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Comment by wonderwonder | Hacker News Reader

An aspect of this is that with the effects of globalization and the reliance of business in both nations on those in the other we could see entire large companies vanish almost over night as their supply chains dry up.

If you cant build your product because a component you relied upon is now 25% more expensive, you're continued existence is predicated on having deep reserves. Many smaller companies don't and even the larger ones will have to implement deep layoffs relatively quickly to conserve resources as they won't know how long the trade war will last.

This in turn will have an effect on the political situations in both countries although primarily America as its the democracy. Globalization and the economic relationships amongst nations now has a direct effect on the internal politics of those same states.

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Yep. My view on trade wars is basically: let's all chop off an arm. Last one standing wins. Whoever wins may discover that they didn't really need that arm to survive, but is life really better without it?

You're assuming it's "just" a trade war. It's not.

Can you elaborate on this?

He might be talking about the Renminbi's fixed exchange rate[0]. It's a fairly common belief that Chinese exports gain a huge advantage because CNY aren't floated but USD (and basically everything else) are, and if I remember right Trump jumped on the bandwagon some time last year.

[0] https://en.wikipedia.org/wiki/Renminbi_currency_value#Histor...

Not the OP but the use of economic disruption as a political tool to exert control over other nations is a common tactic.

The poster child recently for this sort of thing was the US pumping out hundreds of thousands of bbl of oil to create a glut and push prices down. This hurt some of our middle eastern allies but it hurt Russia much harder. It is sort of a sanction without a sanction, rather than tell people they can't buy Russian oil, push the price of oil down with your own supply so that the Russians can't use it to prop up their economy.

The article talks about how this action undermines the Chinese leadership by taking money out of the pockets of people who are needed to support the status quo. It also puts pressure on their economy for which they have limited options for correcting. They mention adjusting the exchange rate, which might work but that percolates through the economy in hard to control ways.

Does this mean that tradewars can or are in effect M.A.D. Devices? ie If China backs down and the US wins then china will stay forever repressed? so therefore they have to keep battling it out until a reset happens via "True War" or the collapse of one of them? (or both)

Or they could open their markets and stop stealing IP.

No, while I suspect it is possible for trade actions to lead to actual war if you look at previous events the most common effect is a sort of economic restructuring not warfare. It does however leave animosity which expresses itself in other ways.

Are you claiming that US-based shale oil producing companies produced a lot of shale oil at the direction of the US government, as a tactic to hurt Russia and other oil-producing countries? Occam's Razor suggests those companies operating out of economic self-interest rather than a secret plot to politically destabilize other countries is more likely explanation of what has happened.

And, in fact, oil's lowest prices were met because OPEC, with Saudi Arabia leading I think, continued massive production even as global supply increased, to drive the price down to the point that shale oil is no longer profitable and put shale oil companies out of business.

It's quite sensible to assume that the rich and powerful are aligned and connected with the governing body of a nation.

No, I wouldn't put it in those terms (government directing oil production of shale oil). I was trying to use oil as an example of a commodity that is often used as a foreign policy tool (see https://www.cfr.org/timeline/oil-dependence-and-us-foreign-p... for some flavor of that) There was a pretty decent article on oil as foreign policy in either the Economist or Foreign Policy Review which showed regulatory response to oil production when viewed as policy. The bottom line was that the Government can make it "easier" or "harder" to get to oil reserves through regulation or easing regulation. And those changes, combined with the short term ability to fill or dump the strategic oil reserves influences the market in ways that are useful.

> at the direction of the US government

Yes. See: http://money.cnn.com/2016/01/29/investing/us-oil-exports-beg...

Look at the date of the article. And it worked.

You don't have to compel companies to do things, you can arrange the world such that they want to on their own.

What? By 2016, US companies had extracted so damn much oil from shale that they could finally convince the government that letting them export some wouldn't jeopardize the US's energy security. And this is two years after global oil prices plummeted, in 2014, causing trouble for Russia but really causing trouble for Venezuela.

> you can arrange the world such that they want to on their own

The US government didn't arrange for the oil to be in the shale. I don't know if it funded research into cheaper extraction from shale or if the companies figured that out on their own but even if they did, there are much better reasons to do so than hoping to screw with Russia at some point in the future.

I think the Chinese Communist Party and Chinese industry in general was built up by the global elites, not by a bunch of Chinese farmers. They want China to be the model for the eventual one-world government that they’re playing towards.

You don’t have to be a conspiracy theorist to see that we’ve been sold out. At the very least, “Made in China” is a curse that the general conspiracy of corruption has put on us. In my opinion though, all the major world leaders are puppets who’ve been bought and paid for and are easily controlled.

I know HN hates conspiracy talk but IMO the unity of opposites dictates that if there are altruistic groups of people, there are evil groups of people and it’s not that far-fetched to believe that some rich and powerful people might get together and try to rule the world once in a while.

Gee, a rebuttal would be nice. Anyone care to explain why you can’t possibly fathom that this could just be true?

In some ways a trade war had already happened with China refusing to open markets and supporting theft of IP. ignored because it was convenient for both sides for a long time,but China is reach a level of power where their ambitions are threatening an established world order in the South China Sea,etc.

So true. China has been waging this quite war for over a decade. Pegging its currency, flooding us market with cheap (and unreliable) good (which are expensive when u consider tco and environment), stealing ip to leapfrog us without needing heavier investment, us loosing manufacturing knowhow, buying off local realestate causing jacked up prices in us. Its unfortunate that we took this lonv to react. Not sure if next administration will keep up this good work to keep china in check.

You are starting from a wrong assumption of 0 existing tarrifs and 0 international market barriers

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