Saturday, May 11, 2019

America's Biggest Trade War Losers

Tariffs have complicated impacts. In some cases, manufacturers will just increase the price if they can get away with it (when there is inelastic demand). In other cases (when there is elastic demand), manufacturers will either have to absorb the cost (if they can) or reduce/stop production of the product.

The industries and states that will be most impacted based on where Chinese retaliatory tariffs are likely to fall are below. They will be the sectors that will have to make decisions about raising prices or reducing/stopping production.


(via Axios)


  1. But we know China has been stealing intellectual property and cheating on the tariff and dumping issues for years now. I would wager America can handle the outcome better than China can over the long term. We have a lower corruption and people with some creativity.

    We know one big issue is worth of the currency. One has to wonder how world trade would be different if the whole world were on a commodity money standard with some relatively stable purchasing power whether you are prole in Southeast Asia, Europe, or North America. The big issue is that countries can devalue their money at will; there is not market basis for it and this has a huge impact on trade.

    Maybe RW could provide us with some theory here.

    1. No one really likes to talk about their heinous IP theft and one sided practices and subsidies! Couple this with the US companies that (nudge nudge wink wink) ship out manufacturing to the cheapest slave labor in China to realize the biggest profit margin.

      Of course there are no tariffs on US companies doing business abroad in China. That wouldnt make Murica great now would it!

  2. The whole, stupid "trade imbalance" argument boils down to this: "You sell too much to us!"
    I can't believe how many intelligent people argue with me about this subject. Just the other day, a very intelligent lawyer, who is a rabid MAGA, just couldn't bring himself to criticize Trump on even this clear-cut issue. Of course, he saw the obvious irrationality of minimum wage laws, but on something that to my mind is just as clear-cut and illogical---the hindrance of trade via tariffs---he just couldn't understand or see clearly.

    1. My sense is that some pro-tariff folks (who are not in the pockets of the crony producers that are protected by tariffs) see the relevant trading entities as nations, rather than the individuals who actually trade. Once you focus on the national level, it's very easy to lose sight of the fact that individuals want to purchase the most goods for their money, so cheaper is better. Bring the analysis down to the village level and they might start to see how ridiculous their position is.