Ok, admit it, I have been playing STO so I couldn't reply until now.Kane Starkiller wrote: ↑2018-06-15 06:21am
It's not that $30 billion of trade is now gone it's that the items currently under increased tariffs encompass $30 billion of trade. I don't know how these tariffs actually affected China and US and whether the effects are symmetrical. In any case at this point it's a fraction of $30 billion not actually $30 billion and it's not significant for US or China as a whole.
However US is not escalating the exact same tariffs for every single country in the world. Just yesterday Trump approved tariffs on $50 billion dollars of Chinese goods. In other words US is in a position to first increase pressure on one country and then move on to another. So unless US decides to simultaneously increase tariffs at the same rate against every country in the world your scenario simply won't happen.
1. I know its not the $30 billion gone, its just tariffs on that value of trade. But unless you have a crystal ball, its most probably easier to assume they are affected equally on either side if you're going to argue who is less exposed.
2. The US might not be increasing tariffs at the same rate, but they are targeting several nations / trading blocs with large economies and who engage in decent amount of trade. So far China, EU, Canada, oh and as I just found out, India as well.
I don't see why you need the same intensity of tariffs. But lets say, the US focusses mainly on China and less on the EU. Lets say 99% of the value of goods targeted by tariffs is against China. China becomes more exposed to the US, because even if the Chinese retaliate the same amount on US goods, its still a larger percentage of their GDP as China has a smaller economy (assume for a moment that extra 1% isn't enough to tip things in China's favour). However those countries that make up the other 1%, will certainly be less exposed than the US as that 1% is going to be a small fraction of their economy, while the US faces a value 100 times that. All this does by focussing mainly on one trading partner, leads to the US being less exposed than one of its trading partners, not all of them. Now you might say, well the US can just focus on one at a time. Sure they can, but that's not what they are doing. I am not sure why they would do this, when Trumps advisors eg that idiot Navarro actually thinks if you just cut down imports, you'll have GDP growth because you subtract imports when calculating GDP. So why would they stop at one country. (Navarro doesn't realise you subtract imports so you don't count the value twice. Its like saying why do I have to subtract cost from revenue to work out profit, why can't I just add it to revenue? Or to take that conclusion the other way, since I have to subtract cost, I can get the cost down to zero by just not buying the raw materials for my final product. ).I do think that if EU looses US as an export market EU will have a surplus production and will certainly not be in the mood to accept the surplus goods that China will also have. In any case this scenario depends on US simultaneously escalating tariffs against both EU and China at the same intensity.
As I point out, countries who have proposed putting retaliatory tariffs are China, EU, Canada, and India.
Add on - and in google I found out Mexico has also put tariffs on the US despite being even more exposed than Canada on US trade.