QUOTE(Smurfs @ Aug 10 2018, 09:03 AM)
Tariff, or tax, are used to restrict imports. US has been in trade deficit for decades. Donald trump is a business man, he wants to make america great again. So he wants to stop fund outflow from the country by imposing tariffs on china.
22% of US import is from China. By introducing tariff, it can protect domestic industry and jobs. Import goods from China is more expensive(due to tariff) and hence consumer from US may consider may switched back to product made in US. Coupled with tax cut, he wants to make America job market great again. But for those export industries in US might facing job cut. On the other hand, US fiscal deficit is ballooning. If they issuing more and more treasuries to finance government spending, more supply, higher yield; Money from stock market flow to treasuries, bear market starts.
China on the other hand, has export almost 19% of total to US. If US impose tariff on China's product, it will affect China's export industry significantly. May caused Yuan currency devaluation (which already did since Trump's tweet) and less attractive. Hence to protect themself, China have to impose tariff on US Product as well. However, devaluation of Yuan may help to boost china's export to other countries. China is studying how to use "Yuan devaluation" as a tool in trade spat.
Both of them want to protect their own country. Who will win? i dont know. But, i am certain that it has created a massive shock to stock market worldwide due to investor dislike uncertainty.
Not an economic expert, blow water only
Haha... yes we not eperts lah.... just talking chickens and what nots...
I wanna blow more steam on US imports from China, I mean US the consumer and lets talk from a business perspective ...
With the Trump Tariffs, the Chinese goods are some 20-25% higher (are the figures right?).
I would break it into 2 group buyers, ie manufacturers or end users.
For manufacturers (buyers of chinese raw materials or component parts), the buyers are either...
1. Looking for cheaper alternative...
a. buying from a local source or getting someone to produce locally.
I believe the manufacturers bought from the Chinese cause they were cheaper ... now with this new tariff, would the manufacturers be able to source from US itself? Or can it be produced as cheaply? If can, would someone want set up plant to produce these component parts? (this one is tricky... cos the Americans have to account for the risk of Trump reign as a president and once he is out, will the tariffs stay or be removed?)
b. sourcing from another country.
This is logical but then.... I am left scratching my head.. Trump, proclaimed the trade deficit was too high. So when the manufacturers buy component parts from another country, it's just a shifting of source, as the trade deficit still remain high and in fact, it COULD EVEN END UP HIGHER. For example, say US don't buy from China this component part. The next best source (price) is Turkey. But the Turkish part is say 15% higher (15% still cheaper than the tariff imposed) than the price they used to buy from China. So how would it help reduce the Americans trade deficit?
c. the manufacturers buy like normal but with higher prices.
which means, these American factories would have to bear the higher cost or they pass on the American consumers... either way, not a good picture ...
Some links on the impact on Americans itself...
This US TV manufacturer which relied on Chinese component parts...
https://money.cnn.com/2018/08/08/news/compa...cuts/index.htmlOther reading links on how things are felt locally...
https://www.10news.com/news/inside-san-dieg...ng-felt-locallyThis car part manufacturer,Magna says they will take the tariff hit... quote ""If the tariffs stay the way they are – and who knows if anything more gets ratcheted up in China – it's about a $60 million a year hit,"
https://www.cnbc.com/2018/08/09/magna-inter...pportunity.htmland the story of Pegasus...
https://www.theguardian.com/business/2018/a...ade-war-with-us 
May 22 2018, 09:16 AM
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