"the US would lose its leverage"
The mistake is thinking that you have leverage.
Xi Pooh couldn't care less about your leverage.
When you're importing 99% of what you use, you have no leverage.
US president Joe Biden is debating whether to end or cut Trump-era tariffs imposed on Chinese imports into the United States, according to reports. Introduced in 2018 during the Trump administration, tariffs on more than $300 billion in imports from China — including products and components vital in consumer and business …
US trade, although significant, is quite a small part of the Chinese economy, the figure I saw quoted was 6%. This alters the balance of power significantly.
I suspect that those 'supply chain disruptions' we've been suffering from are not really about the myriad reasons we're told in our media (Covid, staff shortages and so on). They're teaching us a valuable lesson about cooperating in a global economy. We felt we could pour scorn on China and treat them like second class citizens, people who had to bow to our way of doing things or else, and they're giving us a lesson the limitations of power.
This says it's US$521 billion (17.2% of China’s total exports), and is the country China exports to the most.
HK is number 2 at 313B and 10.1%, and will not be surprised if a chunk of that is reexported to US as well (you may also want to consider that HK is actually part of China itself).
Japan is at number 3 at 151B and 5%.
So there is a reasonable chance that about 20% of all China exports go to US. I assume not many people in US need services provided by China (such as Alibaba cloud, etc), since services are not counted in the totals I think. And I have heard that alot of China companies set up factories in Vietnam, etc to bypass the sanctions as well.
Not too sure how much leverage you have if you are taking in 20% of all exports from China. It's not the majority of all exports, but by the same token, 20% is not exactly insignificant either.
"And I have heard that a lot of China companies set up factories in Vietnam, etc to bypass the sanctions as well"
I looked up the trade figures when that started during the Trump admin and Chinese dollar loss in exports to the US was almost exactly equal to Vietnamese gain over the same 6 months.
So yes, and much of that is probably just Chinese products simply passing through Vietnamese warehouses.
"and that we'll lift a tariff the moment it causes us pain, regardless of if it accomplished anything it was meant to accomplish."
Of course a tariff causes pain on the ones applying it. For example when Trump put tariffs on Chinese steel it cost jobs in the US because it set a 'floor' price for steel in the US. They still sold it to everyone else who didnt have an issue with cheaper steel.
> They must be desperate to find something positive for him to achieve.
I suspect part of problem is Biden needs to a grey man - a bit like John Major, to let the dust settle from Trump's stirring. The catch is that this etyle of politics doesn't grab headlines and thus win elections.
I suspect the Democrates are discussing it, as not all Republicans agreed with Trump and so the question is whether these Republicans can be brought so as to allow other Biden policies to be passed.
As for removing tariffs, well it would be nice, but delusional, to think they were all that stood in the way of a non-US company selling their products in the USA.
Well, they were given a significant shit sandwich when they walked into the Whitehouse.
The economy is running so hot that we've been at effective full employment for a year. A lot of businesses are still closing early, not because of COVID, but because they can't hire enough people to stay open longer. You would think having everyone working would make people happy, but the stock market wants cheap labor which means there needs to be significant layoffs. That of course will kill consumer confidence that is already shaky due to inflation.
The ideal way they would cool things off is by bumping the interest rate at the Fed. The idea there is they can control what type of inflation we have. But instead oil/gas are out of control and the government has little it can to about that, other than threatening them with profiteering during a crisis.
Honestly, I'm not sure the Chinese tariffs would affect the supply/demand curve too much at this point. There is just too wide of a gap.
They have also discussed removing the fuel taxes for a while, but there is no trust in the petroleum industry to not take that as even more profit. And with transportation costs being such a large part of the current inflation, you have to get fuel prices under control to accomplish anything. The rest of the world would scream, and I doubt they'd even consider it, but a sure way to drop domestic fuel prices would be to have an export tariff on oil and gas. Dropping the cost of diesel would show up in just about everything you buy.
"They have also discussed removing the fuel taxes for a while, but there is no trust in the petroleum industry to not take that as even more profit."
The UK tried that. A whole 5p off a litre of fuel. Whether it had any affect, I don't really know. It was a such a small amount and fuel was/is still rising such that even that tiny effect was barely noticeable. There were multiple news stories about whether the filling stations/fuel companies ever actually passed that price cut on. There are current stories about pump prices still going up or at best remaining stable at high levels while the wholesale cost of fuel has dropped a bit over the last month.
Looking at a live price chart on crude oil, it's down between 3% and 10% today.
Looks like it peaked at over $120 per barrel across the first two week of June and has been mainly falling to about $97 per barrel today. I'm not seeing that fall at the pumps yet, but it goes up *instantly* when the well price goes up.
The tariffs would be lifted, not because China is now "better" than they were, but because we're worse? That sounds like an issue of a complete lack of backbone on our part. How would that affect our future attempts to impose tariffs, when the other country knows we'll remove the tariffs just because our economy sours a little?
"Intestinal Fortitude" - isn't that what we used to call it?
"The tariffs would be lifted, not because China is now "better" than they were, but because we're worse?"
The tariffs were introduced because Trump want to "fix" the US economy while using the Chinese human rights record as the "reason" for imposing the tariffs. Now the US is in an economic bind, Biden, while supporting the human rights principles the tariffs were supposedly enforced for, now see the US dollar as more important than those principles. Whatever may be said in public, it's always about the almighty dollar, never about the principles. All governments are the same in that respect, most of the time.
This is supply shock inflation, not typical inflation from an economy running hot too and generating too much demand. Raising interest rates and lowering tariffs won't help. It won't go away until the supply chain untangles, which is going to be a lengthy process.
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