Biden to lift all tariffs on Chinese goods if elected. The reasons why Dems favor China.

We know that there is only one really relevant argument for tariffs: the infant industry hypothesis (and the use of tariffs to enable dynamic economies of scale in developing countries). Anyone suggesting effectiveness elsewhere is selling Mercantilist snakeoil

 

After the ban, 40,000 people still left China for America, so the ban is equal to closing the door on the barn after the animals escaped. It's a specious argument.

Trump has no 'success' in China. Reversingi his policies is necessary as Tariffs diminish disposable income for Americans

The notion that trade imbalances are bad is a myth. To wit, let's simplify this to understand why:

Country A has $100 in cash, $100 in widgets or sale For a total assets of $200

Country B has $200 in cash $300 in wodgets for sale For a total assets of $500

The totals are $300 total in cash, $400 in material goods for sale for a total assets of $700

Country A needs Wodgets
Country B needs Widgets

But, Country A's needs for B's wodgets is less than Country's B's needs for widgets, resulting in an 'imbalance'.

But, is this a bad thing? Let's take a closer look:

Country A purchases $50 of wodgets from Country B, decreasing B's wodgets account by $50, but increase B's cash account by $50

So, that leaves A, at this juncture, with $50 in cash, $100 in widgets, and $50 in Wodgets due to the recent purchase. For a total assets of $200
And, that leaves B, at this juncture, with $250 in cash, and $250 in Wodgets, for a total value of assets at $500.

See? Nothing has really changed in terms of aggregate assets, just the value one cash and inventory changes, but they are actually balanced in terms of total assets.

Let's continue:

Country B, because it has a larger population, purchases $75 of widgets from country A, increasing A's cash account by $75, but decreasing A's widget inventory by $75

The total value of assets in Country A is now has $125 in cash, $25 in widgets, and still $50 in wodgets from the previous purchase, the total value of assets is still $200

In country B, it's cash account is now $175, has $250 now in Wodgets, but $75 in widgets, for a total asset value of $500

After these trades, total assets remain at $700. Nothing really changes in terms of total values of assets.

See, here's the thing, County B is a larger country than A, so it's needs for widgets are greater than A's needs for wodgets.

Therefore, trying to correct this imbalance via tariffs all it does is decrease the bank accounts of citizens in both countries, and increases the bank accounts of the country that imposes the tariff, and since the tariffed country retaliates by imposing tariffs, all that is happening each country is taxing its' citizens more.

All tariffs are a de facto tax increase. Less money for citizens, more money for governments. But, it's a consumption tax.

Aggregate values, as we can see, don't really change, only the value of cash changes, and value of inventory changes.

The fact that cash values go down, they are replenished with income earned, that sales inventories go down, they are replenished with manufacturing.

The idea driving the notion that trade imbalances are bad is really insane, and it is insane because countries needs for goods differ in volume of need due the respective size of each country, so forcing countries to trade with each other at the same level is not only insane, it is impossible. All tariffs due is make it more expensive for the citizens of each country in the equation, which, to the degree of the tariff, decreases the disposable incomes of the citizens of each country. It is a tax on citizens, no trade imbalance is ever correctable, because that is impossible due to the varying needs of countries.

Of course, there are other dynamics in play owing to the complexity of the economics of nations, but this demonstrates the insanity of tariffs and the idea that drives them.

However, tariffs at the retail level to protect a retail industry, done in order to correct the fact that Country B pays its employees drastically less, making manufacture cheap, allow that country to have an advantage on a market that Country A produces a simillar product for, in order to protect an industry for manufacture of a retail product, that might make sense. Tariffs to protect retail manufacture is the only tariff that makes sense, as long as the tariff is not drastic. However, the tariffed country is bound to retaliate, and it if retaliates by imposing a tariff on a raw material, that is not a good thing.

What IS insane are tariffs on raw materials. Tariffs on retail items doesn't rise to insanity, but it's benefits are dubious owing to the tendency for retaliation which cannot be controlled by the opposing nation. so, as we can see, the attempt to protect jobs of one industry diminishes jobs in others, so the aggregate jobs situation isn't improved. Tariffs on retail might save an industry in one sector, but harm an industry in another sector owing to retaliation. Tariffs on raw materials affects all industries that use those materials which results in less disposable income for citizens as it drives the cost of retail goods up to the value of the tariffs.

Always, it is the consumer that pays the bill.

 

Good. Congress should be the one passing tariffs, not the President. And Trump doesn't understand how tariffs or trade work. They could be justified against China specifically, but they do hurt us as well. We need more deliberation than just the brain fart of a barely-functional conman.

 

This is why tariffs are particularly bad. Yes, companies don't have to pay them . . . but their costs go up even if they don't pay them. They artificially drive up costs without necessarily increasing revenue. They are extraordinarily ineffective. Ask any economist. Or do some econ homework yourself. There's a reason why only one economist in the US supports Trump's zero sum idiocy and why over 1,000 economists, including a few Nobel laureates, have petitioned against tariffs.

Trade creates wealth . . . on both sides of the exchange. Tariffs destroy that wealth creation, and they can do so without even having the side benefit of creating revenue. Trump thinks that trade has made us poorer. No economist in the world supports this idiotic superstition, and there are no facts backing it up.

 

hey i’m not a fan of them. Traditionally they been something dems have pushed.

but if it helps force China to the table it works because china has been cheating from the get go with slave labor and are used against american companies by even our allies

 

Hey! Something we agree on!

I'm open to that, though they should still come from Congress . . . and Trump has instituted other tariffs that go far beyond China.

 

Another myth. The US is actually the most sued country via WTO

 

AMERICAN CONSUMERS pay import tariffs, not the Chinese . They only hurt the American Consumer.

 

Even if the cost isn't forwarded to the consumer indirectly (which most often it is), importers pay tariffs, not exporters. Even if the cost isn't forwarded to the American consumer, it still goes to American businesses, not the Chinese.

 

You expect an increase in producer surplus (for firms not reliant on tariffed intermediate factors); a reduction in consumer surplus; and, most importantly, creation of a deadweight loss. Support for tariffs is support for economic inefficiency.

 

Yep...we do

Well, Congress has given the President some power to do them on his own...Congress can certainly take it back....I'd be interested to see if Nancy holds the House and Biden wins if they will

 

That doesn't shock me....we are the one with the most money. That lawsuit 101. We have the richest companies too

What's your point? Have you even heard of 100 companies in Peru worth filing a law suit against? Or for that matter Canada even?

 

You haven't understood. Money is only actually an issue for developing countries (i.e. the legal costs make it more difficult to use the dispute settlement system). The US is "number 1" sued as its support for free trade is largely illusionary. For Americans to whine about unfair trade therefore lacks any resemblance of credibility.

 

...and make progressives support trade deals and foreign trade.

 

I actually supported Trump on his Trade war early on, but he failed to pull it off

 

So he promoted offshoring our economy that feeds us? Then he was stupid. An idiot.

 

If the cheapest foreign widget is all that matters you disembowel your own nation.

Tariffs equalize labor costs so you keep jobs here for our people. Jobs feed us.

 

quid pro joe will open our midwest to china

 

You are selling globalist oil. The scheme to lower wages to max profits for the few at the top.

What good is capitalism if it sends jobs to slave labor and hurts our workers ?

 

Chortle, chortle, Ricardo will blow your mind!

 

This is neo-Mercantilist crotch rot. It is completely alien to economics, both theory and empirical evidence. Try and fit comparative advantage within your outlook. Then, just to amuse me, embed Krugman's approach to intra-industry trade for the crack!

 

I think what this means is that Donald Trumps policies have been failing either because he does not get a broad enough coalition to make them successful, or they are crappy half baked ideas that end up doing more harm than good.

We already figured all this out. Trump has failed.

 

China o trade policies have been a success

 

A country that is trying to develop is completely different. South Korea, for example, plays the trade liberalisation card but was reliant on government industrial policy.

There are two aspects here. First, this has naff all to do with the US (e.g. the infant industry hypothesis cannot be applied). Second, any moaning over unfair trade won't have anything to do with 'US versus China'. It will instead be 'China versus other developing countries' (particularly developing countries forced into irrational trade policy by the US-dominated Washington Consensus).

 

We did that, it was bipartisan, because trade was a better choice than another world war.

Capitalism has been about foreign trade since the 1500s when the first stirrings of capitalism started to evolve.