Cut the bull. Generally you get what you pay for. China does both. You can get crap for a penny but you can also get high quality stuff which costs more. Both made in China.
First, it has a command economy. It's much more equipped to handle this in keeping factories afloat and people employed and housed.
Second, the US is ~15% of China's exports and a lot of those exports will continue even with tariffs. Some by diversified supply chains (eg "laundering" Chinese made goods through Vietnam) or the Chinese goods are so low cost that the tariffs will be paid (eg a milk carton represents a small percentage of the cost of a carton of milk).
Third, the US will feel the inflationary effects. China will not.
Fourth, if China needs to raise funds they can and will sell US treasuries, spiking yields, hitting the ability of the US to issue further debt as well as borrowing costs for homeowners and businesses.
Lastly, the rest of the world is on China's side. This whole tariff fiasco may be the largest self-own in American history. Additionally, it's undoing generations of American soft power globally.
The economic outlook in China isn’t great right now. The US and China are playing a game a chicken, not sure who blinks first.
Nobody said that it would be painless for China. Just that
1- it will be less painful for China than the US
2- China is more resilient against this particular kind of stress because they have a command economy and have more control on the population.
If the US blinks and caves, it does not matter whether China got a scratch, it’s still going to win the war. And Covid taught us that something would need to be quite dire for China to blink.
Also, it got lost in the noise, but right now there is still a blanket 10% tariff on anything that enters the US, and presumably these 10% can turn to much more when Trumps feels like it. It’s not the US against China, it’s the US against the world.
But I was told the ports were empty and the shelves would be bare. That implies almost all of that 15% being shut down, doesn’t it?
> Second, the US is ~15% of China's exports and a lot of those exports will continue even with tariffs. Some by diversified supply chains (eg "laundering" Chinese made goods through Vietnam)
Sure. 15% of their economy either just disappears, gets dramatically more expensive (laundering goods cost money too) or they have to reduce the prices so they can sell their extra 15% of goods to the people that are already buying them.
Keep in mind that China is also only around 15% of US imports too so if 15% is negligible, it's negligible for the US too.
> or the Chinese goods are so low cost that the tariffs will be paid (eg a milk carton represents a small percentage of the cost of a carton of milk).
The tariffs are a percent. Just because the cost of a single item is low doesn't mean the cost of the tariffs paid by the company is going to be low. Low cost goods are profitable because they sell in bulk. It's going to hit their bottom line in the same way it hits everyone else. You've obviously not given much thought into that point.
> Third, the US will feel the inflationary effects. China will not.
China isn't immune to 15% of their economy disappearing. Selling of an extra 15% of the goods in your warehouse at discounted rates while you scale down your factory production 15% is bad.
> Fourth, if China needs to raise funds they can and will sell US treasuries, spiking yields, hitting the ability of the US to issue further debt as well as borrowing costs for homeowners and businesses.
That's a good way to permanently remove 15% of their economy.
> Lastly, the rest of the world is on China's side. This whole tariff fiasco may be the largest self-own in American history. Additionally, it's undoing generations of American soft power globally.
That's not relevant at all. What's relevant is who the American people are on the side of. I'm not saying Trump has unanimous support or anything but he doesn't care at all what Switzerland thinks of tariffs on the Chinese.
Your #4 doomsday scenario is bad for the EU given the role that the US plays in their defense and as trade partners. WTO countries will be urging both sides to come to an agreement.
In the case of a hypothetical trade embargo or at least punitive tariffs, who would you rather be: the buyer of insulin or the seller of insulin? The seller can be propped up by the government or loans. The buyer? Well, they need insulin. There's a natural imbalance here.
Us not buying Chinese goods has a ton of downstream effects like what if you need parts to repair trucks and those trucks are then out of service so can't haul stuff around?
> China isn't immune to 15% of their economy disappearing.
It won't disappear. It'll diminish. It'll get diverted through third countries. In some cases, the tariffs will be paid. China will have a reduction in exports. The US will have increased inflation, shortages and supply chain issues.
> That's not relevant at all.
It's 100% relevant. Everything is sentiment based. If the world is on China's side, then they'll look the other way when China buys oil and gas from sanctioned countries, for example.
> Goldman Sachs in its latest China forecast, reports China's GDP is about to fall off a cliff: the bank now expects China's Q2 GDP growth to crater to just 0.8% QoQ from 4.9% in Q1.
[0]: https://www.reuters.com/markets/asia/view-chinas-q2-gdp-grow...