Trade and the Economy

[Mountain Man]

Source: China to reduce auto tariffs after Trump criticism

Chinese President Xi Jinping said on Tuesday that his country will reduce tariffs on automobiles imported into the country.

Speaking at the Boao Economic Forum in China, Xi pledged to “significantly lower import tariffs” for vehicles and “significantly broaden market access” for foreign companies, the Washington Post reported.

“China does not seek a trade surplus,” Xi said. “We have a genuine desire to increase imports and achieve greater balance of international payments under the current account.”

The announcement comes after President Donald Trump on Monday took aim at China’s 25 percent tariff on foreign cars, compared to the United States’ 2.5 percent tariff.

“When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%,” Trump tweeted Monday. “When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!”

http://www.breitbart.com/news/china-...ump-criticism/

© Copyright Original Source

[carpedm9587]

Source: China to reduce auto tariffs after Trump criticism

Chinese President Xi Jinping said on Tuesday that his country will reduce tariffs on automobiles imported into the country.

Speaking at the Boao Economic Forum in China, Xi pledged to “significantly lower import tariffs” for vehicles and “significantly broaden market access” for foreign companies, the Washington Post reported.

“China does not seek a trade surplus,” Xi said. “We have a genuine desire to increase imports and achieve greater balance of international payments under the current account.”

The announcement comes after President Donald Trump on Monday took aim at China’s 25 percent tariff on foreign cars, compared to the United States’ 2.5 percent tariff.

“When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%,” Trump tweeted Monday. “When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!”

http://www.breitbart.com/news/china-...ump-criticism/

© Copyright Original Source

You may have missed that Xi Jinping originally made this announcement last November, and has made similar announcements in the past.

[demi-conservative]

Like Wall Street Journal said,

China Started the Trade War, Not Trump
Unlike with steel and aluminum tariffs, economists see merit in Trump’s trade case against China

https://www.wsj.com/articles/china-s...ump-1521797401

How many times must demi say, read less Fake News!

It seems to make sense to me that a trade war, if it actually starts, could have significant negative impact on the economy.

Trade war started by China for decades did yuge impact on economy already.

[Mountain Man]

A couple of interesting stories that came across my "news feed" ()...

First up, here's one about Mexico saying they are considering closing a certain trade loophole that has allowed other countries to take advantage of NAFTA. Basically, here's how things have been working: Mexico got a sweetheart deal from the US in the form of NAFTA, so instead of other countries dealing with the US, they would make agreements with Mexico that would allow them to cheaply import their products into the US through Mexico under the NAFTA umbrella. This also gave US manufacturers an incentive to move operations to Mexico because they could import cheap raw materials from countries like China without incurring the penalties they would have had they been based in the US, and then importing their products into the US, again under the NAFTA umbrella. However, now that President Trump is in the process of vigorously renegotiating NAFTA, including tabling the option of dissolving the agreement entirely, Mexico is suddenly wanting to operate on more equitable terms.

Source: NAFTA meeting on tap; Mexico doesn't want to be used to elude U.S. tariffs

U.S. President Donald Trump has driven the renegotiation of NAFTA, arguing that the deal has hollowed out American manufacturing to the advantage of lower-cost Mexico.

Trump has threatened to use other measures, such as slapping import tariffs of 25 percent on steel and 10 percent on aluminum, to gain leverage over Mexico and Canada in the NAFTA talks. Both countries have been initially exempted from the tariffs.

[Mexico's Economy Minister Ildefonso Guajardo] said that if Mexico remained exempt, the government would consider mirroring any U.S. tariffs on countries with which Mexico did not have a free trade agreement.

https://www.reuters.com/article/us-t...source=twitter

© Copyright Original Source

Winning!

Next up: China is starting to sweat with growing concerns that they've underestimated President Trump.

Source: China seeks trade firewall with U.S. allies in rush of ambassador meetings

Amid the rapidly rising tensions between the two sides, China has sought to seize the moral high ground as a defender of the multilateral trade system, even as U.S. allies express shared concern with Washington over Beijing’s highly restricted market.

The rush of meetings last Thursday and Friday with ambassadors from France, Germany, the United Kingdom, Spain, Italy, and the European Union, may be a signal that China is trying to build a firewall against Trump’s aggressive trade measures, the severity of which some foreign diplomats said Beijing had miscalculated.

The individual meetings, which were called by Fu, were generally “non-confrontational” as China sought support in countering the United States, a European diplomat with knowledge of the discussions told Reuters. There were, though, some “subliminal threats” about consequences for foreign companies, this person said.

“The message was that we have to stand together against U.S. protectionism in favor of free trade,” the diplomat said.

“China is showing confidence, but internally they appear quite concerned. They have apparently underestimated Trump’s resolve on trade,” the diplomat said, adding that Beijing is nervous about China’s major trading partners siding with Washington.

[...]

One senior EU diplomat in Brussels who confirmed the meetings said the EU was not in the business of taking sides, and that its goal was to get the multilateral process back on track, referring to efforts to resolve trade disputes through the WTO.

“I think it also smacks of desperation because China also knows that the European Union is not going to confront its biggest ally,” the EU diplomat said of the meetings.

https://www.reuters.com/article/us-u...source=twitter

© Copyright Original Source

In short, China is desperate to cut new trade deals with Europe to cushion the blow of President Trump's proposed tariffs, but Europe is telling them to take a hike.

Source: China Underestimated Trump – Beijing Attempts To Coerce Europe in Desperate Bid To Create Trade Firewall…

Each time China takes aggressive action (red dragon) China projects a panda face through silence and non-response to opinion of that action;…. and the action continues. The red dragon has a tendency to say one necessary thing publicly, while manipulating another necessary thing privately. The Art of War.

President Trump is the first U.S. President to understand how the red dragon hides behind the panda mask.

It is specifically because he understands that "Panda is a mask" that President Trump messages warmth toward the Chinese people, and pours vociferous praise upon Xi Jinping, while simultaneously confronting the geopolitical doctrine of the Xi regime.

In essence Trump is mirroring the behavior of China while confronting their economic duplicity.

https://theconservativetreehouse.com...rade-firewall/

© Copyright Original Source

Winning

[Littlejoe]

OK - NOW you're getting somewhere. But the problem here is not "trade imbalance," it's "theft of intellectual property." That needs to be addressed, I absolutely agree.

But, from what I understand, foreign companies must have a Chinese partner and the foreigner can only own 49% of the company. When that happens, theft of intellectual property is actually legal from their standpoint...they own it now. ISTM that the only way to keep that from happening is to not open a business in China. I know I wouldn't.

Again - getting there, sort of. China is not a purely capitalistic society, and it is not a democracy. Naturally, if you have a juggernaut of a market (1.4T), and people wanting access to it, you're going to be bargaining from a position of strength. Why is that a surprise? And in a country that carefully controls so much, why is it a surprise that outside businesses are being required to work with and through inside businesses? And if companies want access to that market, they're going to have to adhere to Chinese policies. No one is forcing these businesses to work there. They can simply pull out and take their business elsewhere. China is not a "free market." Why do people continually expect it to be?

You are absolutely correct, the only reason businesses go to China is an abundant and cheap labor force. The company I worked for before my current job was with case manufacturer. They made sewn bags and injection molded hard cases, foam inserts etc. They always made the prototypes that they sent to the prospective buyers in the factory here in Texas. When they got an order for it, they had it made at their Chinese factory. They lost a lot of repeat customers while I was there because of the difference in quality AND because of the time it took to get it done in China, shipped across the ocean and through customs. But, they made a fortune on the sales they did have. They had a manager here in the Texas factory who had the job of coordinating with the factory in China, and they always had a company rep in country trying to get the factory running more smoothly and to get quality up. They never did in the time I was there.

[carpedm9587]

But, from what I understand, foreign companies must have a Chinese partner and the foreigner can only own 49% of the company. When that happens, theft of intellectual property is actually legal from their standpoint...they own it now. ISTM that the only way to keep that from happening is to not open a business in China. I know I wouldn't.

You are absolutely correct, the only reason businesses go to China is an abundant and cheap labor force. The company I worked for before my current job was with case manufacturer. They made sewn bags and injection molded hard cases, foam inserts etc. They always made the prototypes that they sent to the prospective buyers in the factory here in Texas. When they got an order for it, they had it made at their Chinese factory. They lost a lot of repeat customers while I was there because of the difference in quality AND because of the time it took to get it done in China, shipped across the ocean and through customs. But, they made a fortune on the sales they did have. They had a manager here in the Texas factory who had the job of coordinating with the factory in China, and they always had a company rep in country trying to get the factory running more smoothly and to get quality up. They never did in the time I was there.

My point, overall, is that a "trade imbalance" is not in-and-of-itself a problem. "We have to solve the trade imbalance" may be a nice, simple political message, but it is devoid of content. As I noted, I have trade imbalances throughout my life. It's perfectly normal. If one country has more of what another country wants than the reverse, more money will flow in one direction than the other. The TRUE issue, economically, is the existence of specific practices that make it more difficult for particular types of trade to occur in one direction or the other. A disproportionate tariff on a good, for example - like the 25% tariff on US->China cars, but a 2.5% tariff on China->U.S. cars. THAT is the problem, not the trade imbalance. Theft of intellectual property is also a problem.

So I look at it this way. A trade imbalance can have two different components: a perfectly natural/expectable imbalance that is a function of the different resources/capabilities of the two countries; and imbalance due to anti-competitive practices on one side or the other. The former is not a problem. The latter is. Just screaming "trade imbalance" does not distinguish between those, and does not focus activity on the actual problems.