly agree that those ex-workers need help, but those unskilled manufacturing jobs aren't coming back. It's just not economically viable to mass-produce things by hand anymore - you'll get heavily undercut in the world market by developing countries with cheaper labour. It's more effective to help those affected to move to different sectors instead; service jobs (which are booming), or reskilling them to other areas.

Re:Protectionism is fine

[PopeRatzo]

Source please.

Jesus, when are ACs going to learn better than to challenge me? Here is the source, from 9 days ago:

>"The average hourly wage paid to a key group of American workers has fallen from last year when accounting for inflation, as an economy that appears strong by several measures continues to fail to create bigger paychecks, the federal government said Tuesday.

For workers in "production and nonsupervisory" positions, the value of the average paycheck has actually declined in the past year. "

http://www.chicagotribune.com/...

Source please

There you go again. This is from 4 days ago:

"Trump and other Republicans claimed that giving corporations huge tax breaks would help workers, going so far as to guarantee them a $4,000 pay raise. Unfortunately, only 4% of American workers are getting any kind of payout tied to the corporate tax cuts."

https://augustafreepress.com/f...

Re:Protectionism is fine

[Namarrgon]

They weren't ignored. And indeed, a lot of jobs were recovered after the GFC losses. But they've been declining steadily since 1980, so that's unlikely to change much soon.

As for "having nothing to lose", we've already seen how e.g. Trump's steel tariffs can actually damage local manufacturing by dramatically raising their costs, so I very much doubt that's true. The decline in those jobs might be slowed a little, but at the cost of making other sectors less competitive - and workers in construction and auto manufacturing are major parts of Trump's base too. And that's before we get into the impact of retaliatory tariffs on completely different sectors like farming.

Re:Protectionism is fine

[Zorpheus]

Well. I am not really a Trump supporter, but his point is: A trade war will reduce both import and export. But since The USA is importing more than it is exporting, he thinks the country will win more than it loses in the long run.
This is why China can't keep raising tariffs matching the US. But the US makes a lot of money by investments, which is partly compensating the trade deficit with China, and more than compensating the one with Europe. Also China was the biggest buyer of American state bonds. And a lot of trade in the world is done in dollars, which forces people to accumulate dollars and is part of what allows the huge American deficit.
So the retaliations on Trump's trade war will soon have to target the financial sector.
I don't know if this will be good or bad for the US in the long run. It could shift the US economy away from making income through investments, which only goes to a few people, back to making income through production, which can benefit more people. It could also put the world into chaos, just making everyone lose. It could also be just a threat, trying to force others to make concessions. But I think both Europe and China don't respond too well to such threats. They would never give in, because it would mean that the US could enforce other things afterwards, without a limit.

Re: Protectionism is fine

[chill]

I think part of what he forgets is that the United States, by dollars, is the largest exporter in the world. We may Imports a lot, but our economy is heavily dependent on exports as well.

While a lot of the trade around the world is conducted it in US dollars, that can easily be changed. Trade could be conducted in Euros without difficulty. We've already started to see some of that change in oil trading.

He also doesn't grasp the concept of soft power. The fact that everyone does trade in US dollars, and we'rr so interdependent, gives the United States a lot of leverage in places where we otherwise might not have it. Petro-dollar trading is one of those areas.

Trump seems to see trade as a zero sum game, and it isn't. The idea that there are other measures and other benefits to trade relationships besides simple cash value seems beyond him.

Re:Protectionism is fine

[Peter P Peters]

China has leverage because we've let them take over virtually all our manufacturing.

Technology (cheap easy communication and transport) unleashed Globalisation and no amount of complaining will get that genie back in the bottle. The smart move is to deal with the new environment we are all in and try and make it work in your favour, the dumb move is to pretend you can wish the world back to the 1950's.
Trump is firmly in the latter camp, and it can't possibly work.

If you don't want desperate people destabilizing the world then you need to do something about their desperation.

Agree 100%

The big picture.

[Okian Warrior]

Protectionist trade policy is the knee-jerk reaction of the weak. Retaliation by not just the Chinese, but America's traditional allies in Europe, Canada, and Mexico will cost US jobs, not create them.

There were originally 6 good reasons for the tariffs:

1) Chinese manufacturers take our designs, make extras, and sell counterfeits as if they were original(*)
2) Chinese manufacturers steal our IP and trade secrets for other products
3) The Chinese violate licensing agreements (ie - hacked copies of software) and the government does nothing about it.
4) Chinese working in the US commit industrial espionage and send the information back to China
5) The Chinese government subsidizes certain industries so that they can sell goods under cost, driving industries from other countries out of business
6) (I forgot what the 6th big item was. Maybe allowing companies to do business with N. Korea?)

On #5 above, China has been subsidizing their steel production, pushing US foundries out of business. The US has only one foundry left that can make the steel plates needed for ships, so this is a national security risk. You can't make battleships without steel plates. See Canadian Aluminum subsidies.

Everyone who has taken Econ 101 will parrot the old saw "trade sanctions are bad", and everyone will wail and moan about how the sanctions have hurt *them* (so they must be bad - ya!).

China violates their trade agreements in every possible way, so much so that it would *almost* be better to not trade with China at all.

Note that for the first time in ever we have a businessman leading the country. This was not a capricious decision, it came from a long history of abuse. It's intended to fix the many and long-term existing problems, it's good for the majority of domestic businesses, and it was a campaign promise.

Take the long view.

(*) This has happened so frequently, it's a meme. Make your monitor or VCR or other electronic device in China, and see eBay flooded with counterfeit copies overnight. Does no one remember that?

Re:The big picture.

[AmiMoJo]

1) Chinese manufacturers take our designs, make extras, and sell counterfeits as if they were original(*)
2) Chinese manufacturers steal our IP and trade secrets for other products
3) The Chinese violate licensing agreements (ie - hacked copies of software) and the government does nothing about it.
4) Chinese working in the US commit industrial espionage and send the information back to China

How to trade tariffs fix any of that? At best they might make it harder to sell those products in the US, but not the rest of the world.

On the one hand, US companies want the cheapest possible manufacturing. On the other hand, they want extreme loyalty and security. And the solution to this predicament is apparently is apparently trade tariffs.

Seems like a bit of a non-sequitur.

How about Apple then? They make all their crap in China. It doesn't get counterfeited really - you get a few similar looking phones but none run iOS or have knock-off Apple CPUs in them or anything like that. And a lot of companies just resell OEM Chinese stuff anyway, and somehow do okay because people trust US brands to at least provide some support and warranty coverage.

Trade tariffs are the wrong tool.

When will US companies steal Tech from China?

[Streetlight]

For sometime China has been sending students to study at US and European universities, obtaining bachelors and higher degrees. Some have brought this expertise back to China and established world class university programs in STEM areas and now produce outstanding home grown graduates. Eventually, if not now, these folks will develop home grown technology which may be as good as that being developed in western universities and private corporations. Sure, it might be easier and cheaper to steal needed tech from elsewhere, but restrictions on exports may turn the tables resulting in China becoming a technology power house. How long will this take? Time will tell.

Re:When will US companies steal Tech from China?

[rahvin112]

Why do you think that if we share our technology with China that the reverse would also occur and China would share the other direction? Your arguement is it may lock the US out not to share but assume they would share and some would consider it highly likely that they wouldn't.

Part of the problem and things that people are concerned about is that China appears to see economy not as something that brings people together and creates interdependence but something that can be "won". That their end goal is to acquire all this technology and then shut out foreign competition. They've already done it in too many industries to count where expertise was sold then the Chinese company displaced the American company with copies of their product.

The problem is Trump approached this completely the wrong direction. He started a war with everyone instead of working with out allies. He could have arranged an agreement with every Western country to take China on in this area and demand change. He could have united the world and forced China to stop the unfair trade practices at the threat of losing all market access in the west, instead Trump started a trade war with all our allies and drove them to make deals with Russia and China at our expense. China and Russia are laughing all the way to the bank while we've destroyed the goodwill and soft power it took this country a century and millions of lives to build and one guy trashed it in 18 months. It's a staggering achievement.

Re:When will US companies steal Tech from China?

[youngone]

EU would not cooperate they are happy to work with China against the USA's interests.

Why would the EU work for the USA's interests? I would expect the EU to look to their own interests.
I would also like an example of the EU working in China's interest please.

Um... you do know the economy doesn't move

[rsilvergun]

that fast, right? These people lost ground for 8 years under Obama, 8 years under Bush and 8 years under Clinton. The older ones lost ground before that too. These trends have been going on for over 40 years. They've been ignored that long. There was a brief respite during the .com boom and an even briefer one during the housing boom.

It's kinda hard to shoot yourself in the foot when somebody else already cut you off at the knees.

I should add

[rsilvergun]

I'm not saying what they're doing is going to help, but I _am_ saying it's not likely to make things much worse for them. You're underestimating how bad off 40% of America is. Like the man said, what have you got to lose? For a lot of people there really isn't anything. That's what 40 years of declining wages means.

Re:I should add

[FFOMelchior]

Cry me a fucking river. That 40% is still 1000x better than half the fucking world.

"At least we're better off than 3rd world countries!"
- New Trumper motto, apparently.

Re:About time

[Anonymous Coward]

It was good for Bezos and Jobs and all the other tech robber barrons.

I notice you don't want to blame the Waltons and Walmart for any of our country's ills. Not only did they help flood the market with cheap chinese crap for decades, they helped gut wages at the low end, shifted the cost of feeding their employees to the rest of us, while filling their own pockets. Now they hide in gated communities where they don't have to deal with results of their handiwork.

But sure, blame Bezos and Jobs. Amazon and Apple employ 10s of thousands of highly compensated employees who don't need "food stamps" in order to eat. Can you say the same for Walmart?

And Trump won't even pay Americans. His resorts bring in hundreds of foreign workers on temp visas because they'll work for even less than Americans. That's #MAGA for you.

(Not sure who the barrons are. Did you mean robber barons?)

Re:Fuck Trump

[Anonymous Coward]

He's not protecting jobs. Metal transformation jobs are now leaving: Harley Davidson moving manufacturing, Mid Continent Nail Corporation shutting down and dozens more to come. Don't worry, the rest of the world is more than happy about it! We'll gladly take your jobs!

Re:FUCK off Trump

[Anonymous Coward]

I'm sick and tired of people like you not thinking through the role of a government.

The role of the government is to protect the commons. That means it is there job to protect all the "me"s not just you. You may be ok with the factory next door polluting the air and water. There however literarily millions of "me"s that aren't ok with it. Many of those millions don't have enough information, education or time to make an informed decision about the pollution.

For example the GPDR in the EU. It is clearly designed to give millions of "me" ownership over themselves regardless of what you personally want. If you are making statements like "I own me" and disparaging the GPDR then you are clearly someone who could use some protecting. i.e. You are ad an idiot who can't be trusted to make informed decisions.

You say that violence is not justified where there is no violence. When you move into a new neighborhood and are informed that you only have the choice of a single internet provider, is that not violence? If local businesses refuse you because you are gay or a minority, is that not violence? At the end of the daym you should have learned in civics class that the government( in theory) has a monopoly on violence and can use it to protect the commons as needed.

 

that is a stupid remark

[aepervius]

People don't compare to folk half the world away, they compare to their immediate neighbors. That is why they elect fascist populist politician : because they want to get a better living and see the other 60% getting it. Not saying they are right, but simply that your remark is stupid.

Re:The NON-ham-handed way to do it

[kellymcdonald78]

Canada does not subsidize its softwood lumber industry, and the WTO has agreed with this assessment time and time again. It's just that the lumber industry in Canada operates under a very different model. Most forestry takes place on Crown Land in Canada (except on Vancouver Island), companies are charged stumpage fees and required to restore the land once they are done. This means the whole capital structure of Canadian lumber companies is totally different from those in the US.