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PostUS-China Trade War: Yukon Huang (Tor Guimaraes, USA, 08/11/19 2:53 pm)
In this age of fake news and alternative facts, it has become much more confusing to determine what is more likely to be the truth. Take for example the trade war between the US and China. I always thought that China was taking advantage of its developing country status to transfer technology and know-how within the bounds of the WTO regulations. Well, when should we declare China a developed county rather than a developing one? I liked when Trump called the problem out, but a wide open trade war is crazy and will hurt the whole world economy, including the US.
So the burning question for me lately is, how will Trump's tariff war work out for the US and the world in the long run? In the short run even Trump advisors recognize it will hurt everyone badly, so it becomes a question of who can stand the pain longer. Given the social political circumstances, China is likely to win the short term, force Trump to compromise with a little face-saving, so we may not have a long term.
However, perhaps I am wrong, so what would happen in a long protracted long term tariff war? My crystal ball disappeared so I put on my student cap and looked for wisdom. First I read and listened to the economists on opposing sides and they all say the other side is to blame for being unreasonable. Listening to some of the Trump advisors, they all love free trade but not with a bunch of totalitarian commies, and their solution implies the need for a Chinese government conversion to free capitalism. On the other side, the Chinese government is not doing a good job mitigating some of the justifiable US concerns such as intellectual property misappropriation. Instead the Chinese seem to be using a passive aggressive tactic: OK, if you hurt us with tariffs, we will retaliate. In other words, eye for eye until we all go blind.
I was getting tired and frustrated after reading and listening to several experts disagreeing and unconvincingly prescribing the truth. Then by accident I bumped into the holy grail: a logical, well-balanced, non-ideological fact-based vision of what is going on and what we should expect. The man, Yukon Huang, should at least be read and listened to, before the meatheads on both sides take us all down the wrong path. This American economist is very knowledgeable and impressively wise on China/US relations. He makes a strong case that the problem here is political, not a trade war. He is a superb persuader even for a diehard skeptic like me. He calmly points out what the relevant issues are for both sides and readily admits when he has no solution to the issue. I could not find any faults with his presentation, facts, reasoning, and conclusions. Ignore him at your own stupidity, and I am not getting paid to say this.
JE comments: Tor, please check the link above and tell me if it's the article you had in mind. (The URL you originally sent me did not work.) Either way, we've let the US-China trade war simmer for too long without a proper WAISly "unpacking." What's the latest? I do know that our soybean farmers in Michigan are hurting. They don't seem to be directing their ire at Trump, however. This in itself is a political triumph for The Donald.
Yukon Huang, "Cracking the China Conundrum"
(Tor Guimaraes, USA
08/13/19 4:19 AM)
For those WAISers wanting to dig deeper and wider, Yukon Huang (see my earlier post, 11 August) has a book Cracking the China Conundrum. He goes around promoting this book and answering audience questions. One of my favorite discussions is below:
John Eipper commented on my last post: "I do know that our soybean farmers in Michigan are hurting. They don't seem to be directing their ire at Trump, however. This in itself is a political triumph for The Donald."
Such a triumph is very questionable, since the money from the tariffs is being promised as a subsidy to the affected farmers. In other words, the taxes are in fact a tax on American business passed on customers, so the American people pay the farmers hurt by the tariffs. Nice for the farmers, but bad enough to make the great Adam Smith roll over a few times in his grave.
JE comments: I would assume a great deal of US agricultural output is making its way to Canada, and from there to China. But the Chinese are pretty sore at the Canadians, too, with the arrest earlier this year of the Huawei executives.
Protectionism used to be the Democrats' game, but under Trump it's never business as usual.