China Threatens To Cut Sales of iPhones and US Cars if 'Naive' Trump Pursues Trade War (theguardian.com) 742
US president-elect Donald Trump would be a "naive" fool to launch an all-out trade war against China, a Communist party-controlled newspaper has claimed. From a report on The Guardian:During the acrimonious race for the White House Trump repeatedly lashed out at China, vowing to punish Beijing with "defensive" 45% tariffs on Chinese imports and to officially declare it a currency manipulator. "When they see that they will stop the cheating," the billionaire Republican, who has accused Beijing of "the greatest theft in the history of the world", told a rally in August. On Monday the state-run Global Times warned that such measures would be a grave mistake. "If Trump wrecks Sino-US trade, a number of US industries will be impaired. Finally the new president will be condemned for his recklessness, ignorance and incompetence," the newspaper said in an editorial. The Global Times claimed any new tariffs would trigger immediate "countermeasures" and "tit-for-tat approach" from Beijing.
Let the trade war begin (Score:3, Insightful)
Maybe then people will finally come to realize what the iPhone really costs.
Re:Let the trade war begin (Score:5, Insightful)
Maybe then people will finally come to realize what the iPhone really costs.
The labor cost of an iPhone is small, and going down as automation gets better. Most estimates put the labor cost of assembling an iPhone at less than $10. American manufacturing labor is about 5 times as expensive, so Americans will earn $50 assembling them, right? Wrong. Americans are more productive, by at least a factor of 2, and there will be greater incentive for automation. So the cost may be about $20, for a marginal cost increase of $10. But that will still lower unemployment in America, right? Maybe. If Americans spend an extra $10 on an iPhone, they have $10 less to spend on other things, reducing demand and lowering employment. These lost jobs will be spread through the economy, so you can't point to one person and say "this guy lost his job to protectionism", but the job losses are still real.
Then there is the issue of retaliation. If we put barriers on Chinese goods, they will put barriers on American goods. China is the world's biggest market for new aircraft, and a lot of Boeing jobs in Seattle will become Airbus jobs in Toulouse, and later Comac jobs in Shanghai.
So we will have fewer $80k/yr jobs making carbon fiber composite aircraft wings, and more $15k/yr jobs making plastic toys for Walmart. The $80k jobs support a lot more service jobs, as that employee spends his money. As production jobs shift to lower productivity and lower pay, many service jobs will disappear.
If a real trade war gets going, it is also possible that the US dollar will lose its status as the world's reserve currency, with big negative consequences for the American economy.
Protectionism is not a "new idea". It has been tried many, many times throughout history. It has never worked out well, and it won't this time either.
Consumer prices (Score:5, Insightful)
Hurts them more than us [Re:Consumer prices] (Score:5, Interesting)
China has much more to lose in a trade-war than the USA does. Their economy is tightly bound to exports. China knows this and is bluffing.
I didn't vote for Trump, but I hope he pushes this issue, and encourages China to shift more to a consumer driven economy rather than an export economy. They won't do it without pressure, and Trump's bullheadedness may be just the recipe.
China will make a lot of noise and initial threats, but after a while they'll have to change or risk an economic hit.
Factory workers have protested and rioted in recent downturns. Thus, a downturn big enough could bring serious challenges to leadership. Tienanmen Square was merely a preview of what could happen.
The leaders are worried they'll be overthrown, Kadafi-style, if the population gets angry enough. Thus, they don't really want an actual trade-war, and that's why they are using threats and bluffs early on to try to prevent one. They saw how Kadafi got Shish-kebabed by his countrymen and know they could be next.
The thing is, they don't have to depend on exports. Grow a consumer base. It works. But exports have worked so well that Chinese leaders don't want to risk change. If Trump puts enough pressure on them, they may change to avert the even worse option: Shish-kebabing.
Re: (Score:3, Insightful)
GOP Congress tied his hands. Trump doesn't have that limitation ... at least not yet.
Re:Can't think well can you (Score:4, Interesting)
No, there were internal disputes over single-payer versus public-option versus no-public-option.
And GOP's criticism of ACA is vague. Democrats have been perfectly willing to tune it, but GOP has blocked tuning. It's like complaining about a car that sputters but not allowing one to take it to the mechanic. Every other large program in history was allowed to be tuned.
Sorry, GOP are manipulative sabotaging sacks of you know what on the ACA. If there is an evangelical Hell, they will fry extra crispy, and Satan has no ACA to cure their burns.
The real problem is that technology is changing the work world and GOP has no solutions other than trying to force the clock back to the 1950's. The very definition of conservatism is trying to change the clock back. They are doing what conservatives are "supposed" to do.
But you cannot but technology genie back in the bottle. Bots will kill jobs in China also eventually. The Democrats' plan of retraining and college had a better shot at making a difference in my opinion because it assumes change rather than hide from it.
Re:Consumer prices (Score:5, Insightful)
China fears Trump (Score:5, Insightful)
Because he will extract concessions. That's what you can do when you have a persistent trade deficit. The Chinese only understand force.
Re: (Score:3)
China may just cut off access to rare earth metals to US companies, call in a huge wad of debt they hold in the US, etc. .
. .
As for "bring home manufacturing", do you have any idea how many YEARS away that is, and thats just the build the factories, then there is the new power generation needed, improved infrastructure (roads, rail, water, power lines etc).
We should not have gotten into a situation, in which we depend on China for raw materials and finished goods. It will be hard to reverse the situation. But the sooner we start, the better.
Maybe we should start becoming independent of China a little bit at a time, instead of all at once. But I see no advantage to doing nothing.
Comment removed (Score:5, Insightful)
Re: (Score:2, Interesting)
Trump is saying China is manipulating it's currency rate, keeping is low (like 4 times lower than "real") hence being much more attractive for investors (low costs).
As South Korea is not accused of anything like that, it shouldn't affect it, at least not directly.
Re:So scared (Score:5, Informative)
Trump is saying China is manipulating it's currency rate, keeping is low
China is manipulating it's currency rates. [fxcm.com] It's been well known in the forex community for years, and they've instituted policies that directly depreciate the currency. Japan does the same thing, it's only avoided scrutiny because the manipulated rate puts it almost on par against the US. "Almost" and "not quite" have a lot of meaning in the forex game. S.Korea has much bigger problems right now, like the entire government being so fucked up that there are mass protests against it. [www.cbc.ca] And evidence that it was being directly controlled by a group of people in the shadows who weren't in the government. That's not even touching on the really weird shit like the rumors that have been floating around that the ferry sinking with the kids on it a while back was deliberately caused as a human sacrifice for the "8 goddesses".
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Cars and cellphones are fun to imagine here, but the reality is that China's manufacturing might has little to do with those industries. Every big box store in your city is filled with all kinds of random crap from napkin holders, BBQ grills, decorative Santa statues, and so on.
A toy manufacturer wanted to return their processes back to the US to avoid all of the liability of undetected chemical substitution. They found out there was no manufacturing capability in US for the fancy cardboard boxes which show
Saudi 'military'? LOL (Score:3)
Talking about Saudi Arabia's military is laughable - they showed it in 1991, when they were begging the US to send in troops to prevent Saddam from rolling in. They have a population of 30M, and are a 'power' only wrt their much weaker neighbors like Bahrein or Yemen. Forget the US - they are shit scared of Iran toppling their monarchy or pulling off a Shi'ite revolution which would end in Mecca & Medina under Shi'ite control. Also, the Arabs have not had a good fighting military since the 13th centu
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I'm pretty sure we figured out how to grow Cotton here in the US at some point in our history.
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Who Knows? (Score:2)
However, experts say officials in Beijing are still battling to untangle what a Trump presidency means...
Yeah, well that's pretty much everyone who wants more detail than "make America great again".
Re:Who Knows? (Score:4, Funny)
Re: (Score:3, Informative)
yeah, cause "hope and change" was so clear?
False equivalence. Obama always stated his policies and they were consistent. Trump is nothing but soundbites and he denies what he is on tape saying the day before.
China has less trade leverage over US than thought (Score:2)
"A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US."
If limiting the number of students studying in the US is on their threat list then the list must represent the entirety of their leverage against the USA because that's a pretty insignificant threat to include.
Weird Soviet reversal (Score:5, Informative)
This vote and the calls for protectionism in the USA and UK strike me as odd. Back in my day... it was the Conservatives and Republicans and similar parties defending trickle-down, supply-side, trade leads to growth, which leads to prosperity for everyone.
Now there's support for reducing freedom of movement in the UK (and other places in Europe), and for the USA to erect trade barriers. All this time, the official explanation was that international trade was not a zero-sum game, that if there's more trade, everyone eventually gains and that protectionism was BAD. I can't remember if state investment on infrastructure was even worse than protectionism, but in any case it was something that Chicago school/Republican politicians just would not have.
Sounds like now In Republican America, state interventions Trump China?
Re: (Score:3)
Now there's support for reducing freedom of movement in the UK (and other places in Europe), and for the USA to erect trade barriers.
Maybe it's just support for regulating those things. People keep telling me that regulating stuff is good because it prevents abuses. Now they're whining because regulations affect things important to them.
Re:Weird Soviet reversal (Score:5, Insightful)
This vote and the calls for protectionism in the USA and UK strike me as odd. Back in my day... it was the Conservatives and Republicans and similar parties defending trickle-down, supply-side, trade leads to growth, which leads to prosperity for everyone.
You remember correctly. But that was in the 1980s and things have changed. The Republicans began strongly embracing what I call "stupid people" in the past decade. I blame Karl Rove for this. I think it started roughly around 2004. You know how people too stupid to vote correctly in Florida all voted for Al Gore in 2000? They got flipped to the Republican side. This culminated in the queen of anti-intellectualism, Sarah Palin, running for vice-president in 2008.
Now there's support for reducing freedom of movement in the UK (and other places in Europe), and for the USA to erect trade barriers. All this time, the official explanation was that international trade was not a zero-sum game, that if there's more trade, everyone eventually gains and that protectionism was BAD. I can't remember if state investment on infrastructure was even worse than protectionism, but in any case it was something that Chicago school/Republican politicians just would not have.
I don't live in the UK so I'll let others comment on that, but as people without college degrees (not necessarily stupid though) and stupid people began to embrace the Republican Party, Sarah Palin pushed an anti-intellectual agenda that resonated big time with small town, non-college educated America. Palin has said multiple times that the only "real" America is the small town one, which just happens to be where a lot of people didn't go to college. If you can see a map of how the vote was broken out by county in the recent presidential election, you'll see that at least 90% of the US is red with the only blue areas being in bigger cities. As small town people have embraced the Republican Party, they've continued to lose jobs in manufacturing and the small towns where they live don't offer adequate replacement jobs. So this has led to a somewhat large group of people in small town America who see themselves and their small town life under siege. They're very receptive to being told that they are victims of forces beyond their control and only the Republicans can bring back those small town jobs that went away. They also tend to be very religious which brings them into conflict with societal changes like gay marriage where they see these changes as coming out of big cities and being pushed by Democratic Party elites who actively wish to bring harm to them.
Re:Weird Soviet reversal (Score:5, Insightful)
This is why you're confused: Donald Trump isn't a Republican. Not in the traditional sense, anyway. Why do you think everyone in the GOP was trying to tank his campaign. If the liberals are to be believed, they would fully agree with his "racist, hateful, xenophobic, sexist and dangerous" rhetoric. Not that he ever said anything that falls into those categories, mind you, but of course the Republican establishment tried everything in their power to sink him, he came right out and said he's going to knock down their house of cards!
Wait, you're claiming trump hasn't said anything racist, hateful, xenobhobic, sexist and dangerous? Possible not in one sentence. Other than that, you know, refusing to rent to black people is pretty racist. Kind of by definition. And not sexist? Are you fucing kidding me?
Re:Weird Soviet reversal (Score:5, Informative)
Re:Weird Soviet reversal (Score:4, Informative)
Re:Weird Soviet reversal (Score:5, Informative)
This has been pointed out a hundred times. There are MULTIPLE INDEPENDENT groups with the name La Raza. The judge was the member of a legal professional organization in California, not the Florida one you are claiming. They aren't connected and the claim that they are the same comes from the alt-right white nationalist groups.
Re:Weird Soviet reversal (Score:4, Funny)
Racism is over. The KKK doesn't exist anymore. What you're seeing are just liberals paid by George Soros to instigate false flag attacks to de-legitimize the president-elect. It's all a conspiracy, you can't trust MSM anymore. The only news outlets to be believed are Breitbart and Fox: everything else is corrupt.
Re:Weird Soviet reversal (Score:5, Funny)
Trump said he never said those things. So he never said those things. If you google, "Sexist things that Trump said", those things are all lies.
Why Trump is the 45th President (Score:3)
At its core the reason Trump is going to be #45 is that most of this countries liberals and bunch of people who normally consider themselves conservatives consider the wealth distribution to be a problem.
I suspect its an optimization problem. Globalism and free-trade policy optimize for maximum economic output but not necessarily for equitable distribution. So they leave you with two options heavy handed policy of direct redistribution, which America has never been about or potentially looking at a return to some form of mercantilism abroad.
The reality is Apple isn't going to get out of the iPhone business if they can't make them in China they will either find somewhere else like Vietnam to do (depending on how the trade policies get implemented) it or they will make them here. The cost of a iPhone (or any smart phone) probably goes up, and therefore the median standard of living probably declines somewhat. On the other hand some jobs come back to the states and the mean distribution of income levels out a little.
The truth is China isn't actually in all that great a position when it comes to trade war. We can tariff imports but not exports (Constitutionally) an import tariff on our side had a similar economic impact as an export tariff on theirs it makes their goods more expensive for the American consumer, and in theory American goods or American alternatives more competitive at the margin. The only difference is to which government the tax revenue flows. We have a trade deficit with China today, yes they can negatively impact some American industries and favor some of their domestic industry but not as broadly as we can that in reverse.
China does not currently have the domestic sink for their economic outputs we have either, that is changing but its not there today. My guess is if we really shut down the China trade today it would trigger a recession here and depression deflation driven death spiral there. The reality is China will quickly learn they have to keep the doors open to sell into the American market as much as possible or they are really screwed.
Reality check (Score:5, Insightful)
China threatens its own stability. News at 11. (Score:5, Insightful)
Stop sales of cars and iPhones? The aftermath: tens of millions of Chinese are suddenly out of work, in big cities where they can cause trouble. Chinese currency flatlines. Financial panic, uprisings, revolution.
Go ahead, China.
It might be like war production (Score:3)
Magically re-creating the entire lost supply chain for every single good China produces would probably be similar to what would happen if we were actually involved in a World War III style scenario with them. If the country had to, immediately and overnight, consider China a dead country in terms of production capacity, some pretty serious interventions on our side would have to happen. During World War II, the military basically requisitioned the entire production capacity of the country because they couldn't build equipment and supplies fast enough. Good luck getting a divided country to get behind government intervention and possible rationing of goods. You couldn't buy a car during most of the war years, let alone fill it up with gas on your schedule...all of GM, Ford and Chrysler's production was redirected to making tanks and Jeeps. Food, rubber and other products were also rationed because there was just no way to satisfy the war demand and it wasn't safe to ship things across the ocean.
Remember, we have almost no native capability to manufacture small, cheap items anymore...that went away ages ago. We make lots of cars and airplanes, but not too many (if any) consumer electronics or appliances. I would imagine it would take a lot of intervention and incentives to get rare earth metal mines reopened, steel mills reactivated, and goods manufacturing basically force-restarted. It would be a very interesting experiment if it worked, but I highly doubt everyone would sign on unless there was a direct threat to our existence. It would be very strange -- iPhones for America and all that, complete with the patriotic posters.
Great news everyone (Score:3)
Looks like the communist came up with a new weapon: A rapid-fire footgun.
Lets compare both countries and the effect this trade war may have:
At stake for the USA: the low prices of electronic gadgets. Yeah Im sure there will be gallons of hipster tears if the Macs get higher prices
At stake for China: Absolutely everything! No more sales to the US (you dont actually believe that the US will not retaliate if the communists try something funny?), means that suddenly they have millions and millions of unemployed people. People who tend to riot. In fact with anything less than a double-digit growth per year China is already struggling to place all the university graduates into the workforce, not to mention the uneducated country side population migrating after the simple manufacturing jobs. Right now this growth is at 6.5%. And their idea of replacing US made goods with European ones is just brilliant. As if most of the NATO states would not follow the same sanctions the US imposes... Just like theiy did with Iran.
So now we have China in deep shit, and the US or rather the US companies have every reason to get back manufacturing to the US, probably helped by subsidisies from senators beating each other up to get the factories built in their state to claim the job growth for their reelection.
Now some may believe that the USA has no manufacturing capacities anymore, this is plain and simple wrong. It is still number 3 worldwide in gross manufacturing capacity. Even if the specific plants to build electronic gadgets may not exist anymore, they can be quickly rebuilt or refurbished.
I bet that in 3 years tops, assuming the right conditions, 80% of the manufactuing jobs are back in the USA and probably permanently too.
This is a situation that would fuck China harder than if the Opium wars were fought by imperial Japanese soldiers.
Re: Oh dear (Score:2, Interesting)
Yes, the Americans could start producing iPhones and cars. At local wages, I guess, driving up the prices of those items. So, basically the economy would go up because of lower unemployment, and down from higher prices...
Re: Oh dear (Score:4, Interesting)
And we could kill off useless idiot-friendly devices like the iPhone which specifically enable American incompetence at the cost of Chinese citizens' lives and health, because they wouldn't be economical to produce anymore.
Re: Oh dear (Score:5, Funny)
idiotPhone.
genius...
Re: (Score:3)
Fun fact: nearly all Android phones are made in places just like China...
But please continue.
In other news, that is curious that the Chinese would call out the iPhone, since a few of their own corporations make some not-insubstantial cash from manufacturing the things...
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Fun fact: nearly all Android phones are made in places just like China...
But please continue.
In other news, that is curious that the Chinese would call out the iPhone, since a few of their own corporations make some not-insubstantial cash from manufacturing the things...
True, but the iPhone's prime contractor happens to be Foxconn which is technically a Taiwanese company. Relations aren't great between Taiwan and China at the current time (due to the election of a pro-independence President in Taiwan).
Of course many of the subcontractors are Chinese companies and they would be of course be impacted...
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iPhone, since a few of their own corporations make some not-insubstantial cash from manufacturing the things...
The labor cost of an iPhone 7 [investopedia.com] is estimated to be about $5. About $220 is parts. The rest is marginal profit. If Apple is forced to shift production to America, and Chinese buy Xiaomi phones instead, it will hurt America far more than it will hurt China.
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I'm sure that China would love to see their factories idle while production of low-cost goods for the US market place shifts to indonesia, bangladesh, etc.
Comment removed (Score:5, Insightful)
Re: Oh dear (Score:5, Interesting)
Re: Oh dear (Score:5, Interesting)
We have sources of materials in our own country, we don't need the Chinese materials. Our mines for them are currently closed because the prices of those materials in the currency-manipulated China are so cheap that our raw materials are too expensive when mined here. Lowering the corporate income tax to 15% is likely to change that, and see those rare earth mines opened up again, and... presto, no more problem with raw materials in the USA.
With the pro-business administration that is coming into Washington, and the vow to "Make America Great Again", I'm expecting that much of what is made in China is going to be made in America after a while. It won't be 1000's of Foxxcon workers standing for hours at tables assembling them by hand for a dollar two nintety eight an hour, it'll be American workers tending 30 - 50 automatic machines, keeping them in raw materials, keeping them adjusted, lubricated, supplied with power, and checking for scrap, and they'll be well-paid, and the iphones shucking out the conveyor belt will be every bit as desirable as the ones from China, and about the same price. That's what I expect, anyway. There's lots of ways for America to compete if we stop allowing the foreigners to have the huge advantages of lower taxes and currency manipulation.
Re: Oh dear (Score:4, Insightful)
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Re: Oh dear (Score:5, Insightful)
The trade deficit with China last year was $365 billion. With an all out 100% trade war, China loses $365 billion more than we do. How is that winning?
We have the upper hand since currently we are the ones giving them net money.
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The trade deficit with China last year was $365 billion. With an all out 100% trade war, China loses $365 billion more than we do. How is that winning?
We have the upper hand since currently we are the ones giving them net money.
You really have no idea how economies and trade wars work, do you?
If you think that it's simply a matter of "net money", I have some very sad news for you my friend.
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Economically it's a losing proposition for China. There's a good chance they will do something anyway out of pride, a show of strength for the citizenry, or even a national security concern... but I just don't think it'll be that major. If they choose cars and iPhones because those are big, the retaliation from the US would be severe and much much bigger, because they have so much more to lose, and so many specialized industries that don't even have a US counterpart anymore due to decades of outsourcing. If
Re: All-out trade war (Score:5, Insightful)
Bullshit. China has the capacity to replace all the manufacturing they buy from the US, if they want. Remember they have whole cities sitting empty.
We don't have an extra billion people to replace those purchases.
It's a very lopsided war, and we will lose if China wants us to.
Re: All-out trade war (Score:5, Informative)
China doesn't have the people to replace purchases either, at least not at the same price. They are poor remember? And they are too frugal to spend any amount of money on most of the cheap disposable crap we buy from them.
Look the math is simple and incontrovertible. We send $X worth of goods to China. China sends $(X + 365,000,000,000) worth of goods to the US.
A trade war hurts China more than it hurts us. Can you tell me what specifically you're disagreeing with? I really just don't understand. Give me some numbers to show that the US would be hurt more.
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Keep saying they're poor. While they destroy our economy.
If China wants, they can replace the $X worth of goods we send them with local manufacturing. If we do the same, our prices double. Theirs won't. Guess who wins & who loses.
It's that simple.
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Keep saying they're poor. While they destroy our economy.
You're the one who wants to let them destroy our economy by putting our heads in the sand and not reacting. You CANNOT sustain a $365 billion trade deficit. It will destroy your economy.
If China wants, they can replace the $X worth of goods we send them with local manufacturing. If we do the same, our prices double. Theirs won't.
Guess what, even without a trade war, China IS replacing that $X of goods with local manufacturing, slowly but surely. That's why their manufacturing increases every year. They do more and more stuff. That's why our trade deficit with China grows every year. And they're transitioning from manufacturing cheap crap to more com
Re: Oh dear (Score:4, Insightful)
Re: Oh dear (Score:5, Interesting)
Nope a country with 4 times the population will always be a larger market unless they are dirt poor. And countries stay dirt poor only so long. Eventually they have a revolution, kill the incompetent leaders and get competent leaders. So in the long run population always wins. China had its civil wars and then got the communist party leadership (that they were communist is pointless , the point is they became leaders after a period when incompetence was punished with revolutionary death)
The current batch is probably the first generation who havn't experienced the civil war and they may get sloppy but for China to become dirt poor again is not really possible.
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This is no more true of countries than people. People who are dirt poor don't stay dirt poor because they are incompetent, they stay dirt poor because they lack the resources to get ahead. Those who have the resources use those resources to bribe/strong arm everyone into giving them so much advantage over those with few that the uphill battle to get resources is ne
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The USA is hundreds of years old (since it was discovered). China is thousands of years old.
I don't think this argument holds up.
China holds the trump card (Score:5, Informative)
iPhones and other smartphones being made here will probably up the prices slightly, but most of the estimates I've heard are absurd.
No they are not. For one many/most of the key components for smartphones (and laptops and desktops and...) are made in China too. Where do you think you are going to get parts? The supply chain for these does not exist in the US or EU. Worse China has a monopoly on rare earth minerals without which you cannot build many modern electronics. The US has reserves of these but re-opening the mines for these would not happen overnight.
Trump starting a trade war would drive up prices dramatically on a huge amount of goods and would almost instantly trigger a recession or depression. It would be catastrophically stupid of him to do that. A trade war would benefit no one and it sure as hell would not increase net jobs in the US.
I'd also suspect that the increased wages (higher demand for employees = fewer minimum wage jobs) would more than offset the price increases you'd see.
No it would not. The number of extra people who would be employed by this wouldn't offset the extra cost of production. That is why it is being produced in China now. If that were not true then we would already see production happening here in the US. Furthermore having a few people making higher wages doesn't help the millions who would have to pay more for the product itself. I don't work for Apple or a smartphone manufacturing company so someone else having higher wages doesn't help me one bit.
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iPhones and other smartphones being made here will probably up the prices slightly, but most of the estimates I've heard are absurd.
No they are not. For one many/most of the key components for smartphones (and laptops and desktops and...) are made in China too. Where do you think you are going to get parts? The supply chain for these does not exist in the US or EU. Worse China has a monopoly on rare earth minerals without which you cannot build many modern electronics. The US has reserves of these but re-opening the mines for these would not happen overnight.
Trump starting a trade war would drive up prices dramatically on a huge amount of goods and would almost instantly trigger a recession or depression. It would be catastrophically stupid of him to do that. A trade war would benefit no one and it sure as hell would not increase net jobs in the US.
Maybe this will finally give us the incentive we need to do a better job recycling our out-dated electronics. This will have a long-term economic benefit, since in the long-run reclaiming metals should be cheaper than mining them. Even better, companies might actually start designing products with end-of-life reclaim procedures in mind.
I'd also suspect that the increased wages (higher demand for employees = fewer minimum wage jobs) would more than offset the price increases you'd see.
No it would not. The number of extra people who would be employed by this wouldn't offset the extra cost of production. That is why it is being produced in China now. If that were not true then we would already see production happening here in the US. Furthermore having a few people making higher wages doesn't help the millions who would have to pay more for the product itself. I don't work for Apple or a smartphone manufacturing company so someone else having higher wages doesn't help me one bit.
I disagree again. With improving automation, the advantage of cheap human labor in China is diminishing and will continue to diminish. An investment in American infrastructur
Cost advantage (Score:5, Insightful)
Any smartphone manufacturer who employs cheap (foreign) labor ends up with a competitive advantage over a domestic manufacturer, while still benefiting from the domestic manufacturer's decision to build in the US and employ US workers.
That is correct. As long as the US has wages that substantially exceed those of other countries there will be a strong pull to locate labor intensive jobs in places where labor costs are low. That is why most US based manufacturing is capital intensive instead of labor intensive.
It would be a very good thing if electronics makers were to start building in the US, but without being forced to as a group, it's not going to happen because while all of them building in the US together would have no negative impacts, any of them choosing not to participate would negatively impact those that do.
It would (probably) be a good thing but trade barriers will NOT accomplish that goal. Those industries will only come back to the US for one of three reasons. 1) Technological advancement, 2) Labor costs falling in the US relative to elsewhere or, 3) advances in automation turning labor intensive production into capital intensive production. But since the supply chains for electronics production have spent the last 3-4 decades moving to Asia they aren't going to come back quickly even if they ever do. Asian manufacturers have a currently insurmountable cost advantage so production will stay there until that is overcome. Trade barriers will not in any way erase the cost advantage.
Re:Cost advantage (Score:5, Informative)
"That is correct. As long as the US has wages that substantially exceed those of other countries there will be a strong pull to locate labor intensive jobs in places where labor costs are low. That is why most US based manufacturing is capital intensive instead of labor intensive."
This is the huge misconception that has been screwing us for decades. Labor rates are NOT the problem. Taxes are.
We have the higest corporate income tax on the planet. THAT is what is causing manufacturing to leave the country. Its not the worker wages, because when we build factories in the USA, we automate the H out of them. There aren't that many workers. Certainly not like Foxxcon where 1000's of workers stand at tables all day and assemble them by hand. We'd have maybe a hundred or two hundred in a factory with 1000's of machines, the workers feeding the machines raw materials, keeping them adjusted and lubricated, checking for scrap, etc. The labor would not be the big part of the price of the product when produced in the USA, but right now, corporate taxes AND regulations have killed much of US manufacturing.
Here's an example from the auto industry. It takes 30 - 33 labor hours to build a car in a US factory. According to the car industries themselves, their workers cost them about $78 / hr. Multiply it out, its about $2500. However, if you study the Fair Tax, the cost of _all_ income taxes to US manufacturing, and this includes the capital gains taxes, worker's individual income taxes, payroll taxes, etc. is 22% of the price of whatever product is built in the USA. So, for a $30K SUV, that is about a $6,600 tax bite while the labor rate would still be only about $2500. You could enslave auto workers, pay them $0, and still not have anywhere close to the size of the effect that getting rid of ALL the income taxes, which is what the Fair Tax people have advocated for a couple decades (and we still do.) But the simple act of lowering the corporate income taxes, and rolling back a lot of unneeded regulations as the new administration is promising to do, will help the auto industry build more cars in the USA, and I believe will likely help the cell phone industry build cell phones in the USA.
I've read in years past - 1 or 2 years ago - that there are exactly zero cell phones built in the USA. Is that right? I don't know, but if so, I think that's about to change.
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I don't think even more low wage jobs is what the Rust Belt had in mind. But then again, they made sure a guy whose idea of business is to screw over his workers and investors and charge licensing fees for the use of his name got into the White house.
And therein lies the real problem. Even if Trump were the biggliest businessman in the world, international trade does not work like a business. It is immensely more complex, and anyone selling simple solutions like ""We'll just make 'em in the US" is either a
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And just how many workers do you think those factories will be hiring?
Even Chinese factories are moving towards automation. You're not getting those jobs back, and as to deregulation, well, I think a look at the toxic legacy of the pre-EPA era should tell you all you need to know about how companies, well not held to proper standards, simply offload the cost of cleanup to the taxpayer.
The Rust Belt manufacturing jobs are largely gone, and they won't come back. Companies will invest in automation, just like
Re: Oh dear (Score:5, Insightful)
Americans already make cars. Even "Japanese" (Honda, Toyota) cars sold in the US are usually made in the US.
iPhones and other smartphones being made here will probably up the prices slightly, but most of the estimates I've heard are absurd.
iPhones could be made completely in the US and Apple could charge the exact same price for them as they do now and the only difference is Apple's profits would go from ridiculously obscene to only slightly obscene.
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Because of American minimum wages, most oversees work that gets forced to be done domestically will just get automated instead. If Apple and the like have no choice but to spend more money, they'll spend it in automation development. Instead of 100 Chinese low wage jobs, you'll get 5 American techs to maintain the equipment.
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Re: Oh dear (Score:4, Insightful)
that you simply can not automate cost effectively
What is not cost effective in a low wage country quickly becomes more cost effective in a much higher wage country. The point is, 100 jobs in China will never equate to 100 jobs in the US. The US environment has a lot more pressure towards automation.
The US unskilled labor market just needs to understand/learn that they aren't worth what they feel they're worth in a global economy. On a global scale, it's a "get skilled, or get bent" situation. I'm not saying it to be mean, but that is the reality.
Re: Oh dear (Score:5, Funny)
iPhones could be made completely in the US and Apple could charge the exact same price for them as they do now and the only difference is Apple's profits would go from ridiculously obscene to only slightly obscene.
Whoa, buddy. You're talking about affecting America's first class citizens: shareholders. What next? A decent wage increase for the middle class? You're mad!
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A bit of understatement. At these prices they could manufacture them in orbit and still stay marginally profitable.
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Apple doesn't manufacture in China for the price. It manufactures for the flexibility. When Apple says people have to work 24 hour shifts so that the iPhone 7 can meet its launch date people in China do that whereas people in US would not. Labor laws. Apple will bring back factories if forced to but will automate them instead of using humans. Heck during launch time even Apple Employees with masters degrees sleep at the office. How tolerant are they going to be of high school graduates refusing to work late
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Apple cannot manufacture in the U.S. without replacing most of their supply chain. While Apple may make a lot of profit, even they are not rich enough to do that.
Re: Oh dear (Score:4, Interesting)
(This is not to suggest that I welcome a fascist in the White House, or a trade war with China, obviously. I just wish we hadn't lost most of our electronics manufacturing capacity with the end of Commodore in the early nineties.)
It's OK. You're allowed to (even loosely) agree with something Trump has said or an idea he's had without a qualifier at the end to signal your virtue. Remember, this is America, and your first amendment guarantees you the right to free speech.
Hillary lost, so these kinds of "signing statements" are no longer necessary unless maybe of course if you have a liberal boss who also reads Slashdot and knows your handle. Otherwise, rejoice in the fact that you can speak your mind without reservation!
Re: (Score:3, Interesting)
Been seeing a lot of that recently and I am not too sure it's all that good for society, especially if its being scratched into cars and spray painted on buildings.
Re: Oh dear (Score:5, Insightful)
Heh, yeah. Although the petty property damage doesn't bother me all too much, I worry much more about the people getting beaten and dragged behind their vehicles like in Chicago because they were the wrong color in the wrong neighborhood. And people burning effigies of Trump in the streets. By goodness, grow up!
Being pissed because your candidate lost is one thing (even if the irony of their lack of self-awareness is lost on them), but trying to start a civil war because you've been mislead by the media is quite another, and it's one lesson everyone has to learn the hard way at some point in their lives or you never truly become an adult. Starting fires and killing people only gives the media whores what they want.
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Remind the Democrats that burning effigies emits carbon.
Faulty analysis (Score:3)
Yes, the Americans could start producing iPhones and cars.
The US makes millions of cars and commercial vehicles every year. Auto manufacturing is alive and well in the US. However high labor costs in the US necessitate a high level of automation in US auto assembly plants so increases in auto production in the US won't result in higher wages or substantially increased employment in the auto assembly plants.
So, basically the economy would go up because of lower unemployment, and down from higher prices..
Faulty analysis. A trade war with China would cause short term unemployment in both the US and China to rise because prices would immediately rise. It would
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Re:Oh dear (Score:5, Informative)
I don't know why people didn't see this coming. I suspect a lot of Americans have a rude awakening in store regarding our position in the world.
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Really, though, even if Trump cuts off China completely, any increase in employment here will be offset by an increased cost of living as we pay for much more expensive labor than we had been. It's probably also worth noting that most economists believe that if China stops buying US bonds it'll lead to a recession. The simple fact
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They did give something up, it's called quality of life. We can manufacture all the cheap shit they do, too, we just need to give up clean air, clean water, spacious homes, etc...
I am not even sure about that.
Many companies find themselves forced to go to China for manufacturing. The US and Europe simply don't have the production capacity to meet the goals in a timely manner.
They didn't give up quality of life. It was already low to begin with and it is improving. Soon enough, if the trend continues, China will have sucked all the mass-production industry from the west and can start increasing the prices to improve their quality of life over ours. And once our means of production ar
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I think it was a bad google translate.
I think they meant if these trade rules were to take place. Chinese will cut purchasing these popular american products.
Granted most of these products are made in China.
Idiotic sound bites (Score:3, Insightful)
If China were to do such a thing it might... reduce unemployment in the US.
This sort of drivel is why we have Trump in the White House. Idiots who think a naive sound bite is a valid substitute for sane trade policy and economic reality. A trade war with China would do no such thing. In fact it would almost certainly result in increased unemployment and significantly increased prices on a wide variety of goods. China and the US depend heavily on each other economically. A trade war between China and the US would probably result in at minimum a global recession in the best cas
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https://en.wikipedia.org/wiki/Comparative_advantage [wikipedia.org]
Nothing to do with emplyment percentage (Score:3, Interesting)
Comparative advantage is only useful when both countries are at full employment.
Comparative advantage has nothing whatsoever to do with "full" employment. Comparative advantage explains why it can be useful for two countries to both engage in production of a particular good even though one of the countries has an absolute cost advantage over the other. If comparative advantage did not exist neither would much international trade.
Xenophobic sound bites (Score:5, Insightful)
Or are you saying that Trump supporters are opposed to the free market?
I think Trump supporters (primarily though not exclusively working class rural white people) are absolutely terrified of a free market and a great many of them don't understand international trade at all. Sound bites are a lot easier than macroeconomics. Xenophobic sound bites that make foreigners scapegoats for their own failings and those of their country even more so.
Or maybe there coalitions that support candidates for a variety of reasons - and that not all the positions held by the supporters are in common?
Of course plenty of Trump supporters supported his lunacy for reasons other than protectionist sabre rattling. Some for reasons of racism, some for sexism, some for tribalistic loyalty to the republican party, some for pure amusement, some for unreasoning hatreds (KKK etc), some for misplaced fears ("2nd amendment people"), and plenty of other reasons besides. Most of them wrongheaded and ill considered but reasons all the same.
Therefore you agree that not all Republicans are for the free market.
Republicans have NEVER been for a free market. They just want a particular version of a capitalist market. Republicans have routinely been against "free" trade. If you recall during the most recent Bush administration they imposed steel tariffs [wikipedia.org] which had the perverse outcome of reducing domestic steel production, increasing the cost of steel, and reducing employment in associated industries (like automakers).
By the NAFTA is not an example of free and open markets. Neither is TPP.
True but there is no such thing as a pure free market. In actual fact a pure free market would be a VERY bad thing. But those trade agreements DO reduce net trade barriers. Whether or not that is a net benefit to society is a separate question endemic to the particulars of the agreements in question.
Both will lose (Score:5, Interesting)
Not necessarily. Your scenario is only if it becomes a full-out trade war.
It doesn't have to become a wide scale trade war for protectionism to be a terrible and self defeating idea. Tariffs almost always cause more damage than they help. Put a tariff on steel and congratulations, you've just made every car, plane, and machine that uses steel more expensive and less competitive.
Trump can play chicken to scare them to make changes.
That is a very dangerous game to play with global consequences if the Chinese don't blink. It's especially stupid given that such negotiation tactics almost certainly are unnecessary and stand a high probability of backfiring.
Because they depend on exports far more than we do, a game of trade chicken is riskier to them.
And we depend on imports more than they do. They hold a sizeable amount of our debt which is a danger to both China and the US. Any trade war would hurt both sides and it's not an exaggeration to say that we have more to lose than they do. We're the ones with the higher than average incomes. We're the ones who are living on borrowed money. Yes any trade war would hurt China too but like any knife fight we wouldn't come out unbloodied.
Let's give it a try rather than live with the status quo.
Trying something that is clearly dangerous and almost certainly counterproductive just to disrupt the status quo is idiotic. Different just for the sake of different isn't a sane plan. That's what people do when they don't know what the fuck they are doing.
The cards are on our side. It's an area where Trump's brashness may work to our favor.
That's simply not true. What we have is something of a standoff with both sides able to hurt the other rather badly. Trump's arrogant demeanor is FAR more likely to backfire than it is to help.
Re:Oh dear (Score:5, Insightful)
The key word is: eventually.
In the short term during a trade war, everyone who works selling Chinese made stuff loses their jobs. Everyone who works making things which require Chinese made parts loses their jobs. Anyone who works making stuff that is exported to China (about eighteen billion dollars of manufactured goods) loses their jobs.
Meanwhile you can't conjure all that manufacturing capacity we had in the early 90s back overnight. It took China over ten years to replace that, and that was with government support. It's reasonable to assume it'll take us roughly as long, and with equal government support. The new factories, however, will be far more automated than the factories that closed in the 90s, so don't expect to get all those jobs back.
The unpleasant truth is that you can't make such a huge change in your economy and then just take it back because the change hurts. Undoing the change will hurt almost as much.
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Anonymous coward online calls billionaire president a naive fool. Film at at 11.
Re:CHina's Mistake (Score:4, Interesting)
Wow... This would actually drive manufacturing back to the United States or other areas if there is fear of state withholding shipments. This could be a very big benefit not a detriment.
1. Force Apple to bring profits back
2. Create manufacturing centers here which are robot/automated
3. Hire middle class to manage and maintain robots/design line
4. Stamp made in america
It's a win, win , win for everyone.
FTFY
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Wow... This would actually drive manufacturing back to the United States or other areas if there is fear of state withholding shipments. This could be a very big benefit not a detriment.
1. Force Apple to bring profits back
2. Create manufacturing centers here which are robot/automated
3. Hire middle class to manage and maintain robots/design line
4. Stamp made in america
It's a win, win , win for everyone.
FTFY
1.5: Apple simply relocates to another country.
1.6: Apple passes on extra taxes to consumers.
1.7: Trump becomes the most unpopular president in history.
No need to complete steps 2, 3 and 4.
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I'm not entirely sure you fully understand supply and demand.
Nobody is going to pay 2x the price for an iPhone, so now the competitors get a chance to take a whack at the 'big dog' exploiting low cost labor.
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Wow... This would actually drive manufacturing back to the United States or other areas if there is fear of state withholding shipments. This could be a very big benefit not a detriment.
And just think about how much money you could save if you grew all your own food and sewed all your own clothing!
Sure at the national level you get specialization and multi-tasking that doesn't work with an individual.
But China gives you things for very cheap, and it's hard to help the economy as a whole by stopping people from giving you really cheap things.
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But China gives you things for very cheap, and it's hard to help the economy as a whole by stopping people from giving you really cheap things.
Short term vs long term thinking.
You would probably agree that things like "dumping" -- flooding the market with below-market-price items in order to harm domestic industry -- are not good, even though technically dumping just gives people really cheap things. The loss to domestic industry is immediate enough that people can put it together. It gets harder for some reason when you have to think 10-20 years down the road, human nature I guess, or at least Western nature.
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recycling and other places are comming online for sources. Everybody with a clue has been looking at china's export ban and going yea lets make sure we have a fallback plan.
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We can make it or buy from somewhere else. China is totally dependent on us and they are scared sh*tless. It's why they will never go to war against us and will negotiate with Trump and he knows it. China has no cards to play.
Re:Cars will still run but tech sector will hurt (Score:4, Interesting)
"Bringing back the manufacturing" would require hundreds of billions of dollars of investment and several years (probably on the order of 5-10). YOu also have almost no one trained in the US, so you would have to ramp up training programs to a massive degree, and it's not exactly clear with relatively low unemployment where you would get the people from.
Trump's declaration is fantasy. It's not going to happen. Maybe he can negotiate some better terms for US companies exporting to China, maybe, but the notion that manufacturing in Asia is going to be repatriated is pure fantasy. And let's remember here that the US is not China's only customer, and if the US starts putting on its big boy protectionist pants, it will likely piss off other trade partners like Europe. Even now Canada, the US's largest trade partner, is signing a trade deal with the EU, in no small part because it wants to diversify away from the US.
The US is a vast economy, but it isn't the only large economy, and if US companies become heavily disadvantaged in other markets, particularly huge ones like China, you will see a great deal of damage done to the US economy.
And for what, exactly? Do you think all those factories that would be built in the US would be major employers? In ten to fifteen years, a factory would be thousands of robots and some technicians. Even a best case scenario does little to restore all those high paying jobs to the Rust Belt.
Trump made a lot of promises he can't keep, and some that if he did, would be ruinous. And let's remember here, he is not an emperor, he would have to bring Congress along for a lot of this, and Congress isn't simply going to sign up for even short term economic suicide. A lot of those people are up for re-election in 2018, and how do you think they would fair if a trade war with China lead to huge leaps in unemployment?
If you voted for Trump to disrupt the system, then okay, but if you actually voted for the man because you thought he would or could keep his promises, well, that's just plain stupid.