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Comment by thwy12321 | Hacker News Reader

I'm having a surprisingly difficult time finding a nuanced view of these policies. On the one hand, china is taking advantage of us and is in part rotting our our middle class and blue collar workers. On the other hand, this could spark economic turmoil. Can anyone chime in here? Or is this beyond the scope of economics? (Not to dig on the field, bit we were told NAFTA we be great, look at the poverty in Mexico as a result.)

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The consensus among economists is that it's a terrible idea which will hurt everyone. Often this sort of trade war is a precursor to real war.

Trade is not a zero sum game.

https://www.bloomberg.com/news/articles/2018-05-02/economist...

The people enacting these policies (Trump admin) argue that what we currently have is not trade, given how the Chinese have manipulated the markets, it is a one sided agreement. Free trade requires both sides not place restrictions on the others. Would you say this is true? Sometimes I feel like economic theory is like psychology, it seems real, seems like it has truth, but counter examples are abundant?

It's indeed not free trade, since the playing field is tilted massively in favor of the US, by controlling the global currency.

“Trade wars are good, easy to win”.

It’s an amazing statement and it will be interesting to see how it pans out. https://www.google.co.nz/amp/s/www.cnbc.com/amp/2018/03/02/t...

> On the one hand, china is taking advantage of us and is in part rotting our our middle class and blue collar workers. On the other hand, this could spark economic turmoil.

Actually, this is much more complicated than getting taken advantage of. Let us walk through an example:

When you're posting a message online on HN, we post using many chinese components going into your China-assembled HP laptop. Cost: $800.

A tiny tariff of 10% will just make the cost of that laptop go up. For the sake of argument, lets say it passes through to customers and that same laptop now costs you $880. We're already eliminating any benefits of tax cuts passed earlier this year.

At 25% tariffs, some components might start getting manufactured here. But the price of those components will be more than current Chinese imported price. Say, the price of that same laptop will go up to $1000.

So now you will be a proud owner of a laptop made in USA by shelling out $200 more.

And you might be fine with that cost for American patriotism. But here is the kicker.

HP laptops now cost $1000 in global market whereas other laptop manufacturers outside the US can still manufacture the same laptop for $800. Maybe HP (an American company) was able to sell laptops to Europe and India before. But not anymore. Because Lenovo can still make it for $800.

Lenovo just gained market (and revenue) from HP simply because of tariffs.

Trade is much more complicated than what we're giving credit for.

It's not just about economics. The China-watching community seems to be generally cautiously supportive of action against China, although not necessarily the action taking place, and certainly not some of the rhetoric around it. Overall, the fear is that China could become the world's superpower and dominate supply chains and control what the rest of the world says about it [1]. China would like to "dominate advanced industries like robotics, advanced information technology, aviation, and new energy vehicles" and become self-sufficient with their Made in China 2025 initiative [2]. This isn't popular with the West, and it has been reported that some Chinese journalists have been instructed to stop talking about it [3]. China also has a habit of intellectual theft [4] and only playing by international rules when it suits them.

One aim of the tariffs is to get China less involved in global supply chains [5]. This would be more likely to create jobs in Vietnam and Mexico than in America, but for strategic reasons this would still be good.

1. https://foreignpolicy.com/2018/09/14/china-is-buying-african... , https://www.merics.org/en/china-monitor/cosmological-communi...

2. https://www.cfr.org/blog/why-does-everyone-hate-made-china-2...

3. https://chinadigitaltimes.net/2018/06/minitrue-on-u-s-china-...

4. https://www.nytimes.com/2018/06/22/technology/china-micron-c...

5. https://nb.sinocism.com/p/tariffed-us-supply-chains-in-china...

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