The problem I see is, that when there are huge tariffs coming some really big market players do not like this at all. The last time it was installed against China the market tanked 25% drawdown around end of 2018. So that is my fear that market will kind crash when huge tariffs will be implemented. Longterm there is no one winning and it is a loose loose game only, so I understand that some of biggest players are selling across all sectors. From an economic standpoint there are no two opinions on big tariffs or ? Everyone is saying it is loosing game only for everyone, so what is the logic to replace income taxes with tariffs, if that is possible (which is also questionable) ? So I do not get it what is the value of implementing tariffs then. Why is that a prudent decision to do huge tariffs or any tariffs at all ? Are there no other weapons available to reduce unfair government practices when China government is supporting private economy with a lot of money, which can cause unfair competition ? I mean if both sides are loosing because of installed tariffs what is the benefit then for the USA ? Anyone else has a different opinion on huge tariffs ? What is your view on the equity markets when some bigger tariffs will be installed (shortly) ?
From Trader's perspective : The opportunity I see is, that when there are huge tariffs coming and traders do like this. The last time it was installed against China the market moved 25% around the end of 2018. So that is the opportunity for the market to move down massively when huge tariffs are implemented. Long term there is some winning and some losing and it is a gain-loose game, so I understand that some of the biggest traders are on high alert for trading opportunities. From an economic standpoint, there are no two opinions on big tariffs or? Someone is saying it is a gaining-loosing game for everyone. So what is the logic behind replacing income taxes with tariffs, if that is possible (which is also questionable)? Does anyone else have a different opinion on huge tariffs? PS - there was too much strange English grammar in your write-up. Please take your medicine.
It's not so much about tariffs as it is about fair trading & competition conditions: if your adversary produces goods with 100x cheaper labor, which can almost be seen as slave labor (just look at how some chinese workers still live, and under what circumstances they work), and additionally receives gov. subidiaries, as it all follows a gov. plan then this is a huge problem! When it's about simple products you may deal with it, but not when it is about high-tech products & goods. The US gov. tries to establish an even field where US goods are competitive; otherwise jobs are being lost and shipped over to low-labor countries. Tariffs help in either achieve the goal of stopping this development, letting own goods be produced and sold (domestic as well as abroad), or at least collect money from goods, that are still being produced way below US labor costs. It all comes down to the longterm effects, and whether you are ready to accept some short term disadvantages (as domestic producers have to adjust). If you cannot accept those, then the question might be, on what side you stand. You see a lot of japanese cars in the US, meanwhile you do not see that many US cars in Japan: So the answer to where most japanese stand, is obvious. They want their economy to prosper, so they a) buy mostly japanese cars b) do anything to export their products to other developed countries.
If this development is not stopped immediately from China, it is like shooting in your own food when installing tariffs for the longer term on either side, you agree ? I mean I have found no (economic) source where tariffs are a good thing long term. I understand your point but should not there be other instruments used to stop China fleeding the private economy with government money ? I mean if you harm yourself with tariffs, who is the winner in the end then ? I understand all the motivation but the instrument used is the wrong one from any economic view, tariffs are only a harm on both sides. I have not found any economic book where it is said that tariffs installing is a good thing.
The only viable long term solution is for the US to heavily invest into automation and get the per unit cost down.
So, did the US harm itself in 2017/18, installing tariffs on goods from different countries? I wouldn't say so. It's not that the US gov. puts tariffs on everything, like simple to produce goods. It is about those economical sectors, that are either important to the whole economy and its development or are of special interest (high-tech sector). Almost anything (for ex.) China builds and sells to the US, can be produced by the US itself; but no one wants to put tariffs on simple goods. It is about producing high-tech / industrial products by yourself (like EV cars), and selling them to domestic and foreign clients. And, it is about forcing your adversary to pay his workers fair wages and treat them with standards. As I heard now, the Biden Administration let China buy advanced IBM computers or chips, which Trump had declined. That is another point that proofs a mishandling by the Biden Administration.
Also China has now a big problem on their own real estate market. There is no need to harm them further. Their whole economy is crashing without the government support. They are forced to support the real estate market with many billions, like they announced recently. It is not that they liked to do it, otherwise there would be real estate market crash and then their whole economy would crash too in a domino effect. China has some bigger problems right now. With tariffs installed from the USA side it makes it only worse. I mean if China breaks totally it is not in the interest of any large economy unit regardless USA or Europe or anyone else, or ?. In the end everyone is acting together in the world. If one big economy unit is going down all the others are affected too. It depends on the degree of course. But if everyone is doing good, it is also good for everyone. We are all sitting in the same boat.
The (maybe) biggest problems is, that China / or the chinese gov. refuses to pay many of their manuf. workers a fair income. And obey some intl. standards; or at least standards that are mandatory in their industr. sectors. While US / the western hemisphere is doing all that. That are slave-like producing environments, that are forced upon the workers.
1. The market fall -25% end of 2018 because of tariffs. 2. Now tariffs on everything are considered. Also from Europe and very big ones on China. 3. Do you say that the US can grow on the expense from other large economic units, or do you not see that we are all sitting on the same boat (worldwide) and each other affects everyone ?
Don't know what I can say to this, honestly. It's about each one having its fair share, including industrial / manufacturing jobs in the USA. What some neo-liberals see as a downside, is an upside in longterm, as that way the economy caters for everyone: The engineer, who does his work at the computer, but also the industr. worker, who produces the good, and other blue collar jobs. You cannot live from services alone. In the US, it has a share of 79%! Which is astronomous. https://research.stlouisfed.org/pub...03/22/what-to-know-about-the-rise-of-services We won't get poor by (at least) every continent having its own production facilities; it's a fair share to not over-raid your neighbor with low-wage / cheap goods & products.