Economics Thread

I’m not gonna pretend like some these aren’t great developments. They are.

But they will be years in the making, and effect won’t be felt for some time. Passing some tax reform and spending cuts will make people feel better in the short term
 
One thing I still just fundamentally don’t understand how making all goods from China arbitrarily more expensive than it otherwise would be for American consumers fixes anything for anybody. China and other countries with massive populations are going to always be the best places to produce cheap shit because their labor markets are inherently cheaper due to the amount of participants per capita. If we move all that production to another country that presently has less financial power than China, we will just begin the cycle anew. Wage slaves in China will be replaced by wage slaves in India, Bangladesh or Indonesia and we’ll pay the price to arbitrarily move their operations. Then those countries that are full of humans stacked on top of each other like sardines will use that newfound wealth to exert control on the market.

And with our flat 10% rate being the absolute best case scenario, China also will now have the opportunity to immediately strengthen its position in other markets, will it not? There ceases to be any incentive to open up your markets and trade barriers with the United States if you know that the best your exporters can hope to do in return is 10%, which is a pretty substantial tariff rate. Wouldn’t China just be able to leverage that for favorable deals with countries impacted by our scattershot policy?
 
sturg33 said:
that's an amazing headline... and we know that trump gets a lot of milage about announcements

but Qatar'sGDP is $200B. I am unconvinced that they will be able to pull this off!
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This is something I’ve never really understood on either side of the aisle. Governments always tout these sorts of purchasing commitments, but aren’t these countries actually just making commitments to individual US companies? And given that, why do we give credit to the government and not Boeing or Raytheon or whatever?
 
mqt said:
One thing I still just fundamentally don’t understand how making all goods from China arbitrarily more expensive than it otherwise would be for American consumers fixes anything for anybody. China and other countries with massive populations are going to always be the best places to produce cheap shit because their labor markets are inherently cheaper due to the amount of participants per capita. If we move all that production to another country that presently has less financial power than China, we will just begin the cycle anew. Wage slaves in China will be replaced by wage slaves in India, Bangladesh or Indonesia and we’ll pay the price to arbitrarily move their operations. Then those countries that are full of humans stacked on top of each other like sardines will use that newfound wealth to exert control on the market.

And with our flat 10% rate being the absolute best case scenario, China also will now have the opportunity to immediately strengthen its position in other markets, will it not? There ceases to be any incentive to open up your markets and trade barriers with the United States if you know that the best your exporters can hope to do in return is 10%, which is a pretty substantial tariff rate. Wouldn’t China just be able to leverage that for favorable deals with countries impacted by our scattershot policy?
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No country consumes like the US - We are essential for CHina to function.

And the idea is for them to take down non-tariff barriers as well and move more towards a consumption model as well.
 
mqt said:
This is something I’ve never really understood on either side of the aisle. Governments always tout these sorts of purchasing commitments, but aren’t these countries actually just making commitments to individual US companies? And given that, why do we give credit to the government and not Boeing or Raytheon or whatever?
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Well this president is creating a climate to stimulate more investment in America. Thats a good reason why.,..
 
Every increase in investment in American assets involves a recycling of dollars acquired by selling goods and services to Americans.
 
thethe said:
No country consumes like the US - We are essential for CHina to function.

And the idea is for them to take down non-tariff barriers as well and move more towards a consumption model as well.
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Why do you trump let them off the hook so easily by reducing the tarrifs already?
 
nsacpi said:
Every increase in investment in American assets involves a recycling of dollars acquired by selling goods and services to Americans.
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Well, when the investment is productive and not just further financialization. An investment into a Hedge fund is different than an investment to onshore business.
 
thethe said:
No country consumes like the US - We are essential for CHina to function.

And the idea is for them to take down non-tariff barriers as well and move more towards a consumption model as well.
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In part because we’ve enjoyed relatively free trade and lower prices on imports which drives that consumption. Does a *minimum* 10% barrier to trade with us not run the risk of reducing that leverage any?
 
mqt said:
In part because we’ve enjoyed relatively free trade and lower prices on imports which drives that consumption. Does a *minimum* 10% barrier to trade with us not run the risk of reducing that leverage any?
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Free trade for who?

For which direction?

And it doesn't reduce leverage in any way because they still live off of the US market. They can't find a suitable alternative. Especially since most of the western world relies on the US for many other aspects. Further, what people are starting to udnerstand is the majority of tariffs are eaten by the manufacturer because of fear of losing the supply chain stickiness as well as demand elasticity.
 
thethe said:
Free trade for who?

For which direction?

And it doesn't reduce leverage in any way because they still live off of the US market. They can't find a suitable alternative. Especially since most of the western world relies on the US for many other aspects. Further, what people are starting to udnerstand is the majority of tariffs are eaten by the manufacturer because of fear of losing the supply chain stickiness as well as demand elasticity.
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We are making trade less free for our consumers and international producers by imposing 10% or more tariffs. That will reduce demand for foreign products, which will lower the incentives for other countries to make any effort to sell to us. America isn’t just inherently a good market to be in, it’s based on the systems we have in place. Taking a sledgehammer to those systems without any regard for comparative advantage whatsoever would then encourage other countries to work cooperatively with each other to try to fill some of those gaps in lost demand for the goods their companies produce.

It’s quite literally the argument for trade wars in the first place. We want more access for our producers to other markets through the lowering of tariffs and similar barriers. But if the best a country can possibly do is 10%, they have no incentive to do so. There’s also frankly no point in discussing elasticity of demand because the entire formula of the tariffs we initially implemented assumed it was equal across the board, and if we stand firm on 10%, we’re clearly not properly accounting for it to begin with.
 
mqt said:
We are making trade less free for our consumers and international producers by imposing 10% or more tariffs. That will reduce demand for foreign products, which will lower the incentives for other countries to make any effort to sell to us. America isn’t just inherently a good market to be in, it’s based on the systems we have in place. Taking a sledgehammer to those systems without any regard for comparative advantage whatsoever would then encourage other countries to work cooperatively with each other to try to fill some of those gaps in lost demand for the goods their companies produce.

It’s quite literally the argument for trade wars in the first place. We want more access for our producers to other markets through the lowering of tariffs and similar barriers. But if the best a country can possibly do is 10%, they have no incentive to do so. There’s also frankly no point in discussing elasticity of demand because the entire formula of the tariffs we initially implemented assumed it was equal across the board, and if we stand firm on 10%, we’re clearly not properly accounting for it to begin with.
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The incentive for other countries is to not have that demand drop at all so that they don’t lose production. When a country is so heavily weighted towards their production they become victim to what the consumer nation demands.

When China agrees to concessions on many items and the US only change interning an “entrance fee” you’ll understand.
 
thethe said:
The incentive for other countries is to not have that demand drop at all so that they don’t lose production. When a country is so heavily weighted towards their production they become victim to what the consumer nation demands.

When China agrees to concessions on many items and the US only change interning an “entrance fee” you’ll understand.
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but the US just dropped the tariffs from 145% to 30%. what were the concessions they made for the boost in demand to their goods?

if you can't answer this, what does that say?
 
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