Trump imposed another $50 billion tariffs on China, as noted yesterday.
Today, Beijing Hit Back at the U.S. with tariffs on an equivalent $50 billion of goods.
While the Trump list would affect 1,300 categories of goods, China critically is targeting a narrower range of 106 types of U.S. goods, many of them high-profile. Soybeans and smaller commercial passenger planes, mostly made by Boeing Co. , are the most valuable U.S. exports to China, worth nearly $23 billion last year.
Also prominent in China’s retaliation are sport-utility vehicles and other agricultural products, from beef to sorghum—goods that were chosen to hit U.S. states that supported President Donald Trump, according to people familiar with Beijing’s plans.
Not a Trade War
Mercy me. Don’t call this a trade war. It’s really a peanut butter sandwich.
Trade Dispute Will Hit Automakers
Reuters reports U.S.-China Trade War Could Hit German Automakers, Plus Tesla, Ford
If a tit-for-tat tariff dispute between the two countries erupts into a full-blown trade war, auto production in both will be affected, but U.S. factories would feel the strongest effect because China imports nearly 270,000 U.S. vehicles, worth $11 billion, and sends relatively few back.
Tesla’s California plant, which ships an estimated 15,000 cars a year to China, as well as BMW’s South Carolina facility and Daimler AG’s Alabama factory, could lose hundreds of millions of dollars’ worth of production if China goes ahead with its threat to double import tariffs. All three export high-margin luxury models, many of them sport utility vehicles, to China.
Ford’s problem is twofold, involving both imports of premium Lincoln vehicles to China and a plan to export low-cost Focus compacts from China to the United States.
Barclays auto analyst Brian Johnson, in an investor note on Wednesday, predicted that Tesla “would bear the brunt of any increased auto tariff on a relative basis,” with China accounting for 17 percent of the company’s revenue.
To Hell With Wall Street
Steve Bannon chimed in with a “brilliant” comment: “To hell with Wall Street“.
“Ask the working people in Ohio, Pennsylvania and Michigan about Wall Street. Wall Street supported and cheered on the export of their jobs. To hell with Wall Street if they don’t like it. It’s time somebody stood up to them and Donald Trump is the perfect guy. Wall Street is always short term. Trump is trying to protect the beating heart of American capitalism – our innovation.”
Brilliant. Let’s shoot ourselves in the foot.
We will not label that a peanut butter sandwich. Instead, we call that “winning”.
Mike “Mish” Shedlock
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I’m buying into Trump, he’s the greater fool
record unemployed.
They have always been fake. Obama supporters are blind. Even if Trump is a con man, he is only the second biggest con man that America has seen this century. Obama is the biggest con man.
Wait, are you accusing kram or myself of being Obama supporters? What exactly are you basing this on? More likely, it seems this is your defense mechanism for being unable to win an argument without resorting to dopey American partisan politics. Not sure about kram, but I take pleasure in deriding the whole blue/red team paradigm, as would most thinking individuals.
Hmmm…for eight years these SAME unemployment numbers were just great for obama and his liberal supporters to show how great the obama economy was doing. And now the are all fake. Amazing.
“Anyone claiming America’s economy is in decline peddling fiction”
— obama, State of the Union address, January 2016
Kram is correct. Unemployment numbers, like many .gov stats, are nonsense. If EBT cards were suddenly deactivated, there would be food riots. Quite a few Americans are much closer to the brink than you seem to believe. If they weren’t in trouble, why would they support something as dangerous as a trade war?
If you include the millions of discouraged workers (taken off the “seeking employment” list) who have been taken out of the calculation of unemployment, that record would be a little blemished, wouldn’t it. That is called cooking the data to falsify the picture – photoshopping the employment picture for the techies. Given that around 94 million working age adults in America (in a population of around 326 million; roughly 29%) are not working at all (of course many of them have never worked), that is a large number of people depending on other sources for income and livelihood. While unemployment rate U-3 is 4.6%, U-6 is more like 9.2% and if you include the millions of discouraged people (participation rate has dropped dramatically), U-6++ would probably be over 10%. This is the level of obfuscation being carried out to make everyone believe that America is great again!
@kram
We have record employment. Minimum wage is at about $10/hour (higher many other places). So taking into account taxes/fees that is 3 hours of work to feed yourself for a week.
What is your opinion that people can’t work half a day to feed themselves for the entire week?
As per Wiki, “SNAP benefits cost $70.9 billion in fiscal year 2016 and supplied roughly 44.2 million Americans (14% of the population)[2] with an average of $125.51 for each person per month in food assistance.” This average is 150% of the $20 per week (or $80 per month you had mentioned) and I suppose that, but for this assistance, many people would be close to starvation. What is your opinion on that?
I was not talking about sufficiency of food. India has a huge surplus of food stored in its storage, but inaccessible to people who cannot afford it. I was talking about the millions without jobs, incomes and homes, who can barely afford to eat and would starve if not for the billions being distributed by way of food stamps.
Interestingly, my grandfather, a very conservative man, voted Democrat his entire life. His reason, per him, was that he would have starved to death during the Great Depression if it hadn’t been for the Civilian Conservation Corps, which gave him a job and allowed him to feed himself and my grandmother. He was always grateful to FDR.
@kram
Nah. America is self sufficient in food and is a massive exporter of food (with a great food distribution system). Even in the depths of the great depression there was no mass starvation (or even any starvation).
All the countries listed as “food-insecure” cannot feed their own people. They are highly dependent on food imports. Massive food imports. With fragile food distribution networks.
And, that is the thing. Countries like CHINA that need to import massive amounts of food to feed its citizens cannot just “turn on a dime” to change suppliers of food. Those relationships take years or decades. Farmers in Brazil, even if they could, are going to take a few seasons to even to START replacing America in food exports to China. However, food stocks runs out in a month.
So, in America, we are not talking shortages and empty grocery stores if the EBT cards stop working. The only thing we are talking is much and type of food people can buy.
Just a few short years ago (in college), I was able to get by on $20/week for food. Easy to eat cheap in America. It is WORK cooking from scratch with basic ingredients but no one is going to starve.
The ONLY reason you don’t have civil conflict in food deficient (ask all those on food stamps) US of A is because the country is going deep in hock to continue to support food supplies to millions of Americans who cannot afford it. This will end sometime and there will be food riots, else there will be economic strife. Civil conflict in the USA has merely been kicked down the road, like everything else, not resolved.
I don’t think anyone posting here knows anything about China’s tariffs on US goods. It’s not something that can be googled up in 10 seconds and ranted about.
Putting tariffs on Chinese imports is so 1970. Manufacturers today can quickly pack up and move to some other hell hole. Unless you put tariffs on the entire world, this won’t cause manufacturing to move back to the USA. This is clueless stuff.
During Bush2 conservative columnist Bob Novak personally advised the president to “ignore the LIBERAL STOCK PICKERS and build an economy that was friendly to business.” Bush ignored him, although stock pickers had a rough eight years under B2, markets were up only 3% after he left, business fared a lot worse as income disparity widened. This GOP president has put the stock market in the firing line and the influx of foreign money makes deflating the bubble less painful, and gives him some cushion. People wondered how Bush could ever be reelected, and Trump? Americans seems to have taken self flagellation for their political guide, Beat Me, Hurt Me, Make me Write Bad Checks….
Trump wants tariffs. If the Chinese government is so unfair, why not go to the WTO and adjudicate the matter? Intellectual property theft is not being done by China’s government, although we create that impression. This will not end well.
Yep. Mish and co. have benefited from the status quo. No wonder they want to see it carry on, regardless of how much harm it inflicts on average Americans.
They did not give a DAMN to the average Americans for the last 40 YEARS. But now they have the GALL to proclaim that they care so much for their fellow citizens. What a load of crap!
“The trade wars will not have much effect on the US upper 20% income earners, they will for the most part be OK. The lower 50% earners will suffer the most. Lost jobs and more costly living expenses.”
I agree. The trade war that is ALREADY being waged on America for the last 30+ YEARS has enriched the top 10% or so. The lower 50% earners are the ones who have suffered. I fully agree – except that it is in the past and the present, not merely in the future as you seem to think.
““Sixty-five percent of the world’s food-insecure people live in seven countries: India, China, the Democratic Republic of Congo (DRC), Bangladesh, Indonesia, Pakistan, and Ethiopia, of which all but China have experienced civil conflict in the past decade, with DRC, Ethiopia, India, and Pakistan currently embroiled in civil conflicts.”
And China, it should be pointed out, hasn’t been all that quiet. With about 180,000 protests per year, the government now spends about $125 billion annually on riot control.”
http://www.slate.com/articles/health_and_science/feed_the_world/2014/04/food_riots_and_revolution_grain_prices_predict_political_instability.html
China is not going to have food riots. You are aware that China will just go buy soybeans from Brazil or Argentina while US farmers will be left suffering lost sales. The trade wars will not have much effect on the US upper 20% income earners, they will for the most part be OK. The lower 50% earners will suffer the most. Lost jobs and more costly living expenses.
“Last time America seriously implemented tariffs it lead to ww2. Perhaps now we are heading to ww3.” Symptoms of a debt bubble.
God Bless DJT for standing up for America. Finally, a president looking out for the average American citizen and NOT Wall Street.
$400 billion trade deficits with China PER YEAR. They require IP from American companies to do business there. They require joint ventures to sell anything there. Very difficult to take profits out. Etc. Etc. Etc.
Now China is going to put tariffs on imported food. Go right ahead. Food riots in about 3 months. China is NOT self sufficient in FOOD or ENERGY.
The fact is China has everything to lose. China needs American trade and products to SURVIVE. America doesn’t need China. Yeah, OK – my HDTV will be $10 more expensive. We will get through it. And then import cheap electronics from other nations or, maybe, even start to make things again in America.
Tick – Tock China. You are about to get schlonged.
Last time America seriously implemented tariffs it lead to ww2. Perhaps now we are heading to ww3.
“Brilliant. Let’s shoot ourselves in the foot.”
Stupid. You guys have already shot America – in the heart.
We have already suffered millions of casualties. Just take a look at the opioid deaths happening in middle America. Read, or listen to an interview with the author of, “Glass Houses” and the story of Lancaster, OH over the last 30+ years…
I do business in China — in fact they supply 90% of the product I sell in my market. If they’re subsidising their manufacturers then my customers win. It’s that simple.
You only call it a trade war when we fight back. Not all these years, when it was being waged on us.
So Bannon’s way of saying “to hell with Wall Street,” is to make things more expensive for workers in Ohio….. In order to protect uncompetitive Wall Street owned companies from competition. Another flash of brilliance, Idiotopia style, no doubt…
Just stop stealing Main Street’s money by debasing them and handing the loot to Wall Street via “asset appreciation.” Then stop taxing those who work, while instead focusing on getting revenue from those who idly “own.” That’s how you say “To Hell With Wall Street.” Not by making American workers less competitive, just to shield some standard issue useless, incompetent, zerobrain Wall Streeter’s steel stocks from falling a few points.
Then ensure everyone has “equal representation.” Meaning equal access to politicians and regulators. As in, the probability of being called in to the White House to influence “economic policy,” is exactly equal for the CEO of Goldman, Warren Buffet, a college kid, or or a strung out bum under a bridge somewhere. Considering how economically illiterate is the exact equal to economically illiterate, there is zero chance that doing so can render things any more idiotic than they already are. And maybe, just maybe, that college kid has been woodshedding his Rothbard on the side….
That and hedge funds that are bleeding money are also deflating the stock market. Most hedge funds are in a world of hurt right now.
A trade war will destroy China more than the U.S. Trump knows this and he will win. Trust me. My company exports coal to China and I am not the least bit worried. So how many of you people that have commented on these posts actually do business in China?? I am betting none of you. That makes you observers, not players. Put your money where your mouth is. It is called bluffing. China and the U.S. will eventually come to some sort of compromise because there is too much money, and jobs, at stake.
I predict that this is just The Donald’s penchant for hard core negotiating. He wants to get China to the negotiating table to do some serious trade negotiation, which has not happened previously. I think it’s funny that so many people think Trump is a loose cannon, because that’s exactly what he wants the “other side” to think.
When the trade deficit with China is running at $500,000,000,000 per year, it seems a little naïve to talk about President Trump “starting” a trade-war. The President is right — mercantilist China has been waging a trade war against the US for many years, and we have been losing badly.
Seems the hypothesis that unilateral “Free” trade yields benefits has been tested — and found wanting. Unilateral “Free” trade may bring short term benefits to certain consumers, but it also brings massive long-term costs.
Instead of just whining, the “Free” trade purists should come up with a coherent plan for how to get to sustainable trade with a mercantilist competitor. Come on! Let’s hear the suggestions!
https://dailyreckoning.com/tariffs-american-apple-pie/
James Rickards seems to be in favor of the tariffs
Don’t forget that China is the US’ primary source of rare earth metals that are essential for pretty much all advanced technology. Talk about a critical defense weakness.
It seems China will run out of bullets first. Our $50B tariffs represent only 10% of what we import from them but their $50B in tariffs is damn near half of what they import from us.