As part of the United States’ continuing response to China’s theft of American intellectual property and forced transfer of American technology, the Office of the United States Trade Representative (USTR) today released a list of approximately $200 billion worth of Chinese imports that will be subject to additional tariffs. In accordance with the direction of President Trump, the additional tariffs will be effective starting September 24, 2018, and initially will be in the amount of 10 percent. Starting January 1, 2019, the level of the additional tariffs will increase to 25 percent.
The list contains 5,745 full or partial lines of the original 6,031 tariff lines that were on a proposed list of Chinese imports announced on July 10, 2018. …
Implied US tariff overall tariff rates, from GS:
Source: Hatzius et al., “The Trade War: An Update,” Goldman Sachs June 25 2018.
Haven’t seen the Chinese back down so far, as some sanctions enthusiasts have predicted. If the demand is for China to give up on Made in China 2025, I’m guessing the Chinese are not going to back down in effect.
The justification is specious.
Does no-one in this administration realise tariffs are a tax on imports?
Will the Chinese retaliate? you betcha
Who will lose? US consumers.
So, do the Communist Chinese view foreign goods like opium?
And, are they justified to steal and cheat others out of their most valuable property?
Talk about specious.
“do the Communist Chinese view foreign goods like opium?”
How utterly insulting. Yea we know you hate Asians but cut out this intellectual garbage.
are they justified to steal and cheat others out of their most valuable property?
And therefore we need to punish American consumers. Brilliant.
2slugbaits, you want the Chinese to capture, through theft and coercion, good future American jobs, just so you can work at Walmart buying cheap Chinese goods.
Brilliant!
You are assuming we are incapable of producing quality goods at reasonable prices. PeakTrader turns from insulting the Chinese on baseless charges to insulting American workers. Hey fellow – go back to making sure banks fail. It is what you do!
PeakTrader you want the Chinese to capture, through theft and coercion, good future American jobs
And tariffs are going to fix that???
2slugbaits, you want to start modestly, because that may be enough.
You mean China cheats by giving you pieces of paper in exchange for your solid goods?
If you have a problem which you believe is outside the WTO rules then you bring on a dispute so the WTO x\ can rules on it.
That is what a conservative would do because conservatives a fervent supporters of a rules based trading system.
China has referred the USA’a actions to the WTO. I am unaware the USA has done the same.
It seems, China is very slow to comply with WTO rules or operate outside those rules.
https://ustr.gov/sites/default/files/files/Press/Reports/China%202017%20WTO%20Report.pdf
I guess, the Chinese operate in terms of centuries.
PeakTrader: And here I thought China’s accession to WTO only occurred in 2001, 17 years ago. Silly me.
Peak,
WTO seventh Trade Policy Review of China 2018
https://www.wto.org/english/tratop_e/tpr_e/tp475_crc_e.htm
“Members commended China on its recent reform initiatives aimed at broadening market access and investment opportunities, the greater involvement of the private sector in the economy, and its commitment to fossil fuel subsidy reform. Members appreciated China’s ongoing reform of customs procedures, such as further use of single windows, and commitments in the Trade Facilitation Agreement. Regarding the TFA, Members encouraged China to implement all its category B commitments within the specified transition period. Several Members commended China on the Belt and Road Initiative and viewed it as an avenue for mutual cooperation and growth; some invited China to follow international best practices and adhere to a level-playing field for trade and investment opportunities for all. Members also commended China’s recent announcements of liberalization in financial services and tariff reductions in the automobile sector. China was congratulated for providing far-ranging preferences to products from LDCs. Many Members expressed appreciation for China’s support and assistance to developing countries in areas such as Aid for Trade.”
“The justification is specious.” Agreed on all counts. But expect the Usual Suspects to declare we are “winning” and this is another Trump poker play that will lead to free trade.
It will not just be US consumers that lose. As a result of fewer dollars in the hands of those who buy our exports, we will export less.
Which hurts not only Iowa farmers but also Boeing. It is PeakTrader’s plan – impoverish everyone and then buy their stock cheap.
Can someone verify if there is some old English saying about “birds of a feather, fly together”??
https://goo.gl/images/5PSLt2
https://www.washingtonpost.com/national/the-latest-ex-senator-gets-15-years-in-sex-trafficking-case/2018/09/17/0e896f82-ba9a-11e8-adb8-01125416c102_story.html
In other news – FEMA Director Brock Long is in legal trouble:
http://theweek.com/speedreads/796479/investigation-fema-chief-brock-longs-lengthy-commutes-reportedly-referred-federal-prosecutors
“The Department of Homeland Security’s inspector general has referred an internal investigation into Federal Emergency Management Agency chief Brock Long’s frequent commutes to North Carolina to federal prosecutors for possible criminal charges, The Wall Street Journal reports, citing people familiar with the investigation. Long and two other FEMA employees may have broken as many as six laws by traveling from Washington, D.C., to Long’s home in Hickory, North Carolina, in a caravan of government vehicles. The aides who traveled the 400 miles with Long for his long weekends at home stayed in hotels, at taxpayer expense, the inspector general’s office found. Long has spent about 150 days in North Carolina since becoming FEMA administrator in June 2017, the Journal reports, and he continued his government-subsidized commute after DHS lawyers warned him it was illegal last year, prompting the inspector general’s office to put him under surveillance.”
Now had that caravan of government vehicles been made available to Puerto Rican relief from Maria, maybe that water could have been delivered. Oh wait – Mr. Long’s vacations are more important than saving Hispanic lives. Never mind!
Long overdue move by one of the most savvy presidents this nation has ever seen. Who didn’t come to Washington so much with main priority of growing the economy. Though formidable results on the economic front as have already been achieved — and as will further be achieved when the long-running gravy train to surplus trade partners is taken away — were preliminarily necessary to get more of the public behind him to enable society to weather the shock that’s coming. From the beginning, Trump’s raison d’etre was to drain the swamp! Necessary because corruption is by far the nation’s gravest economic impediment, worse even than the federal debt. Declassification of documents revealing complicity of rogue elements of the government in this web of corruption began just yesterday. The curtain is now rising.
More comic relief from Comrade “17” of QAnon. I especially like the part about Trump draining the swamp. Hilarious. And that part about Trump being “the most savvy” president was a real knee slapper. Please post some more of your humorous posts. My only regret is that they will all end in February with the coming of the promised Rapture.
Without the trade, current account deficit how are the republicqans going to finance the massive federal debt they are building — the deficit is already back to 4% of GDP.
Anon: I have a very different view of the economy than most here. PeakTrader and Corev are amongst the exceptions. My finely-honed view was constructed over years by shedding academic baggage that didn’t work, then digging deep for what to replace it with, all baptized under the fire of forecasting the economy and interest rates as a feedback corrective device. This is called science. Catching the top of the cycle has been particularly important. You simply would not believe me if I told you the scores of successes I’ve had, many contrary and often directly opposite to the consensus view. So I won’t even go there. Where I will go is to say that I think quite differently than textbook macro. And have done so ever since since taking Principles.
I understand your question. However it is too narrowly formulated in the current environment and context of a president who indeed does understand the economy. Of course if your belief system cannot comprehend this, you will likely shut down right here. I shall suppose you are open minded enough to follow along further. Quite some years ago I began to formulate the economy’s problems in terms of growth drains and impediments. As my understanding of the economic sphere — and oh so importantly the larger sphere that surrounds and impinges on the economy proper — broadened and deepened, corruption rose to the top as the number one impediment to growth. Now of course if you haven’t spent time and thought on this, you can’t really have a well-formed opinion about it. This is not a criticism. I would say much to my surprise — but it really wasn’t a surprise at all as in fact I predicted Trump’s victory a month after he announced — Trump went on to win. Since my view of economics is different than yours, it is also consistent and in fact was the case that I was in sync with every one of his economic policy proposals. Including and especially on the trade deficit. Over time after he took office, it gradually became clearer and clearer that he did indeed intend to drain the swamp. Slugs above ridicules and scorns this. Sorry, I can’t be responsible for Slugs’s ignorance on this matter. What I said in my comment above will prove to be right. As the swamp gets drained, corruption deflates. Since in my book corruption is the number one impediment to growth, the logic is that growth will then pick up even more. The denominator of debt-to-GDP will operate benignly to shrink the problem, albeit slowly at first and possibly only just slow the rate of increase in the debt ratio rather than outright turning that ratio down.
Now like it or not, observe how this president has gone about things. He has operated on many policy fronts to revive the economy from the trend-like torpor it had fallen into under Bush-Obama. There can be no mistake about his intent — drain the swamp and grow the economy for all Americans. Anyone who can’t see that I can’t help. That includes most commenters here. My point being that as corruption collapses (the hard fact of 13,000 sealed indictments attests to that coming), Trump will not only have juiced the economy another notch with a tool the economics profession can’t even conceive of — he will then be able to move on to the next biggest impediment, the debt, which is your concern. And my presumption is he will apply the same technique of multiple policy changes to resolve that next problem. As the debt problem is a different one than the first, the policies he addresses it with will, of course, be different too. Some of these will not be in the textbooks and they will make all the difference. Want to understand this better, then begin by understanding Trump better. Those who have vitriol against this man, have their rational faculties so occluded they don’t stand a ghost of a chance of following or understanding this brief but clear explanation to the very important question you ask.
@JBH I somehow guess trump would make America more alike China in the end.
JBH (the hard fact of 13,000 sealed indictments attests to that coming)
I didn’t know Trump had that many friends and family members.
JBH is Bagdad Bob??? Hahahaaaaaahaha thats pretty funny.
The question really is: Does China proper due to unfair trade practices? The USTR did a study which showed that yes, China did indeed practice unfair trade.
” Section 301 sets out three categories of acts, policies, or practices of a foreign country that are potentially actionable: (i) trade agreement violations; (ii) acts, policies or practices that are unjustifiable (defined as those that are inconsistent with U.S. international legal rights) and that burden or restrict U.S. Commerce; and (iii) acts, policies or practices that are unreasonable or discriminatory and that burden or restrict U.S. Commerce. 2 The third category of conduct is most relevant to this investigation. ” https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF
Which leaves us with the question: What to do about China’s trade practices after negotiations fail or are insufficient?
Some here appear to disbelieve that China’s trade practices are unfair or that there are alternative approaches, although those alternatives are seldom if ever addressed.
CoRev Some here appear to disbelieve that China’s trade practices are unfair or that there are alternative approaches, although those alternatives are seldom if ever addressed.
You haven’t been paying attention. Ever hear of something called TPP? Ever hear of WTO? Ever hear of not working against your allies?
Much of the claims about Chinese IP theft are overblown and are really just one group of rent seekers whining because they don’t get to keep as much unearned income as they want. Still, there are some legitimate claims and those should be addressed. But the way you address those claims is through established institutions like the WTO and proposed institutions like TPP. And you exert leverage on China by working with your trading partners, not against them. Finally, you also choose tools that are designed to address the problem. Fixing IP theft with tariffs makes about as much sense as trying to turn a bolt head with a hammer. It’s just the wrong tool for the job. At the end of the day all you end up with is a buggered bolt head.
You seem to believe that something MUST be done, even if it’s ineffective and counterproductive. It’s the old adage of substituting motion for action.
Does CoRev has any motionable intelligence? We know he has no actionable intelligence!
“Econbrowser has always welcomed a wide range of opinions and spirited discussion from commenters, and will continue to do so. To preserve civility of the discussion, we have two rules. First, comments referring to someone’s racial or ethnic characteristics will not be published. Second, we will block comments that are pure insults with no intellectual arguments.”
2slugs, “Still, there are some legitimate claims and those should be addressed. But the way you address those claims is through established institutions like the WTO and proposed institutions like TPP. And you exert leverage on China by working with your trading partners, not against them.” That’s what is going on with the various ongoing discussions. Canada will probably soon join in the US Mexico trade agreement, and that will put pressure on China in several areas, primarily auto parts.
Mean while the US and the EU continue to negotiate on their separate trade deals.
It takes time to establish the new trade conditions relationships with your trading partners. Sometimes getting them to to the table for serious talks takes pressure, before our trading allies are all working together in one direction. How long? Certainly more than a few months. Just wait and watch.
CoRev: Weren’t you the one claiming that Fall soybean prices would rise as demand for Northern soybeans rose? I am waiting for an explanation of how current soybean futures confirm that prediction.
CoRev Your comment is clueless. First, the new US-Mexico trade agreement is very much on life support right now. And the good things about that agreement (e.g., effectively accepting the TPP position on IP rights between the two countries) is something that Trump opposes. Have you actually read the provisions in the agreement? It’s basically Trump agreeing to return to the status quo ante. Same thing with Canada, which has now come down to a little less free trade with auto parts and a little less free trade with dairy. And the EU negotiation is going nowhere. We’ve antagonized the EU not only with our tariffs, but with our walking away from the Iran nuke agreement. And how do you think South Korea reacted when Gary Cohn had to secretly remove a document from Trump’s desk because of what Trump wanted to do with trade between the two countries? If you’re the Japanese prime minister, why would you want to trust Trump after having the rug pulled out from under you? Our trading partners are moving ahead without the US. Our Pacific trading partners are going ahead with their version of TPP without our input. When we finally do get around to joining TPP, we’ll have to accept their rules and not ours. But that’s typical of Trump’s long history of making bad deals and living in bankruptcy courts most of his life.
Sometimes getting them to to the table for serious talks takes pressure, before our trading allies are all working together in one direction. How long? Certainly more than a few months. Just wait and watch.
This is just Fox & Friends inspired nonsense. Our would-be trading partners (especially the EU) are giving up on Trump and going their own way. You might want to try watching overseas economic news (e.g., BBC or NHK or DW, but not RT) instead of Fox Noise. I think you’ll get a very different perspective. And as I’ve point out before, you still don’t understand Menzie’s game theory argument.
2slugs, this is just wishful thinking: “First, the new US-Mexico trade agreement is very much on life support right now….
Same thing with Canada, which has now come down to a little less free trade with auto parts and a little less free trade with dairy. ”
If and when these negotiations conclude the China auto industry will be changed. How many Chinese auto factories are US resident?
Remember those manufacturing jobs that were never coming back?
CoRev Remember those manufacturing jobs that were never coming back?
Yep. They’re still not back. Manufacturing jobs today are about 1.5M below the pre-recession peak.
If and when these negotiations conclude the China auto industry will be changed. How many Chinese auto factories are US resident?
I was referring to auto manufacturing between Canada and the US, but since you mentioned China, a helluva a lot of the components that go into cars assembled in this country are manufactured in China. When we compute GDP we don’t sum the value of the car, we sum the value added within the domestic economy.
2slugs, “Yep. They’re still not back. Manufacturing jobs today are about 1.5M below the pre-recession peak.”
And most of them disappeared under Obama.
And you added: “but since you mentioned China, a helluva a lot of the components that go into cars assembled in this country are manufactured in China. ”
Exactly why the US/Mexico (and soon Canada) trade agreement changed the mix of non-North American parts making up autos.
CoRev: And how the elevated domestic content requirements under this “new” FTA will work against the shift to Mexico/Canada from China and East Asia generally.
CoRev And most of them disappeared under Obama.
Not even close to be true. The biggest drop by far was under Bush43 with a loss of about 5 million. Under Obama manufacturing jobs fell by about a million and then gradually recovered to about where they were when he took office. The fact is that manufacturing jobs have been declining for a very long, long time, starting in the mid-1980s. And that’s not necessarily a bad thing, just the way it is. Next time you might want to check out the BLS data before commenting. Oh…be sure to use seasonally adjusted data.
Menzie, what are you trying to say? It appears to be an incomplete thought. This “new” FTA will work to increase content the content from US/ Mexico/Canada. Moreover, it will work to increase wages of auto workers.
CoRev: See this post.
2slugs I stand corrected on t5he manufacturing jobs data.
That was supposed to be “prosper” no proper.
“Specifically, the Section 301 investigation revealed:
China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
China deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations.
China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.
China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially valuable business information.”
Investigation or “witch hunt”. The last charge may have a little validity I guess but are we THAT incompetent in protecting our computer networks? The first charge is absurd – joint ventures are a business fact of life globally. And no company is forced into a joint venture. The third charge is also patent nonsense. A Chinese person decides to acquire a U.S. company and this is a bad thing? I thought we were hoping for more foreign direct investment?
I just love the 2nd claim. First of all McDonald’s China pays royalties equal to 5% of sales just like every McDonald’s franchisee. Same for other companies like Starbucks. Now maybe our greedy pharmaceutical companies do not get to charge royalty rates = 50% of sales. Oh gee – China wants real competition. I thought Trump was saying the same for the US drug market. I just wish he would get this stated goal accomplished.
This section 301 “investigation” is absurd on its face.
Communist China at least shouldn’t cheat and steal, if it doesn’t want to open its market:
https://www.google.com/amp/s/nypost.com/2018/06/20/china-not-trump-started-this-trade-war/amp/
“Communist China at least shouldn’t cheat and steal”
Cheating and stealing should be left to failed bankers like you. Another dishonest and incredibly insulting comment from PT. I guess this is what you do in lieu of actual analysis.
BTW – why does everyone of your links started with “google”?
Peaky has to cite some babble from right wing Betsy McCaughey that he found doing one of his patented Google searches? Does Peaky even know who she is? Oh yea – the ex-wife of Wilbur Ross. A real expert on what Peaky excels at – babbling.
Which US corporations informed you that China stole their stuff?
Talkingspoints memo discusses how China is planning their own round of new tariffs:
https://talkingpointsmemo.com/news/new-china-tariffs-may-spread-pain-to-ordinary-households
Can someone ask PeakTrader to clarify how this will all lead to freer trade? Or is this like the dude who needs to lose weight ordering another dozen doughnuts?
The people who support Trump’s tariffs are by and large the same folks who supported Brexit. Trump thought Brexit was a good idea. The usual suspects here supported Brexit, although I suspect the reason they supported it had more to do with the fact that Dear Leader supported it. Let’s face it, most of the usual suspects here have never read a textbook on international trade and didn’t follow academic economists in Brexit debate. I believe we have a similar dynamic here. The usual suspects who support Trump’s tariffs only support those tariffs because Dear Leader wants them. And so we get all kinds of invented fantasies about how Trump really is a free trader despite four decades of him saying free trade was for suckers! And it’s only just a negotiating tactic even though they can’t describe any plausible game theory scenario in which Trump’s tariffs return us to a long run position with fewer tariffs than we had before he started his trade war. How high up that Goldman Sachs chart will the line have to go before Trump’s supporters admit they were wrong? I won’t hold my breath. They still refuse to admit they were wrong about Brexit, so why should this be any different?
“The people who support Trump’s tariffs are by and large the same folks who supported Brexit.”
Guess who else supported Brexit? Try the Bernie is God crew who dominate the comment section over at Mark Thoma’s place. Mark tries his best to present good economic analysis but the Bernie is God crew gets easily confused. They think Brexit and Grexit are the same thing. Tariffs are the same thing as allowing one’s national currency to float? And we thought our Usual Suspects failed freshman economics!
Trump is taking us down a cul de sac here. No exit strategy. Indeed, I don’t even know what the objectives are.
This is costing the President and Republicans votes. It is turning into a competence issue, even for conservatives.
its what happens when people pledge blind allegiance to an ideology, or an idol.
JBH: “Long overdue move by one of the most savvy presidents this nation has ever seen.”
This “savvy” president, once again today, said “China is now paying us billions of dollars in tariffs.”
I’m sure at least one of his advisers has told him this isn’t true. China doesn’t pay one dime of U.S. tariffs — U.S. importers do. He is either too stupid to remember or else — and I think more likely — that he is purposely feeding BS to the rubes. He doesn’t care if it’s true. It just sounds good. A lot better than the fact that he is raising taxes on Americans. He’s willing to tell a lie as long as it works for him.
FRED reports we have reached $44 billion in customs duties. Not all of this comes from imports of goods from China. Of course you are correct – customs duties are imposed when the goods reached US ports and are passed onto consumers. Now maybe Trump is so incredibly so stupid that he does not know this. Of course that is why one needs economic advisers. Oh wait – his idea of an economic adviser is a village idiot like Lawrence Kudlow.
joseph Allianz’s El-Erian a few days ago: As the U.S. secures concessions, which ultimately it will, because of the underlying game theoretics, I put the probabilities for the distribution of outcomes as follows currently: 60 percent of slightly fairer but and still free trade; 25 percent of a global trade war; and 15 percent of a Reagan Moment that significantly improves the landscape for international trade.
Trump is overplaying his hand, thinking that China will be forced to back down. But China is much less dependent on exports for its economy than when Peter Navarro wrote his book “Death by China.” Exports have decreased from 40% to 20% of China’s economy in recent years. China has been transitioning to internal consumption. Trump and Navarro are still fighting the last war.
But China has an even bigger card to play than tariffs and that is intellectual property rights. Much of what the U.S. exports to China only has value as a result of IP protection, for example, software, drugs, entertainment, electronics. China doesn’t need tariffs to extract a huge price from U.S. exporters.
Trump just said China has taken out $500 billion year from us. Oh please – we do import $500 billion per year but someone tell this flaming idiot we also export goods and services to them. BTW – those Trump suits being sold over at Macy’s all say Made in China. Trump is so stupid that he does not know where he sources his suits?
Can one tell the lying idiot that his next tweet will be on a phone assembled in China. Of course at a price tag of $800 smart phones are a rip off. But wait Apple pays Foxconn just over $200 and then pockets the rest shipping off to Bermuda tax free. That is the real stealing.
Tyler Cowen has a large spray at this absurd decision.
https://marginalrevolution.com/marginalrevolution/2018/09/tax-salience-new-trump-tariffs.html
What a pinko!
“The higher prices will reduce consumption and output, yet the invisibility of the tariffs will limit voter pushback.”
This is always the political case for tariffs. A few people gain and a lot of people lose a little. Of course focusing on consumers misses the point about how the export sector is getting crushed.