German Think Tank: Trump Winning in Trade War with China
The U.S. trade deficit with China drops by 17 percent: EconPol Europe
Contrary to the mainstream media reporting, President Donald Trump may be winning the trade war with China, according to a leading European think tank.
The tariffs placed by the Trump administration could narrow the U.S. trade deficit with China by 17 percent, a recent paper published by Munich-based EocnPol Europe projects.
“The US import tariffs will increase the prices of the affected Chinese products in the United States and decrease the profit margin of Chinese exporters,” the fifteen page report says. “This might force some Chinese firms to stop exporting to the US, or even force them completely out of the market.”
The tariffs slapped on Chinese goods by President Trump could lead to a net gain of $18.4 billion for the government, the document estimates.
The report titled “Who is Paying for the Trade War with China?” shows the changing trade dynamics between the two countries:
[T]he greatest share of the tariff burden falls not on American consumers or firms, but on Chinese exporters. We calibrate a simple economic model and find that a 25 percentage point increase in tariffs raises US consumer prices on all affected Chinese products by only 4.5% on average, while the producer price of Chinese firms declines by 20.5%. The US government has strategically levied import duties on goods with high import elasticities, which transfers a great share of the tariff burden on to Chinese exporters. Chinese firms pay approximately 75% of the tariff burden and the tariffs decrease Chinese exports of affected goods to the United States by around 37%. This implies that the bilateral trade deficit between the US and China drops by 17%.
German newspaper Die Welt backed up the findings published by EconPol report by citing the economic data published by the IFO economic research institute:
“Germany’s IFO Institute sees China in a tough spot. The IFO researchers concluded in a study that the countries in the Far East will be most affected by the trade war. “Tariffs are just another form of expense which is distributed between the foreign manufacturer and the consumers at home,” economist Gabriel Felbermayr explained.
And three fourth of the U.S. tariff on Chinese goods will be borne by the Chinese manufacturers. Americans, on the other hand, will gain considerable revenue. “The problem with protectionism is that it can actually have economic benefits for the United States,” Felbermayr said.
These are outrageous predictions that British and German [economists] are making: around the world, even in the U.S., economists and company bosses were long convinced of the disastrous results of Trump’s tariffs. And now economists say that President’s tough trade policy and his much despised “America First” can have positive impact.
The U.S. customs revenues are going to rise by 22,5 billion, IFO Institute estimates. An amount that can later be redistributed [over to consumers]. Economists project a net gain of $18,4 billion. They see a 37 percent drop in the exports goods impacted [by the tariff hike]. In terms of trade deficit between China and the U.S., this will amount to a reduction of 17 percent. [Translation by the author]
In late September, President Trump had imposed tariffs on $250 billion worth of Chinese goods, alleging Beijing of engaging in unfair trade practices. The White House has threatened to raise tariffs on additional $267 billion worth of Chinese imports.
In recent weeks, President Trump has raised the prospect of a negotiated settlement with China. “China wants to make a deal, they sent a list of things they are willing to do, which is a large list, and it is just not acceptable to me yet. But at some point I think that we are doing extremely well with respect to China,” he said on Friday.
A deal could be reached later this month when President Trump comes face to face with the Chinese leader Xi Jinping at the G20 summit in Argentina, Chinese media suggests. Beijing is dispatching a trade negotiation team to Buenos Aires, South China Morning Post reported on Tuesday.
If the projections made by Germany’s EocnPol Europe, a state-funded institution, are to be believed, President Trump — unlike his predecessor — will be negotiating with his Chinese counterpart from a position of strength. As President Ronald Reagan forced the Soviet Union to the negotiating table with his strategy of “Peace through strength,” President Trump’s “America First” policy has succeeded in making Beijing reconsider its predatory trade practices.
What a difference a presidential election makes!
Video: ‘China wants to make a deal on trade,’ Trump
[Cover image via YouTube]
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Hardest hit, the liberal left!
It is in the interests of the liberal left for there to NOT be a negotiated trade deal! The last thing liberals need is Trump to continue to be successful!
So, explain how it is that Schumer and Bernie Sanders have the exact same trade positions as Duh Donald, and LOVES them some protectionist crony crapitalism.
Well, Raggy, I guess my first question How sure are you of that?
On the odd chance you are telling the truth, the next question is Why aren’t folks like Bernie supporting President Trump in this dispute?
How do I know what I’m relating? I read. You should try it.
What ARE you talking about, Raggie? I mean, really, dude(?).
I ask you a couple questions, not really expecting any answer. You respond with some random comments having nothing detectable to do with the topic at hand. Now you are probably patting yourself on your back for how clever you are.
sigh . . . .
“So, explain how it is” you are always wrong and have to rely upon false propaganda.
International business doesn’t work like they taught you in business school populated primarily by professors without real international business experience.
Nothing all you bed wetters have predicted has occurred.
Sure it has. You’ll just lie about anything, as demonstrated.
Liberals in the United States have just heard the two words other than ‘white male’ which make them most furious;
Never mentioned by the Globalists: We can get our cheap trinkets from other countries (India, SE Asia, North Korea?) just as easily as from China. Don’t worry America, there are plenty of serfs in the world to satisfy your lust for cheat Sh&t.
When the economy that became the biggest, strongest, most advanced, most efficient, most innovative, and most engaged in history challenges a parasitic house of cards that grew big via theft, currency manipulation, abusive tariffs, weaponized government subsidies and trade barriers, guess who wins.
Once the genuine economy levels the playing field by cancelling out the cheating, the house of cards collapses. China is teetering on the edge of free-fall. Emperor Xi’s generals are grumbling as are the peasants. When things get unstable in communist China, the government takes away liberties and starts killing Chinese citizens.
We remain the only economy on earth that can do well without the rest of the world. All we have to do is reverse the political mandates that forced us to import food and plow ahead with becoming energy dominant. The rest of the world needs us. China and Russia are not attractive alternative so China MUST cave for its own survival.
Trump is forcing everyone to the negotiating table and demanding that the nations who attend represent the interests of their own citizens. There is no such thing as a “global citizen”.
I expect that the counsel of some dope who doesn’t know the difference between a sanction and a protectionist tariff, who doesn’t know that merchantilism is EXACTLY what T-rump LOVES, and that T-rumpian trade policy is identical to Bernie Sanders’ trade policy is MAYBE not the basket you want to trust with an entire economies’ eggs.
“Planners” are for BIG GOVERNMENT control of OUR choices, where “brights” make our decisions for us, predicated on lies.
Vijeta Uniyal: Contrary to the mainstream media reporting, President Donald Trump may be winning the trade war with China, according to a leading European think tank.
The study notes that it does not account for possible Chinese countermeasures. They would also target tariffs in a manner to shift the cost to their adversary. An agreement would be far preferable, but that is hardly guaranteed at this point.
There is a danger of long-term damage to trade relations. China and other observers may decide the U.S. is no longer a reliable partner, so may hedge their market strategies going forward.
Pasadena Phil: China is teetering on the edge of free-fall.
China still has about $3 trillion in currency reserves, mostly in U.S. dollars. The U.S. is borrowing about $1 trillion per year with a publicly-held debt of $15 trillion.
China is burning its candle at both ends and between the ends is a parasitic, inefficient, kleptocratic, ponderously unimaginative economy. They are also a country consisting of dozens of separate nations that speak different languages and customs.
You’ll be shocked how fast the Chinese can burn through their currency reserves. They are absolutely addicted to techo-theft and subsidized exports. Cut that off and those reserves will prove to be woefully inadequate even wheb including their mercantilist strategy of stockpiling metals, oil and other commodities.
Their only alternative to negotiating is war. And even there, they have already deployed their “new” military with stolen technology to fight the war they want to fight. We haven’t yet deployed our best technology to fight the war we would want to fight. And no one scales up production better than the US. We are still the world’s most advanced high tech manufacturer.
China is a house of cards just waiting for a breeze to topple.
Pasadena Phil: You’ll be shocked how fast the Chinese can burn through their currency reserves.
Yes, but the U.S. is no piker when it comes to burning up money.
Pasadena Phil: China is burning its candle at both ends and between the ends is a parasitic, inefficient, kleptocratic, ponderously unimaginative economy.
Agreed, except for the imagination. China’s scientific and engineering sector is exploding. They are already offshoring some basic manufacturing as their own technical capabilities increase.
Pasadena Phil: Their only alternative to negotiating is war.
Let’s hope that both sides decide to negotiate, then.
Non-arguments. You avoided the most critical point of my argument. We have a real economy, they don’t. Their admitted national debt as a percent of GDP is double ours. And they are paying it back with Chinese clams that have proven to be too weak to remain pegged to the USD. They are collapsing. The demise of the USD is vastly over-rated.
It’s not just China vs US.Do you think settling payments with CClams is a good idea for France? Or Iran? Or Russia? Who benefits from the demise of the dollar? Yes, it would be very damaging to the US to lose reserve currency status but what is the alternative? Bitcoin?
The world has bet on the new “China Century”. But you need to strongest, most efficient and robust economy in the world to take the leadership. China is far from that and they are already in a down spiral. They are still communists. Central planning doesn’t work.
Pasadena Phil: We have a real economy, they don’t.
Well, that’s certainly false. The Chinese produce trillions of dollars worth of goods every year, much of which they can sell on international markets. That’s a “real economy” by any reasonable use of the terms.
Pasadena Phil: Their admitted national debt as a percent of GDP is double ours.
China’s national debt is about 50% of GDP. U.S. publicly-held debt is about 75% of GDP.
Pasadena Phil: Who benefits from the demise of the dollar?
Most of China’s currency reserves are in dollars.
Pasadena Phil: Central planning doesn’t work.
It doesn’t work — in the long run. China is moving towards more openness, but is also worried about political instability. Nonetheless, China has great economic potential, though moving to the next level will require an openness they have been avoiding.
Pasadena Phil: You avoided the most critical point of my argument.
You avoided the most critical points of our argument: the cost of Chinese countermeasures, and the the danger of long-term damage to trade relations.
I don’t know where you’re getting your information but I do this for a living. And you are still missing the main point.
Pasadena Phil: I don’t know where you’re getting your information but I do this for a living.
Well, one who does this for a living, let’s start with the easy one.
Pasadena Phil: We have a real economy, they don’t.
China produces and exports goods, which they trade for hard currency in the amount of more than $2 trillion per year, and have built up a reserve of $3 trillion. That means they clearly have a “real economy”.
“Central planning doesn’t work.”
True, and ironic coming from you.
Protectionist tariffs, imposed by diktat and based on lies, won’t work any better coming from Duh Donald than they have anywhere else.
Rags, if you don’t understand the difference between a negotiating tactic and central planning, you really need to do your clients a favor and stop practicing law.
“It would be in your best interest to listen to our offer, because we will make it painful if you don’t. Here’s how. Your response?”
“China is moving towards more openness…”
One commie trying to con someone about other commies. It’s precisely the opposite.
SDN, happily, my clients know that I won’t lie to them and impose a tax on them as part of “negotiating” with an adversary.
T-rump recently vaunted a new trade deal with South Korea. It’s all just managed (central planning) trade. You can know how Duh Donald feels about “free trade” from acquainting yourself with the deal. When you have, come back and tell us how many US tariffs have been removed WRT South Korea.
T-rump is what Hayek termed a “planner”. He believes in BIG GOVERNMENT making your choices for you, and taking your use of your property for his ends. Those and his cronies.
I don’t really get why people continue to engage with the hive mind troll group. IMO, make your point if you want, refute them, and move on. Leave them spitting in the wind with their BS.
“China has opened considerably over the last two generation…”
I’ve been traveling to China for almost 40 years, from the days of bicycle waves to the current traffic jams. I’m probably much better acquainted with the change in China than you are.
China remains an oppressive communist regime which explains your pandering. The current leadership has no intention of expanding freedom, rather it is curtailing is as fast as possible.
Barry: China remains an oppressive communist regime
True, but far more open than when Mao was in power.
It was interesting listening to NPR over the last few days. (I call it oppo research) The Liberal ‘song’ as it may be called has shifted to “Oh, the economy worldwide is slowing, we’ll never be able to maintain this excessive rate of growth, and it’s all Trump’s fault for the tariff war.”
We all know that if President Hillary was in charge, the tune would be “Economy still maintains record growth despite drop in tech stocks, who are all owned by Rich Republicans so to (censored) with them anyway.”
You nailed it with the end part. Stockholders are the enemy but only when liberals are in charge.
Don’t overestimate China’s weaknesses. I’ve read the Imprimis article that some quote, and there are errors in it. Besides, I have lived in Chinese-speaking Asia (both Mainland and China), and Mandarin is my bet second language. I have studied Hakka, and had exposure to Hokkien and Cantonese as well. I have worked as a document translator and editor as well.
China’s dialects are not as diverse as “Finnish and French”, as a widely disseminated article puts it. Think French, Spanish, and Italian. There is also a high degree of cultural cohesion, and the common use of Hanzi is another unifying factor. I am also of the mind that the Second Sino-Japanese War was a major factor in driving China together to form a nation in the Western sense of the word (for better or worse).
We also need to take seriously China’s work in science and technology, especially AI. It is true that China has pirated much, and gained much from a couple generations of graduate students trained on American campuses. But Do not underestimate their capacity for innovations of their own.
I do not wish to praise the Chinese Communist regime. It is the last, best hope for 20th century totalitarianism outside the American university.
But I believe that the transfer of the US manufacturing economy and the transfer of its information economy to Communist China ha been and continues to be an ongoing mistake that may ultimately prove fatal. I hope Pres. Trump’s policies will work for the USA. But I also believe the USA needs to retool its educational plant; and also that American conservatives need their own concerted “countermarch through the institutiions”.
There are two things that China does that the US and any other free nation cannot do. One is that they steal and then sell the stolen property back to the nations that they stole it from with no punishment. And two, they are a totalitarian regime that can enforce any regulation, instantly, on its people that helps itself remain in power. It is very difficult to fight this kind of trade war with a country that posses this control. However, we have thrown them into a place where they have never been before and their lack of imagination is their major weakness. They are rigid and slow to react and even with all of their powers DJT has them in a state of chaos and confusion. There can be no going “Back” to where we were even with no tariffs because of their theft of intellectual property and their requirement that any business operating in China must share their corporate secrets with the government. As painful as it may become. the US must lead the push to stop the nefarious ways of this totalitarian regime once and for all.
“There are two things that China does that the US and any other free nation cannot do. One is that they steal and then sell the stolen property back to the nations that they stole it from with no punishment.”
That is simply false. They can, are being, and will be sanctioned for their abusive conduct.
The US regularly sues other nations for trade infractions. Last I looked, we won 80% of the cases we brought.
“They can, are being, and will be sanctioned for their abusive conduct.”
Sure thing, up until now they have been “sanctioned” with about 500 billion in sales to the USA annually.
Some sanctions. They simply don’t exist. They laugh at fools like you.
That, again, is another of your stupid lies in the face of facts.
It’s predictable, you call facts lies and lies facts. Just like the rest of the progs.
You’ve been to China how many times? You’ve done what dollar level of business there?
You are ignorant. And yes, they laugh at you. They love suckers.
Rags: “That is simply false. They can, are being, and will be sanctioned for their abusive conduct.”
Both can be true. China steals/sells X and is punished, but steals/sells Y and is not punished (or given 3 years probation like Eric “Bike Lock Thug” Clanton.
Rags: “we won 80% of the cases we brought”
That would be a more useful stat if it included:
1) the number of cases we didn’t bring, and why
2) an approx number of cases we couldn’t bring because we had no knowledge of the theft.
..hang on, some lapdancer on CNN is parroting that there hardly any voter fraud because we so rarely prosecute…
In the US, we don’t figure we are powerless to prevent or punish murder.
When we can report that our efforts to those ends results in fewer murders and more punished murders, that is useful.
Demanding that we ALSO include how many murders went without being solved and punished, or even MORE ridiculous, how many we didn’t know about, is just Fen-level stupid.
It’s a metaphor.
bottom line – US dodged MAJOR bullet by having DJT as POTUS!
Trump Winning In Trade War Against China
Phil: “China is burning its candle at both ends …a house of cards just waiting for a breeze to topple.”
Agree completely. I staff a committee that follows this closely and I’m surprised how spot on your analysis is.
I’m curious what (if?) China will evolve into? I feel like we’re watching the decline of the West, th red fall of the American Republic, and wondering if those principles will shift further west.
Rome -> Britain -> America -> … india?, China?
If China has a preference cascade, to you think there is any possibility they could evolve enough to pick up the torch of Liberty? Or are they more likely to devolve back into tribal regions like the USSR did?
I dream of a New China picking up the Federalist Papers as their founding documents. If wishes were horses, I know.