China strikes back with 84% tariffs | Hacker News Reader

China strikes back with 84% tariffs

reuters.com

49 pointsxnhbx44 comments

Isn't this essentially "we're closing borders"?

Since the gloves are officially off, I'm wondering about something. Doesn't China hold a whole lot of US treasury bonds? What happens to those famous 10 years yields if China sells all its US bonds (why would it want to keep them if the relationship is dead)?

> Isn't this essentially "we're closing borders"?

Even if Chinese goods becomes twice as expensive, many are still cheaper than what you can buy in the US (if they're even made there).

Some businesses just don't have a choice, or they'll go bankrupt.

Yes, but we see that the "raising" logic is in place. Whoever stops raising the tariff "loses face". So they'll raise them until... infinity?

> So they'll raise them until... infinity?

We got to follow the formula. So when US no longer has a trade deficit with China, we'll be back to 10%.

Not an economist but doesn’t it also depend on what you think the rest of the world would think about the dollar in the future?

Meanwhile, Apple stock is up 3.5% at the time of writing. What gives? Has Wall Street already priced in the "104% is so unreal, there has to be some kind of deal or exemption in the works"?

The damage is bad but also entirely voluntary, and there are a lot of people who really want to believe that there is some kind of complex strategy where this is a negotiating ploy which won’t be around long enough to really change things.

There's no 5D chess strategy, Trump literally just loves tariffs and thinks they actually work. He's been talking about tariffs since the 80's. Last year he even said that "tariff is the most beautiful word in the English language".

It's -20%, and this is without counting the fact that the USD itself is weakening.

So all the savings that were somehow stored in USD are getting eaten, as you can buy less with them.

The thing is, Trump needs some exit ramp for this. He's incapable of admitting fault, and will keep going until something catastrophic happens - only to throw other under the bus.

China knows how to play him, he's an open book. Predictable as the clock.

But he can't end this himself, someone else has to pull that lever and take the blame - unfortunate as it is.

>He's incapable of admitting fault,

But he's not incapable of reversing course, while claiming he was right before, and also right now. He can totally do a "deal" that achieves nothing, while claiming to be the smartest negotiator. Just look at the deals with North Korea last time around.

See also his replacement of NAFTA last term with something very similar but a different name.

Off ramp is he tries to double it, is declared mentally incompetent by his handlers and is replaced by JD.

The off ramp is some "deal" that Trump can take credit for, even if it's bullshit. China doesn't seem to want to play that game this time, though.

Xi cannot afford to look weak, but also doesn’t need to worry about the next election and has a couple hundred other countries to trade with. I think they’re making the fairly rational decision that appeasement will lead to future attempts and are betting that Wall Street has enough influence with Republicans in Congress that they’ll stop delegating tariff powers to the executive branch. You only need a handful of them to break ranks to make this end, so it’s not a bad bet.

It's highly unlikely that enough Republicans will break to form a veto proof majority in Congress. MAGAs grip on the party is too strong. It's literally a cult.

It’s not easy, but there’s enough money on the line that I would expect it here rather than anywhere else, and the longer it goes on the more Republicans in Congress are going to be afraid of affirmatively voting to continue it. Right now they’re acting like bystanders but if a few people are willing to let a bill ending the proclaimed emergency out of committee, they’re forced to own the damage.

How do we expect Trump to respond to this? 200% tariffs? He's already shown that the only thing he knows how to do is fire off even more tariffs. He expected the world to just capitulate to him.

IIRC last year Trump threatened to tariff PRC at 150% if they invaded Taiwan. I guess at 200%, PRC would invade to get a 50% off.

Hard to see how this benefits anyone. Or who's going to be hurt more by it. America's tariff move under Trump is a symptom of mass psychosis. But I think China's response is a huge gamble that the psychosis can be broken with careful application of pain - before that pain hurts China even more.

Personally, I buy almost no consumer products, and it's true that most people in the US who backed Trump are debtors and consumers who are going to see prices go through the roof. But there is no guarantee they will blame their leader. The cognitive dissonance implies they will blame anyone else. There is some hope that they'll revolt against Trump if things get bad enough, the way there's some hope for democracy in China, I suppose. But at the same time, I don't know that China's aggressive response is going to politically move things in that direction, because it's so easy for the nationalists to rally around the flag - regardless of the economic pain they're experiencing. China itself knows this and leverages it with its own nationalists. And this response is going to cost China dearly. It may be counterproductive. Then again, I think it's a bold move, and if I were in China's position I think I would have to try the same and wait to see how long it takes for America to cry uncle.

> I think China's response is a huge gamble that the psychosis can be broken with careful application of pain - before that pain hurts China even more.

Politically, as a dictatorship, China can withstand pain longer than the US, which is not (yet) a dictatorship, and even if Trump himself can't be moved, Congressional Republicans are nervous about the 2026 midterm elections.

> most people in the US who backed Trump are debtors and consumers who are going to see prices go through the roof. But there is no guarantee they will blame their leader.

The people who love Trump are never going to be moved, but Trump's victory in 2024 required nonpartisan swing voters who were frustrated with the economy under Biden as well as hard-core supporters. If the economy actually gets worse rather than better under Trump, then the swing voters can easily swing the other way in 2026 and 2028.

Swing voters are always underestimated. But can the left run moderate candidates that appeal to the Bill Ackman types? I wish they could but I suspect they can’t and won’t. Their recent track record is how we’re here.

I don't know. I hold out hope that the Democrats are capable of thinking and learning, but their actions after the 2024 election haven't given much evidence of that...

> But can the left run moderate candidates that appeal to the Bill Ackman types?

What type is that, billionaire hedge fund managers voting in a solid blue state? Who cares? The voters who matter are in Wisconsin, Michigan, Pennsylvania.

In general, swing voters are nonpartisan, not "moderate". Trump is certainly not moderate, yet they voted for him anyway. Indeed, polls show that independents prefer Bernie Sanders over any Democrat.

Partisans want to define all politics on ideological lines, but that's not the way nonpartisans think and behave.

The billionaires probably backed Trump because they loved the tax cuts of his first administration and were expecting basically more of the same. Tax cuts and deregulation, the standard agenda of that type. (A Biden and/or Harris administration was likely to result in higher taxes for them and more regulation.) They failed to anticipate what Trump would be like unrestrained, emboldened by a popular vote win, unburdened by reelection concerns, surviving impeachment and felony conviction, surviving an assassination attempt, and having purged all dissenters from his party and now from the federal government. Trump is probably feeling like king of the world at this moment, as if every other country will bow down to him (and many will).

In concrete terms, America crying 'Uncle' equates to Trump losing so much popularity that he becomes a nonentity. Trump wields power only to the extent the Republican establishment respects and fears him.

The tariffs are already showing dents in Trumps personality cult. More Republicans are standing up to him over this in the Senate, house will follow as it becomes harder to deny he's not a great businessman or negotiator.

Retaliating is the correct move from other countries, groveling to this kind of leader will just lead to getting bullied more in the future. And unlike with Russia you can almost count on him losing power if you push back.

/5d chess mode on

What if Trump wants and expect some kind of coup attempt ("losing power"), a kind of Reichstag fire, in order to consolidate it?

Trump's action appear self-destructive when you consider them in the context of normalcy, but if you consider that he intends to catapult the US outside normalcy, these actions might make sense.

"Losing power" in this context looks like Republicans in Congress not voting in lockstep to back Trump. It's hard to make a Reichstag fire out of that. (I mean, Trump could yell at his base that "They're not backing me 100%! That's treason!", but that boils down to "I am the state", and I suspect that at least some of his base won't buy it. I don't see, short of a real shooting civil war, how he can turn this into consolidating power.)

I agree Congress reasserting power over tariffs (or budget) is not going to give Trump any leverage like that.

But I do think he could, and would, try to make a "Reichstag fire" over any kind of mass protest moment. During the BLM protests, he wanted to send the military in to take over Democratic-led cities. He toyed with declaring martial law if protests related to the 2020 election became violent. Any whiff of clashes with counterprotestors, or with police, or even property vandalism... any of that would be just the excuse he's looking for. The question isn't whether he'd try to use the excuse to grab more power, it's whether the people around him would push back like last term, or cave in and let him do it this time.

> But I think China's response is a huge gamble

It isn't. Trump got the math wrong. China and the rest of the world has a trade deficit with the US not the other around (if we count properly).

Does Trump not understand that US' position is the fragile 1? A lot of people can't live without necessities e.g. from China. Most people can live without US goods e.g. Netflix.

China has proposed banning US films. China licenses huge amounts of American drama too. Watch Hollywood crash.

Sports like NBA and Major League (baseball / soccer) are all exports with advertising, TV rights, etc. These were big in China.

The US education industry relies on foreign students as a major part of their funding. A lot of them are Asian.

China has a real monopoly on things like fireworks. There is no alternative.

Let's crash billions in the gaming industry too. Electronic Arts, Epic Games, Microsoft, etc.

The list goes on.

Trump is only in power because millions of Biden voters stayed home. His tariff power is not constitutionally specified but delegated by the legislature, who can withdraw it at any time. I think that China, and other world leaders, believe there’s a good chance that a handful of Republicans – who were already having to hide from their constituents – will be willing to join Democrats in repealing or restricting that delegates tariff authority by the end of the month or so. This would certainly be plausible given how their party used to pride itself on free trade and is heavily funded by the Wall Street guys who are eating huge losses right now, not to mention the non-trivial percentage of their voters are watching their retirement portfolios and home equity shrink.

> "Trump is only in power because millions of Biden voters stayed home."

From a detailed post-election analysis posted on HN a few weeks ago (https://news.ycombinator.com/item?id=43400172): "The reality is if all registered voters had turned out, then Donald Trump would’ve won the popular vote by 5 points [instead of 1.7 points]. So, I think that a 'we need to turn up the temperature and mobilize everyone' strategy would’ve made things worse." Anyone who still thinks that there's some latent segment of the voting public that's on the Democrats' side needs a wake up call.

It’s not that simple. As Shor noted, most of the weak Democratic voters were motivated by economic concerns (Gaza was also a big factor for roughly a third, too). The fact that they stayed home in 2024 doesn’t mean that they will next time, but it absolutely means that Democrats need to give them a convincing reason to show up. His analysis of social media trends is similarly incomplete: he identifies the degree to which it’s influential but misses the billions of dollars plowed into promoting right wing content, just as the age gap analysis sees a real phenomenon (younger voters aren’t as likely to vote for Democrats) but misses whether the explanation is that they’re ideologically conservative or economically more precarious and swimming in a sea of propaganda blaming Biden for the pandemic fallout, which has affected every incumbent party around the world. Again, that doesn’t mean that the Democrats don’t need to do a lot of hard work but I think it’s a mistake to see it as “they’re all movement Republicans” rather than “we need to focus on economic inequality”.

> America's tariff move under Trump is a symptom of mass psychosis.

Mass? It's a symptom of one man. (Yeah, a bunch of others voted for him. You can label that "mass psychosis" if you want. The tariff whiplash is not driven by those people, though.)

Oh I see a lot of Trump supporters actually call things bidenflation and that this is a pain to fix it.

Off topic but the whole world is kind of looking for a scapegoat / just let's things be and give blame to anybody but just remove tariffs. Some guy named bloomberg twitted a rumour and that was the craziest market action I have ever seen.

It's sound absolutely bonkers, it truly shows the amount of influence just reach has.

And reach is given by algorithms and big corps.

If your money can go up and down legit based on rumours in stocks, i genuinely don't feel much optimistic though the times are dire.

It's really funny, like I can imagine far good things happen more likely even when people would retaliate. Think universal basic income or god forbid, giving american healthcare.

Like doge etc. are literally doing things which cost them money and reputation when they could've just sat and do nothing.

I think this is part of some 1984 plan where we all pretend we are in war with each other for authoritarinism and polarity.

It sends me shivers that the things I am saying are making sense, they should be fiction, but sometimes reality is more harder to believe than fiction.

The times are bleak. We all really need to put aside our capitalistic needs. there is a 60 percent chance of us recession according to many betting markets/ goldman sachs.

If anybody is reaching/wants help. My hands are open to help anybody, it's seriously a time of crisis, times of crisis don't start with saying attention this is one of the worst times. Though i am just a 16 year old boy in india. I just want people to really forget capitalistic needs to help the needy for this one time. I don't want it like the 2008 crisis that the bankers who caused it would just get a slap at the wrist and the people suffering would have no one to look after them.

I urge the world to create peace. Nobody wins in wars

Not doing what China does is a massive gamble too - Trump and America will bully for more and will lie while doing it.

Yes, conservatives will blame everyone but the perpetrators inckuding themselves. But, it does not matter, because if they will get what they want, they will come back for more and cause more harm.

Nice work blaming the victims and trying to push them into passive acceptance of what is done by perpetrators. In reality, when you bully, others have choice between letting it or retaliating. And letting it happen has huge risks. Everyone else is opening themselves to more bullying ... but that is better for Trump, so you do not care about those risks.

> Nice work blaming the victims and trying to push them into passive acceptance of what is done by perpetrators

I don't think the person you were responding to was necessarily blaming the victims.

S/he's just pointing out that China imposing tariffs are self-inflicted pain just like the US imposing tariffs--tariffs cause some amount of self-harm.

Even The Economist said the most 'rational' response from Europe was not to impose counter-tariffs, but simply continue on as best they could without them and let the majority of the pain fall on the US.

But The Economist (and the person you responded to) also acknowledge that there are other factors at play beyond economics (e.g., national pride).

National pride is part of what got Trump elected and it's something that China has to incorporate into its decision making.

The person I responded to did not cared about China situation or self-harm - they analyzed it only in terms of how America responds. Note that the risk of "and America will attack us more and more" was not present at all. The risks were expressed only in terms of "China will not succeed in fixing America". Which, I really do not think is China goal at all anyway.

> Even The Economist said the most 'rational' response from Europe was not to impose counter-tariffs, but simply continue on as best they could without them and let the majority of the pain fall on the US.

Isn't it always the pattern with Trump and conservatives in general? The most rational person is supposed to let them bully you without response. Again and again and it never works. Their aggression and harm they cause is just going up with each cycle. And it is because what is conventionally called "rational" in this context amounts to "be nice submissive enabler else their actions are your fault".

American tariffs are made in fairly dumb way. They still harm Europe, China and everyone else great deal. Surely it is possible to create reciprocal tariffs that will actually harm America more. Even America could have done tariffs in smarter way. And the sooner Trump supporters are actually harmed, the sooner harm to Europe stops.

> Isn't it always the pattern with Trump and conservatives in general? The most rational person is supposed to let them bully you without response. Again and again and it never works.

In case I wasn't clear before ... your response to me is preaching to the choir.

Interesting times intensifies ^2

Trump caved as expected day after EU passed a countertariffs resolution. Exactly what I predicted 2 days ago. https://news.ycombinator.com/item?id=43613377

Reply on news.ycombinator.com