On Sunday, Trump decided to go ahead with new tariffs of 15% on clothing and other Chinese imports totally about $111 billion. The new tariffs are in addition to the 25% tariffs previously imposed on about $250 billion of Chinese imports.
No one should be surprised that the knock-on impact of Trump’s Trade War Hurts South Korea and Japan
South Korea said Sunday that its exports to China fell 21.3% in August compared with the same month a year earlier, driving an overall 13.6% decline in exports. And Japan said Monday that capital spending by the country’s manufacturers fell 6.9% in the April-June quarter, the first decline in two years, as companies grappled with a nearly double-digit decline in exports to China.
“Given that there is no sign of recovery in Japan’s exports due to the U.S.-China trade friction, the downtrend in manufacturers’ profits and capital expenditures is expected to continue,” said NLI Research Institute analyst Taro Saito.
Even after decades of growing economic interdependence, exports to China by themselves account for a small portion of the total output of countries like Japan and South Korea. In Japan’s case, exports to China equaled 2.8% of gross domestic product in the year ended March 2019. But a falloff in exports could trigger a broader downward cycle by leading companies to slash investment or by making consumers more cautious.
Manufacturing Recession
On August 2, I commented Global Manufacturing Recession Started: Trump’s China Tariffs Made Matters Worse
It is increasingly clear that is the correct view. But what about a real recession?
How Much Lead Time Do You Expect?
Once again please consider Manufacturing Recessions vs Real Recessions: How Much Lead Time Do You Expect?
For further discussion, please see Debunking the Myth “Consumer Spending is 67% of GDP”.
Mike “Mish” Shedlock
There is a reason Dem’s are silent on Trump’s tariff’s on China. Their constituents also agree that China has been financially raping the US for decades. One may argue that if China, Vietnam, India, etc want to abuse their people and pollute their environment so we can enjoy cheaper trinkets, then that’s their business. However, you have a large group of people that believe man is responsible for the climate changing, and are willing to destroy their economies to save the earth. Do you think these noble nut jobs care about tariff’s on China?
If you are going to blame Japan and South Korea’s export woes on Trump’s trade war, then it is fair to say they were beneficiaries of 2018’s ramp (and stockpile) to beat tariffs. Making year over year numbers pale.
In the 1930’s worldwide trade didn’t just plummet all at once. It gradually dropped, quarter after quarter, year after year, from 1929 until 1933. Once these cycles start, they can take a long time to reverse.
How. 6.9% drop and 2.8% of GDP!! Do that math. That would be a drop in GDP of 0.19%!! So the point of the article is that this a tragic downturn and we should all be scared?
Count me as skeptical.
There are other factors too. Japan stopped selling materials to Korea that are needed for semiconductors, which has caused problems in the short term until Korea can find other suppliers. Japan threw away a huge market for these materials. It was a lose-lose. Here in Korea, there’s an active boycott of Japan. There are NO Japan signs up everywhere, airlines are cutting flights to Japan, and so on. Sales of Japanese goods have plummeted.
Korea has gone overboard with this anti-Japan zeal, as evidenced by that guy beating up a random Japanese girl on the street in Seoul last week.
I’ve watched interviews in both countries about this rift. Generally, the Japanese are calm and say that they want to be friends with Korea. The Koreans, on the other hand, are either livid or quietly worrying that things are going too far. I’m glad they were at least unified in condemning the girl-attack guy, but that’s what happens when you rile up the crowd for political gain. It does seem that Moon is doing this at least partly to take heat off himself, to focus anger on an external enemy.
Ingrained inferiority complexes, are dangerous ground to build political and cultural cohesion on….. Look at Rwanda…..
You’d think Koreans would have outgrown that by now, but as usual, culture tend to linger long past where fundamental performance warrants it.
Of all things China, the whole, underlying “we’re going to show those who looked down on us all this time, how Bruce Lee beat up those bigger Westerners,” is a lot more concerning, than any nonsense about so called “unfair trade practices.”
Well you can hardly blame the Koreans or Chinese for not having a warm fuzzy feeling toward Japan when you consider WWII
…nor Christians for not having warm and fuzzy feelings towards Jews, considering “they” killed Christ and all…. And all of Europe being mad at the Scandinavians for their behavior during the Viking era.
That’s silly my case is one generation removed yours is hundreds
Am I then to presume God and evolution conspired to hardcode into the laws of the universe that there is a universally meaningful line at 4.74 generations?
Either someone did you harm, or he didn’t. If he didn’t, what’s your problem with him again?
A full-on blockade is like… 100% tariffs or so. Their consumers must be doomed, but wait…they have a manufacturing base.
I don’t know if Trump’s solution is the best possible idea. But I do know that the status quo (shipping jobs to China without creating new ones here, letting China steal intellectual property, while feeding the Federal Reserve’s parasite class) was not working for most US citizens.
When you are at the bottom of a deep hole, you have to stop digging it deeper. Only a fool (aka the political class) would suggest continuing to dig as though everything is OK.
I’ve heard the explanations from college professors about supposedly free trade, but I note they all have tenure and cannot be fired no matter how ridiculous a theory they write. The people paying for their ideas (and paying their tuition!) do not have that luxury.
What has been going on the past few decades is not free trade, its lopsided trade. Its China stealing intellectual property, while the Fed steals our pensions to pay for it.
When you buy things from Walmart, are you stealing?
“When you buy things from Walmart, are you stealing?”
That’s precisely what most of this Walmart stuff is – Junk
There is no stealing involved with junk.
I accused the Chinese of stealing INTELLECTUAL PROPERTY not shop lifting from Walmart.
Not sure how we could measure this, but I suspect Amazon sells a lot more Chinese made products than does Walmart. Alexa and firetablets, for example, are manufactured in China.
I don’t hear the traditional political establishment complaining about Amazon’s sweat shops in China, nor their sweat shop fulfillment centers in the US.
And Walmart has done more to lower the out-of-pocket health care expenses of middle class America, than did Obamacare. Obamacare tripled my insurance premium, Walmart sells $4 generic medications. Another reason not to trust the traditional politicians.
The Chinese now make a lot of stuff that is not junk
Yes they do.
And partially thanks to Trump, the junk will move elsewhere while China starts to compete with non-junk!
I would also add that the US education system is turning out a very low quality product. Too many high school grads can’t balance their checkbook or write a business letter. Too many college grads have thousands in debt but still aren’t qualified to do much beyond coffee barista. Many others are employed in fields that have nothing to do with their major.
All the presidents in recent memory have made speeches about the growing importance of STEM majors. But all the presidents have invited college sports teams to the White House. Talking about McDonalds vs White House chef food really misses the point about WHO gets invited… its not the STEM students.
How many cities are issuing billions in municipal bonds to build new sports stadiums? But those same cities balk at providing similar incentives for manufacturing jobs. Billions in tax free financing for sports stadiums, higher taxes for factories. This misallocation was going on for decades before Trump.
Spot on about education. The problem is the schools have to lower standards. Otherwise they would be full of 20 year old black and hispanic kids. I live in one of the best school districts in the country. Most black kids don’t even bother going to school and they graduate. The same with hispanic kids, but to a lesser degree. The white and asian kids go to school and take separate classes from the others. They call them AP classes. They get a good education and go on to college and do well. The others complain about how they aren’t given the same opportunities.
Too bad your opinions are not backed by “pesky” facts:
“Overall, the total number of degrees awarded in STEM fields increased at every level between 2000 and 2015. The number of master’s degrees has shown the largest growth, increasing by nearly 88 percent over the 15-year period”
“NCSES notes that at the master’s level, the proportion of STEM degrees earned by students from historically underrepresented racial and ethnic groups increased from 14 percent to 21 percent in 2000 to 2015 (NSB, 2018h7), with Hispanic and Latino/a students showing the largest growth at nearly 202 percent. AIAN students, on the other hand, experienced the slowest rate of growth at the master’s level overall, at close to 43 percent.”
Opinions without facts are worthless.
link to nap.edu
It is based on data. Our school system reports truancy levels for blacks, hispanics, whites and asians at every high school. Blacks and hispanics have far higher truancy rates and far lower test scores. And what you posted doesn’t refute anything I wrote. I never stated the problem is worse than before.
“with Hispanic and Latino/a students showing the largest growth at nearly 202 percent.”
Well then those Latinos were skipping schools to go to the library ? LOL
I call an increase of 202% better than before. So yes you are wrong based on higher degrees earn by both Latinos and Blacks. High school diplomas are just the first step on what comes next in this day an age. But old people still think that high school is plenty because it was like that when they were young…
“Well then those Latinos were skipping schools to go to the library? LOL I call an increase of 202% better than before.”
Hey Carlos, how many of those blacks and Latino engineers are working lucrative high tech gigs in the Silicon Valley? Not a lot and that’s not a knock on them, as the competition in those fields (and essentially any engineering/manufacturing company in the US) is basically the entire world market. The whole point of “economic nationalism” is protecting US citizens’ jobs from world-wide competition. You won’t come across “economic nationalism” in the MSM. Rather, its always “white” nationalist. However, economic nationalism benefits everyone (at least those engaged in productive occupations) regardless of race, religion, and orientation and is the reason Trump may appeal to minority voters more than the MSM will admit.
You are putting manufacturing and engineering in the same bucket. That is the past. Companies can hire talent anywhere in the world (engineering jobs) and have that work done “in the cloud”. That applies to HW and SW design. It also applies to fintech and mechanical engineering. That development is a file transfer away to the HQ. So if you are thinking about “economic nationalism” in the engineering field good luck with that
Standards have been reduced and idiotic methods of teaching, like Common Core, have not made graduates smarter, as demonstrated by the fact that US test scores continue to fall against the rest of the world.
“high school grads can’t balance their checkbook”
Are you serious? I have not balanced my checkbook in 40+ years. And, now, I only write 4 checks a year (One per quarter for estimated taxes)
DaveBarnes: ” I have not balanced my checkbook in 40+ years”
You don’t check your balance and don’t know if a charge is correct or not. And you even brag about not checking your balance for decades!
Like one of those pro athletes that makes millions, trusts his “business managers” to keep the books, and mysteriously ends up bankrupt.
You don’t even need to write those if you use EFTPS. link to eftps.gov
I’m glad you mention the Fed as well, but their contributions to the toxic status quo Americans loathe is far, FAR greater than Chinese manufacturing. The central bankers have encouraged currency devaluation, huge deficits, asset stripping corporations, and asset inflation, which makes living/manufacturing in the US far more expensive than it should be. Without extreme Fed meddling, things like housing and education would be much cheaper for Americans, for starters. Companies would be encouraged to invest in their own people rather stock buybacks to feather executive nests. The Fed has molded a world where nobody cares about tomorrow.
Trump’s strategy achieves very little, since closing factories in China to move to other low cost locales like Vietnam is meaningless. We’re going to run big trade deficits no matter who manufactures for us, and until we deal with the banksters no change in trade policy can have a positive impact.
“…while feeding the Federal Reserve’s parasite class)..”
Ther’s no “while” about it. Stop feeding the parasites (which are here at home, not in China), and American workers can easily compete with a bunch of commies.
Trade has nothing whatsoever to do with what ails neither American manufacturing, American wages, American workers nor American anything else.
The guys who stole your pensions work on Wall Street and in the rest of the FIRE rackets, run around suing people, collect public pensions and “made money off their house and ‘investments’”
That’s where the money stolen from American workers went. Every single penny. China, Mexico nor anyone else, are no more relevant than Pluto and Neptune. All they serve as, is a foil: To fool the economically illiterate into looking the wrong way, while the same old thieves which have been at it since Nixon went full retard, can keep up the theft game, while the saps run around worrying about 100% imaginary hobgoblins.
No one on Wall Street (or for that matter Washington DC) held a gun to your head and made you buy a house you could not afford. They gave incentives – cheap financing and free toaster when you took out a second mortgage. But the decision to borrow more than you could afford was entirely your decision.
YOU used the math and economics you learned in public school to evaluate your monthly payment. And YOU not someone on Wall Street or Washington DC decided to sign on the dotted line.
YOU believed the politicians would watch over your pension for you. No need to check the pension’s balance or funding levels! Actuarial work involves statistics and math – two topics that many in the US think are scary or boring or both.
YOU paid $200 per month for cable TV so you could watch house flippers on your Chinese made HD TV. You needed HD so you could watch NFL and March madness from home, since stadium tickets are unaffordable. Before WW1, the country somehow muddled along without a single professional sports team — now survival is in doubt unless we see it in HD played in a billion dollar stadium. The players squirmed through high school and college on tutors and coach influence, but those players make more in a year than an average person makes their whole career. And do to the player’s math and business skills, many go bankrupt anyway.
YOU voted for the politician who issued the muni bond to pay for the stadium, while taxing and harassing the factory until it closed.
Did Washington and Wall Street take advantage of your bad decisions? Yep. But they couldn’t do a thing unless you made those bad decisions. Your willingness to play along made it all possible. You not wanting to check the numbers for yourself. You were the key player, without whom the whole bubble couldn’t happen.
But go ahead and blame everyone else. Nothing is your fault
You made a lot of valid, but generalized points. Personal responsibility has been dragged through the mud, spat on, laughed at by the central banksters shenanigans; re-inflating asset bubbles, screwing of savers to bail out the deadbeats. After a few reruns, most people wise up.
I personally can’t recall doing any of the above……
The purpose, the entire purpose, of central banking and fiat money, is specifically to facilitate redistributive theft: From the productive to the connected, without the latter having to bother with directly holding guns to anyone’s head. Instead, just debase the currency.
That way, the productive has to work for a living, while the connected can just idly sit by while The Fed enriches them.
Directly by pumping up their “asset” prices. And then indirectly, by ensuring “owning assets”, rather than doing something useful, worthwhile and productive; suddenly become the only road to a decent living. Hence creating an entire class of otherwise pointless leeches, who make money (vast amounts of it in many cases); not by producing something or otherwise adding value, but simply by getting a cut of the asset rackets constant Fed intervention and debasement guarantee will represent an ever growing share of the population’s aggregate source of purchasing power.
That’s why fiat money and central banking is so popular among the idle, incompetent and connected: It allows them to live of loot stolen from their productive betters, without having to do anything even as complicated as figuring out how a gun operates. Heck, most of them are seemingly way too incompetent to figure that out; instead believing guns are another one of those scary, dangerous hobgoblins who are out to get them… Unless the guns are carried by minions in the direct nominal employ of other connected Fed Beneficiaries, that is. Then they suddenly become OK. That’s well connected incompetence for you in a nutshell. That’s who are left owning, and running, America; after 50 years of complete run amuck, unconstrained theft by financialization; preceded by another 75 years of uninterrupted progressive decay, from what was once The Shining City on The Hill as well as a reasonably free country.
Everyone says they are an above average driver… everyone says Congress is terrible, but their Congressman is the exception.
I have no idea if you personally enabled Washington and Wall Street – I was using “you” in the generic sense, not you Stuki. But I do know that US citizens as a group enabled every single thing.
Wall Street did not issue a billion dollar muni bond for Yankee stadium, but then refuse 30 million in tax rebates for Amazon. Can’t blame Washington DC either. New York City residents voted to shoot themselves in the foot.
Please don’t tell me about Amazon, its just one example. And I heard Dallas spent $2 billion on a new Cowboys stadium. I don’t know how many new sports stadiums have been built with taxpayer money while highways crumble. Trucking companies pay taxes, while the NFL is a non-profit. All those NCAA teams in March madness earn millions for their non-profit schools, while students get buried in debt that a barista job can’t pay down.
And we the people voted for all this, even if you Stuki claim you weren’t standing shoulder to shoulder with us while we did it.
German Jews apparently voted the Nazis into power too, I assume….. Just like the lone Sheep who voted over what to have for dinner with two wolves… It’s all “We, The People”, after all…Or was it “The People’s Republic?”
There is a very good reason economics is very explicit, to the point of perhaps sounding a bit anal at times, about exactly who economic actors are, and are not: They are rational individuals. Not arbitrary wishy-washy aggregate groups and “classes”. Individuals vote. Not some mythical “we.” And individuals are only responsible for their own vote. Again, not the vote of a bunch of “we” ‘s.
There exist no non-tautological “we” out there. “Women” don’t vote one way. Neither do “gays.” Nor “minorities.” The only women who voted a given way, are women who voted that way. Any extension beyond that, is nothing but obfuscatory conjecture.
Ditto New Yorkers. And German Jews. No matter how many times two wolves outvote a sheep over dinner plans, it’s not the sheep’s “fault”, nor responsibility, that “we” voted that it should be eaten. And neither do the sheep have any obligation to unconditionally comply, just because the wolves bothered to dimple some chads before digging in. Ditto two leeches stealing all your money and calling it “just taxation”, just because you happen to live in a voting district of only three. The sheep’s ability to non-comply may be limited, which is exactly why The Founders wrote The Second. But lack of current practical ability to stand up for ones God given right to life and, does not mean the right is no longer there, just because a couple of thieves and killers took a vote before they started killing and stealing.
Just want to add another plank in the destruction of the US manufacturing: the litigation-industrial complex. It’s difficult to get injured working as greeter at Walmart, or Starbucks barista.
Hi. One of the best direct and simple answers of read explaining what the political and acidemic elite have been forcing on the average working citizen though the media for the last 40 yrs. If it’s not stopped now the average American worker will not have a job in 10 yrs. It takes time to turn a super tanker around and the two elites are trying every trick to reverse the change that’s needed.
Cheers Morrie