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WSJ: Trump’s Tariffs Could “Really Hurt” China

Maybe President Trump knows what he’s doing.

If you listen to much of the press, Trump is recklessly getting the United States into a tit-for-tat trade war with China that hurts everyone. But from Trump’s point of view, as he tweeted this morning, the United States has already lost the trade war. Now, it’s time to play catchup.

According to the Wall Street Journal, the United States has significant leverage because of the damage Trump’s proposed tariffs could do to China:

Foreign firms in China are among the most productive of all firms there and are a critical conduit into the country for technology.

Those same companies will dial back investment if they believe routing Chinese goods into the U.S. is set to become progressively difficult. And China—struggling under a massive debt load created by its own inefficient state firms—needs their dynamism and know-how.

But companies attracting investment from outside mainland China have still been key job engines over the long run. Crucially, they have done so without the dangerous build-up of debt that’s characterized so much of China’s domestic industry . . .

So while U.S. leverage with China is weaker than a decade ago, there are still good reasons for China to offer concessions. Neither the U.S. or China has yet set a firm deadline for these tariffs to actually take effect—that means the next step is serious horse trading. The question is what the Trump administration will accept.

A few things are perhaps achievable. They include greater purchases of U.S. semiconductors by Beijing—a move reportedly under discussion; much looser joint venture or foreign ownership requirements, particularly in sectors like finance and health care where additional capital is sorely needed; and higher Chinese payments for U.S. intellectual property.

The article goes on to say we can’t “rapidly” scale down our trade deficit with China. But serious progress in combating China’s egregiously unfair trade practices seems to be on the way.

16 Responses to WSJ: Trump’s Tariffs Could “Really Hurt” China

  1. Couple of things about trade with China. We currently have a $700,000,000 annual trade deficit with China–unfair trade practices, their theft of our intellectual property and other issues all contribute to that deficit. One of the dirty little secrets about China’s trade practices is that US companies who want to build manufacturing plants in China are forced by the Chinese government to reveal their proprietary technology to China. The Chinese then simply begin manufacturing for themselves what we would have manufactured in China. Before you know it, the US plants in China are closed. This practice has cost us dearly. The result is 60,000 US manufacturing plants have been closed, and millions of US jobs have been lost.

    So Trump is calling out the Chinese on these practices and saying this mess is going to end. Obviously the Chinese are angry about it, and as they struggle on with their current miserable, sick economy, it will only get worse for them. They are as crooked as they can be and Trump is trying to put an end to their corrupt trade practices.

  2. Marcus, you have nailed it on the Chinese. They are not particularly creative or imaginative people, but they can copy anything. If a movie is released on Friday, it is copied and for sale on their street corners by Saturday. The same applies to music, books or anything else creative. Combine the copying with cheap labor, we don’t have a chance. Why this has been allowed to happen for decades, God only knows. MAGA.

    • Bonnie, I’ve done extensive business throghout the Far East since the mid 70’s. What we are seeing in China is no different than what I happened in Japan, South Korea, Singapore and Malaysia during their growth years. Copy and paste the methods from one country to the other. Now, for American companies to transfer their IP to these countries is due to their own stupidity and greed. When you KNOW they will clone your technology, yet you still send it there to have access to the market, then you are signing your own death warrant. Not now, but 10-15 years down the road.

    • Bonnie, the Chinese have a very long history of stealing and copying the technology and innovations of other cultures. When the Persians traveled to China on trade missions as far back as 500 BC, the Chinese would purchase or trade for the goods and materials the Persians would bring with them to China. The next time the Persians brought materials to trade with China, the Chinese would say, “Oh, we already have these devices, compasses, sextants–whatever–like the ones you want to sell us.” They had copied the “technology” they got from the previous trade missions and were now manufacturing them on their own. They do the same thing today.

      • But, Marcus, EVERYBODY does that. Including our US companies and government. What should this be a “surprise”? A simple example: we ‘stole’ Germany’s rocket and jet engine technology from them. Cloning other’s technology is not a Chinese invention.

        • “Kaizen” (lean manufacturing) and statistical process control system, developed by an American, introduced in Japan, then cloned by US companies when it was proven to be so successful, is another good example.

          • You are speaking of Edwards Demings (I betcha). TQM and all that. I attended one Dr. Demings famous one day workshops (he was in his 80’s at the time and feeble on his feet), but it was an amazing experience. He was a brilliant teacher. He told us the story of how he offered his expertise to General Motors which was having enormous quality issues at the time. As he told the story to us, GM executives basically threw him out of the office. What did HE know about making cars, after all? ;+} Demings then went to Japan (which was having terrible quality issues in the automobile industry at the time) and after hearing his pitch,they hired him to help turn their product quality around, and the rest is history.

        • Oh, I know. It’s true more so today with the use of today’s technology and industrial spies. There are no secrets anymore. Were there truly ever any secrets? ;+}

  3. Sending our Nat’l Guard to our southern border:
    World wars, ‘police actions’, war against terror and now, for the first time in most of our lifetimes, we need to protect our own borders from an invasion of people who demand that we let them inside our country. Demand!

    President Trump has drawn a line, thrown down the gauntlet, and said “enough!”. It might be a few million too late for a lot of illegals, but closing the gate to invaders is a welcome sight and plan.
    I admit that living in a border state and 500 miles from that border is a little disconcerting if things get out of hand. We don’t have to fear violence from the common illegal alien, but the drug cartels have a lot to protect and aren’t afraid of gunfire.
    A President who means what he says, and follows through. We are blessed.

  4. There is one thing that hasn’t some up in this discussion. That is what keep the communists in power in China?
    It is the economy….stupid…
    When the economy in China falters even a little, the party starts to sweat. Hurt China in the wallet too much, and the powers that be fear revolution.
    China has much more to lose in this spat than is being considered.