re: Chinese to meet with U.S. despite possible rise in tariffs

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Less imports from China and more production at home which creates more jobs here thus having more people paying into our tax base which theoretically helps with the debt and/or other government supported programs.

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But the problem is that reality does not really conform to this theory.

1. There is a strong correlation between changes in the trade deficit and changes in GDP. In other words, when the trade deficit grows GDP also grows.

2. In a global economy, merely decreasing the products and materials imported from one nation, does not mean they will return back here. It may just go to another foreign nation, that is still cheaper than the US, but will be more expensive than it was before, on top of the costs of that move.

3. As it pertains to addressing trade through tariffs, there is the obvious increase in prices on imports as a function of the tax. But the problem is that this also creates upward price pressure on the domestic products too as a result of increased demand PLUS companies now use that competitive tariff margin to increase their prices.In other words, if imports have a 25% tariff, a domestic company could increase price by say 10% and still have an price advantage. But now the consumer pays more for both.

Furthermore, because of this, there is no guarantee that companies will even increase their labor and/or production. They can increase their profit margin without adding any more costs and adding any supply, and adding even more upward pressure. At the very least, it minimizes the incentive to increase the costs that they can't already scale (e.g., once they reach their current labor and production capacity), especially since there is no guarantee those tariffs will be there far enough into the future, to justify the risk.

4. Even if jobs are added in the sector benefiting from the tariffs, this unfortunately creates a biased perception of reality of the aggregate impact.

Specifically the job gains from that particular industry is usually easy to quantify and usually represents a fairly sizable portion of that sample; however, the jobs that are lost due to the negative impact of increased costs are more spread out across sectors and regions and represents a smaller portion but of a much larger aggregate sample.

So say we add 150,000 or so jobs in the steal industry, because of the tariffs. That would be easy to see that major benefit for that industry since that would be roughly the double the current job totals. However, that increase would represent only about 0.1% of the total non-farm workforce. So it would take 1 out of every 1006 or so people to lose their job as a result of increased prices across the rest of the job market to completely offset those gains.

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Less imports from China and more production at home which creates more jobs here thus having more people paying into our tax base which theoretically helps with the debt and/or other government supported programs.

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US producers are becoming more and more automated so you’re not going to get a big job creation.

Another way to look at it:
Less imports from China = less stuff to sell = less money to be made = less employees to pay = less paying into tax base creating more debt.

Less global competition = higher priced US made products

US Company A buys a widget from China for $5. Their sales teams sells these widgets to US company B for $15. Then company B sells these widgets to Company C for $30. Company C sells these widgets to Company D for $50. Everyone is working and selling. With tariff in place, Company A, B, C and D are forced to buy higher priced same quality widget from US company. Unfortunately US company cannot produce enough of this widget so company B, C and D are SOL. Employees of B, C and D let go and company loses money.

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They consider Trump to be an idiot and the Republicans bigger idiots for following an idiot.

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Are these the same folks who eat bugs and bean sprouts? Yep, we need to pay attention to what they think.

Everybody in here looking at the short term when the long term is where the focus needs to be.

China is in some deep waters financially right now and has a credit bubble growing like crazy to keep the economy afloat.

We put pressure on them, their economy gets weaker, they have banks give our more loans, bubble gets bigger. 856 Billion in loans went out Q1. That’s an increase of 20%.

Eventually that bubble will burst as Xi continues to drag his people back to the cultural revolution. People will rise up against the government as things get really tough after 40 years of prosperity.

Losing a few jobs or paying a few bucks extra to help facilitate the collapse of a communist dictatorship is fine by me.

People think China is some real economic threat but visit the country a few times and you’ll see that fear was built on unsustainable debt.

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If these things take time then why have you guys been prematurely ejaculating for the past year and half?

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Because win, lose, or draw it is nice that a President finally stood up to China on trade. Hopefully, someone will do it on pollution next.