Leadership, Laughter and Tariffs
S E E D E D C O N T E N T
There are so many issues breaking right now that it’s hard to keep track — and focusing on any one leads to feelings of guilt about neglecting the others. But it’s worth remembering that the Trump trade war still seems to be on track, and important to have a sense of its effects.
The view within the Trump administration is, of course, that “trade wars are good, and easy to win.” Where does this view come from? Actually, it involves two propositions.
First, it takes the mercantilist view under which trade as a zero-sum game in which whoever sells more wins. Because the U.S. runs a trade deficit, we’re losers, and anything that reduces that trade deficit is good.
Second, it takes for granted the proposition that precisely because the U.S. exports less to other countries than we buy in return, a trade war will hurt them more than it hurts us, reducing U.S. imports more than it reduces U.S. exports.
Now, anyone who looks at the actual effects of international trade knows that the first proposition is wrong: trade isn’t just about selling stuff, it’s about getting better, cheaper stuff both to consume and to use as inputs in production. But you might assume that at least the second proposition is true: a round of tariff retaliation should reduce foreign exports to the U.S. more than it reduces U.S. exports to the rest of the world, simply because those foreign exports are bigger to start with.
But maybe not. A new study from the European Central Bank suggests that even though the U.S. runs trade deficits, a trade war would reduce demand for U.S. goods more than it would reduce demand in the rest of the world. The Bank of England has reached a similar conclusion.
Let’s be clear: these are the results of models, not actual experience, and could be wrong. But it’s still worth asking why the modelers are getting this result. The short answer is the phenomenon known in the field as “trade diversion.”
For simplicity, think of the world as three economies: America, China, and Europe. Both the ECB and the BOE are assuming scenarios in which America raises tariffs on China and Europe, with China and Europe retaliating. But China and Europe don’t raise tariffs on each other.
Such a scenario gives both foreign consumers and foreign producers a lot of options to diversify away from America. Chinese producers, facing U.S. tariffs, can sell more to Europe instead; Chinese consumers, instead of paying tariffs on goods imported from America, can seek substitutes from Europe. The story for Europe is the same. But U.S. consumers and businesses won’t have comparable flexibility.
The difference in ability to switch partners means that both U.S. exports and U.S. businesses that depend on imported components etc. will be hit harder for any given level of tariffs than their counterparts abroad.
But why assume that it’s a unilateral U.S. trade war against everyone? Because that’s what is happening. The Trump administration has isolated America on many fronts, and trade policy is very much one of them. Under different leadership, America and Europe might be working together to put pressure on China over things like intellectual property, but given who’s actually in charge, we’re on our own.
As Trump just found out at the U.N., the world is literally laughing at us. And it certainly doesn’t trust us, in fact is looking for ways to cut us out of various loops. This matters for a lot of things — and trade war, it turns out, is one area where go-it-alone will be costly.
Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
Trade wars are easy to win...........
I sometimes shop in the German-owned "big-box" METRO store, that imports products from around the world, besides selling Chinese products, and recently there didn't seem to be as many American products for sale as there were previously. As well, the two big Chinese supermarkets within walking distance sell almost nothing produced in America. Since Walmart is known to sell mostly Chinese produced products anyway, I imagine that's what those Chinese-located stores sell mostly anyway. Most appliances here appear to be made here, and maybe the only ones to really suffer here in China will be GM, Ford and Chrysler - but they have manufacturing factories here, so who knows? Maybe the Apple stores here will suffer, since so many people have smart phones, but there are alternatives. Okay, so I'll pay a little more for almonds. Big deal. BUT American consumers are going to pay more for a LOT of things.
China inter asia trade is over twice as large as it's American trade and the EU trade is as large as their US trade.
China's growing trade with South American where it has replaced the US as the main trading partner and Africa will help it in a trade war with the US.
I believe the major losers out of all this will end up being those at he end of the line - the American consumers. And if Trump uses subsidies to compensate, where does the money come from if not taxes?
He has already set up $12 billion for farmers and that isn't going to put a dent into their losses.
Why China will lose tariff Trade War with Trump
The media will not give Americans the real facts that demonstrate China can’t win a trade war with the US. China would starve without US Agriculture Imports.
“In terms of crop mix, many Chinese growers plant the same key crops that U.S. growers do – corn, cotton, and soybeans, for instance. But according to Zhang, crop yields in China are have been significantly lower historically than those for their U.S. counterparts.
“Chinese corn yields are perhaps two-thirds as high as those in the U.S.,” he said. “Soybean yields are roughly half, with the average Chinese farmer getting around 26 bushels per acre soybean yield compared with 48 bushels per acre in the U.S.”
“And then, of course, there’s the matter of farmland size to consider. “On average, the amount of farmland a U.S. farmer in Iowa has is around 200 acres,” said Zhang. “In China, the average is less than two acres.” In part, he added, one of the reasons for this is that Chinese growers are not permitted to own the land they farm. “This is instead owned by the village in which they live,” said Zhang.
Because of all these circumstances, some Chinese growers have recently began shifting much of their agricultural away from row crops such as corn and cotton. “In the area of China where my family is from, farmers have moved away from these crops to growing specialty crops in greenhouses,” said Zhang. “And the reason for this is simple – they can get 10 times more income by growing these kinds of vegetables for the nearby cities.”
This is part of the reason China will likely find it tough to combat the trade tariffs on goods now being imposed upon the country by the U.S., said Zhang. “China consumes a lot of U.S. agriculture goods, valued between $12 billion to $14 billion per year,” he said. “We sell way more ag products to China than we buy from them. The U.S. sells 62% of its soybeans to China, one in every four rows grown, 75% of the sorghum, and 15% to 20% of dairy products each year. The U.S. buys some fish and fruit from China, which averages less than $5 billion per year.”
I think that you should do more research....But if that's what you believe will tip the scales in our favor go for it.
I'm pretty sure China will do whatever is necessary to prevent another starvation as what happened in Mao's time. Other countries may well be able to produce and provide alternative sources.
I have done a good bit of research and I spend my time mostly in farm country
So? Just because you spend your time in farm country doesn't mean you know a goddamn thing about farming.
Both sides of my family have been in farming for generations. My dads side for nearly 400 years and my moms side for over 300 years.
i live pretty much a self sustaining life growing, fishing and hunting. I hate cities and stay away from them as much as possible
I hate cities and stay away from them as much as possible
LOL As a child I was the same way, as an adult , No way am I gong back to driving 30 miles out into nowhere just to be able to be alone to do what I what when I want to do it.
I just stopped answering my doorbell. Period !! Ring baby ring I dont care !
Now I live 2 miles from whatever I need and I still have all the privacy I like !
New York is where I'd rather stay.
I get allergic smelling hay.
I just adore a penthouse view.
Dah-ling I love you but give me Park Avenue.
...The chores.
...The stores.
...Fresh air.
...Times Square
source:
LOL: To each their own !
.
True enough Steve. My oldest son loves cities while the rest of us in our family hate cities
My oldest son loves cities while the rest of us in our family hate cities
LOL Yeah the both have their advantages and disadvantages. For me when the disadvantages out numbered the advantages I relocated to and adapted to a city life. I bought a nice sized home with a nice sized lot and I'm serious though I do not answer that door if I am not of the mind to.
(I seldom do) There is no reason to. Its someone wanting to sell me something , someone wanting me to come to their church, or some one wanting to do work on my property. NO , NO and NO !
I dont want any of that so I dont miss anything by not stopping what I'm doing and going to answer a door I dont care who, what or why someones there.
Recently I put up a notice that says "Day sleeper ... Homeowner available by appointment only, if you do not have an appointment, Do NOT ring the Damn Bell... NO SHIT !!! "... The notice is next to the doorbell. No one has rang the bell since. LOL
PS: I also Have 5 adult Chow Chows that have a window seat looking out next to the front door, So... No one stuck around my door long anyway.
LOL
But Having everything I need and or want within seriously about 2 miles is Great ! I live in Phoenix Az 1,000,000 of us , yet, Some Days I see NO other human.
I like that.
PS: When i bought this place I had all the doors and windows replaced ( they needed it anyway ) with sound reduction windows and doors, I JAM out on my drums with the music cranked up just like a live performance. I do what I want, when I want ! Even in the middle of 1,000.000 people !!
So, IMO: City life isn't so bad, when ya set yours up like YOU want it !
I was just down in Prescott Valley. We have a center for our ministry on 20 acres there. Love the area
Cool
Good time to be there most of the year its too cold there for me. I'm climatized I lived in Fl for 17 years I get cold anything below about 60 degrees these days. I'll bet it was nice around Prescott right now though.
I used to go camping up there with my brother this time of year to get the hell out of the heat of Phoenix for a few days it was nice there this time of year and close to us.
So Cool Hope ya missed our "Hurricane" LOL After 17 years of Florida hurricanes I laugh at the ones they worry about here. Yesterday though we did get over 2 1/2 inch of rain from the one that broke up over Mexico and moved over Az.
But, IMO: Rain is not a hurricane. lol
IMO: Mainly AZ sucks its too dry and hot and not enough water fun. But we dont have natural disasters here like REAL hurricanes so...
When I was a lot younger I came to a crossroads in my life, and could have afforded to buy this 300 acre property in the country because the owners were elderly and wanted to move to town - 65 acres cleared, 35 acre self-contained spring fed lake and the rest forest, tight little bungalow with indoor plumbing with a drilled well, little fishing shack on the shore, abandoned brick one-room schoolhouse at the gravel county road where I stood to take this photo, but I didn't, and maybe I made a mistake with my life. The ironic thing is that I once took an aptitude test and what I was best suited for was farming.
Wow. That’s one beautiful piece of land
You can just make out the fishing shack on the shore about one third of the photo from the left, and the little dot just above the horizon just to the right of the centre of the photo is a forest ranger lookout tower. The owners only wanted $15,000 for the farm, but remember that that was almost half a century ago.
Not that it needs any help.
Why can't we just ask China for cell phones and we give them soybeans as trade?
Too simple? LOL!
LOL. That kind of "trade" goes way back in history when life was very different than it is today.