U.S. Government Strikes Back Against Chinese Investment

Yes, its a huge loss for FAANG that they cant compete in china, but its also a loss for chinese people. It's just not a loss for chinese politicians, that can tout that thanks to them they created massive companies.

You can run indefinitely on a bad platform while it gives your reasonable returns. We'll see what happens when china gets its own big capitalist crisis.

I contest this idea that protectionism is what spurred growth in america in the 1800's. At the time, federal spending was like 5% of gdp. It was a time of low regulations and lots of business freedom within the borders. Also take not that America was severely and artificially constrained as a colony, unable to legally build manufactures. After those restrictions were gone, the capital invested into machinery and production was going to shoot up immediately, regardless of tariffs. Also take into account the immigration the us had. The US kind of doubled its population every 20 years during the 1800's.

It grew in spite of the tariffs, not because of them.

> The US can drop all tariffs on imports to zero if it wants. Have you considered why it doesn't? If free imports really benefited the US in the way you're claiming they do, why would the US so aggressively seek trade deals with other nations?

Of course I considered it, and already mentioned it: political support. Why does the US subsidize corn? Or restrict the importation of agricultural products, or limits immigration? Votes and private interests, and generally because the public has believed the lies those private interests push, like immigrants taking away jobs. Something that is repeated even in this platform when the H1B topic comes up.

The only economical purpose of a trade deal is to improve free trade, by abridging the rules of both countries to merge the markets. There are then political reasons to do it, which relates to diplomacy or geopolitics, things that I cant speak much about.

> The only reason to engage in trade deals is to be able to gain regulatory influence of other countries and set mutual tariffs. It is in the US interest to make these tariffs lower for things they are net exporters of and higher for things they are net importers of (because if you're manufacturing, the raw materials generally cost less than the cost of the imported raw materials and so a larger tariff on a smaller value is better than a larger tariff on the larger value)

Trade deals with the purpose of protectionism, which definitely exist, show terrible results. You can see the Mercosur of south america, where Argentina and Brazil have deals that you can only import cars from one another. Result: cars cost twice as much as in the US with the labor force making less than what they make in the us. Disaster.

It would be in the interest of any country, at any point, to completely liberalize is import/exports, even if the other countries don't. If the US decided not to import argentinian lemons, argentina retaliating by not allowing the import of internet services can only be reasonable as a retaliatory measure with the intent of receding the other restriction. But without that goal, if that cannot be achieved, then there is no point in restricting the import. Let argentina eat its own lemons while watching netflix, and let americans think they won a battle while they eat worse or more expensive lemons.

But this is the part where people flare up their nationalism and lack of understanding of economics, and clamor for vengeance, or to teach a lesson. And thus,a politican gains votes by putting tariffs.

> That's a poor analogy and as hard as I try I really can't see the mapping. In this analogy the businessmen are countries. The workers are what, the citizens? The factories? That makes no sense. Each party wants their factories to make money, of course. Are the wages taxes? Because the state taxes people. Reflecting the analogy back, is the US saying "cut taxes, cut the services for workers" whilst hypocritically turning into a social democracy?

The citizens are the workers. They are being "harmed" by the employer giving them lower salaries, but naturally retaliate by less loyalty, costing the business-man as well.

> The Fortune 100 company uses its leverage to suggest it will give the smaller manufacturer a huge order subject to it giving it a free sample run or such of a bespoke part. The smaller manufacturer would never entertain such terms for any other customer in ordinary circumstances, but this contract would save it. So it bites, takes a hit and gets accelerated under. Then the Fortune 100 company buys it at a knock-down price when it's no longer a going concern.

Countries dont buy countries. And countries have great diversification, as there are 200 of them, and producers get to move their capital according to the risk and the benefit. If the us stopped importing a good only made for the us, the good will cease to exist, and capital will move to something else. There are no permanent results.

> The US wants imports, but not of things that directly compete with US manufacturing. Things have gone a little wrong, because self-interest has led to the moving of production to the plundered world and has led to the perception amongst some people that the main thing the US has been exporting is jobs.

My understanding is that the stronger import restrictions the us has is actually agricultural products. If the US prevented the tech imports from china its economy would go under in 2 days. You would be hard pressed to sell Apple shares if that happened. The US will stop producing things that other countries will do better and cheaper. A tariff can only move capital from competitive industries to non-competitive industries.