America owes China $1tn. That’s a problem for Beijing, and Trump knows it
theguardian.com
theguardian.com
The article itself isn't that bad either but I guess even the Guardian has to compete with eye catching headlines now too.
Which country would US consumers even purchase from instead? Mexico? Who even manufacturers stuff cheap enough for most US consumers?
There are regulatory hurdles to making a manufacturing plant in the US however: minimum wage, safety regulations, etc. etc. So it will be more expensive if made in the USA.
Alternatively, things can become like the Car industry. Where certain parts are manufactured outside the US, while the final car is manufactured inside of the US. Toyota has a major presence in the US.
I'm not saying I necessarily agree with it, but it helps to understand at least why Trump's supporters support Trump.
'A: One example from The Times article: When Jobs decided just a month before the iPhone hit markets to replace a scratch-prone plastic screen with a glass one, a Foxconn factory in China woke up about 8,000 workers when the glass screens arrived at midnight, and the workers were assembling 10,000 iPhones a day within 96 hours.
'Another example: Apple had originally estimated that it would take nine months to hire the 8,700 qualified industrial engineers needed to oversee production of the iPhone; in China, it took 15 days. Anecdotes like that leave you "feeling almost impressed by the no-holds-barred capabilities of these manufacturing plants," says Edward Moyer at CNET News, "impressed and queasy at the same time."'
From: https://theweek.com/articles/478705/why-apple-builds-iphones...
For some reason I can't edit the obvious mistake I made.
The products would be more expensive, which less consumers would be able to afford, meaning even less demand.
American companies are also likely to start heavily looking at using robots or other devices to help with building and the tooling required because that is the only way to drive costs down, but that requires an up front investment that is difficult to justify to the shareholder when it's easier to ship it overseas.
You take away those $19 jeans, $49 blue ray player, $79 ikea bookcase, $299 laptop and there is going to be hell to pay.
consumers would be disappointed, but i'm not as confident that people would become super angry about it. they'd buy less disposable low quality merchandise. for other, high quality goods, people would repair more often and replace less often.
also, property theft would rise.
It's fixed rate loans, but it's also fungible assets that can sold before maturity. I don't think China will sit idly and watch their tbill ands forex reserves turn into paper.
What will they do? Unloading them will flood the market, collapsing the price.
That's a sizable dumping.
https://www.ft.com/content/714117d0-ddd1-11e6-86ac-f253db779...
One of the dangers of over-reliance on single source of import, and a serious failure of long-term planning of several recent administrations. Imagine if imports were diversified; split roughly equally among several source countries. Slapping import tariffs on one of them wouldn't move the prices much thanks to competition, but surely would put serious pressure on the one select source country.
Even the mere ability to do just that that would give USA some leverage in any trade negotiations.
As things stand, introduction of small tariffs on imports from China would help manufacturing grow and flourish in competing countries, including inside USA. Also would put some brake to Chinese current policy of financing growth by huge credit.
Let's not forget American manufacturing and services are already carrying nontrivial burden of indirect taxation by the regulation of environmental protection, workplace health&safety, and the likes. This indirect taxation is much lower in China, allowing it to manufacture at very low cost, to the detrimen of local environment, populace health etc. Basically a lot of externalities are unpaid for in China. An import tariff based off of at least a degree of (the missing) environmental protection could be palatable to Dems (including "progressives"), while being long term help to American economy (help move some manufacturing back to the States), temporary increase in prices of goods notwithstanding.
tl;dr: currently China is the sole source of many consumer goods, and tariffs on chinese imports would tax consumers. If America had several alternative sources, tariffs on chinese imports would tax the chinese; with prices remaining low thanks to competing countries.
To consider the opposite, how have ended up so reliant on China, given that there are many other countries that would love to split the business?
even Japanese and Taiwanese electronics companies are having products created and manufactured in China.
so, now, how does any other country really have the ability to do that work?
If you owe the bank 1,000,000,000, they have a problem.
of course, giving the US a reputation for something resembling default probably won't be a good thing in the long run.
and i'm sure there are ways any large creditor could "encourage" the election of US politicians which favor the return on capital above other priorities.