Miscellaneous News

W20 said:

"I thought tariffs were paid by the American populace"

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Not in the first round; it was largely absorbed by the fall of the yuan and partly by Chinese companies. Hence the conviction of Trump's advisors that it will be the same this time; but on the one hand, this time the yuan may not fall, and on the other hand, Chinese companies' margins are already shockingly low, horribly low.

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Nope in the first round was absorbed by US consumers nearly exclusively. Hence why living costs went up so much in US while remaining unchanged in China.

China moved down Yuan much later, with the auto industry boom. It has nothing to do with the trade war, it was a move to gobble up auto market.

The only way that countries could balance their trade deficit with the US is:

1- Importing-Consuming more expensive US goods but most of these countries lack purchasing power to afford US made goods or they have strong saving cultures like Japan.

2-Voluntary restrict the export of goods to the US by using yearly exports quotas to the US.

Voluntary export restrictions could be even worse than tariff given how large the trade deficit with the US, at least with tariffs you get to buy whatever you want, with VERs tied to the trade deficit there will be shortages that will make some hyperinflated countries look like a paradise.

ZeEa5KPul said:

Weak companies go out of business. If you're 1. Stupid enough to still do business with the US and 2. Incompetent enough not to produce profitably then please do everyone of favour and drop dead.

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your speech is very enthusiastic, but is evident that you know few Chinese companies, It is a reality that competition is fierce and margins are horribly low.

W20 said:

your speech is very enthusiastic, but is evident that you know few Chinese companies

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I don't know what's enthusiastic about my speech, and I know what I need to about Chinese companies: if they depend on America, they need to go away and have their assets bought out by competent people.

ZeEa5KPul said:

I don't know what's enthusiastic about my speech, and I know what I need to about Chinese companies: if they depend on America, they need to go away and have their assets bought out by competent people.

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I don't really think that is sustainable or smart business practice. If it wasn't for Trump and co. attempting to completely blow up the global trade system, many of those companies would be able to continue to do business within the US.

Like Trump could have taken a measured approach to address trade concerns, but since most of his concerns are based on outright misunderstandings or just xenophobic views towards foreign made goods you cannot expect logical policy goals from this admin.

That's a projection of your wild imagination. Just because for example 10% of sales are in America doesn't mean you're dependent on America. All I've said is that the margins are so low that Chinese companies are already saying no.

In short

I've stated that Chinese companies' margins are very low

and you've said, "Let the weak, the stupid, and the ugly die!"

W20 said:

your speech is very enthusiastic, but is evident that you know few Chinese companies, It is a reality that competition is fierce and margins are horribly low.

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Then such a business model will not be viable. Given the 100%+ tariffs we are witnessing, it is unlikely any export-based businesses not pursuing a blue ocean strategy will survive.
Then capital will be allocated towards other fields, as the market demands. It is unfortunate it had to end this way but both sides will hurt from this duel.

Just an aside, but margins being low implies a very efficient market. In practice, large profits are not due to innovation, but due to monopolization and rent-seeking. This is also connected to the falling rate of profits issue, which states that as capitalism progresses, the rate of profit for any industry gradually decreases. What you see is the natural result of free-market competition without rent seeking jacking up profits.

Biscuits said:

Nope in the first round was absorbed by US consumers nearly exclusively. Hence why living costs went up so much in US while remaining unchanged in China.

China moved down Yuan much later, with the auto industry boom. It has nothing to do with the trade war, it was a move to gobble up auto market.

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The problem is that the scope of trade war 1.0 was quite small compared to bilateral trade, which is not the case with trade war 2.0.

Tariffs affected inputs and capital goods, not consumer goods. The overwhelming majority of cases of protectionism are aimed at consumer goods. This was not the case in trade war 1.0. An incredible 95% of the tariffs applied were on capital goods and intermediate goods. These are the materials that American companies and industries use to manufacture products. These companies and industries paid more, which led to an artificial increase in their production costs (which is why small and medium-sized companies were being negatively affected).