US China Agreement – But Countries Don’t Trade With Each Other, People Do

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1020

This latest announcement about the trade spat between the US and China shows a certain lack of understanding of the basics here. For they’ve gleefully stated that China will buy more US goods, thereby closing that bilateral trade deficit. The problem here being that it isn’t actually countries that trade with each other. Sure, of course, actual governments do buy things but that’s not what we’re talking about here at all. Rather, it’s the people who happen to live within certain lines on the map who trade with people who live within certain other lines.

So, how do we force people who happen to live in China to buy more stuff from people who happen to live in the United States? Further, would we actually be happy about the liberty and freedom enjoyed under any government that could manage to force such things to happen?

This is before we even get to the basics, which is that trade deficits don’t matter and bilateral ones don’t matter a damn:

America has pulled back from launching a trade war with China that could have destabilised the global economy, by agreeing to put proposed tariffs on Chinese imports “on hold”.

The Treasury secretary, Steven Mnuchin, said on Sunday that negotiations with Chinese officials have borne fruit, meaning Washington and Beijing can step back from imposing punishing tariffs on each other’s exports.

“We’re putting the trade war on hold, right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin told Fox News.

Obviously, it’s good news that the tariffs aren’t going to be imposed. After all, it’s not normally thought of as part of valid statecraft to make your own people poorer. Which is what tariffs do, they make things more expensive for the buyers of goods. The people who pay US import tariffs are the people inside the tariff barriers, American citizens.

It’s this though:

The United States and China have stepped back from a trade war, after the Asian giant agreed to “significantly increase purchases” of American goods and services.

How? They going to put security men inside the shops? Comrade, buy American or it’s the laogai for you? No, really, that American car looks so much better than that Japanese one, don’t you think? American beef is so much more tasty than our own.

If not that then what?

The entire approach to this misses the most important point. That it’s not countries which trade with each other but people. It being that which explains why trade deficits don’t matter in the slightest. For if it’s not the nation doing the trading then why should any imbalance be of any interest to said nation?

In short, what the hell are they on about?

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JamesInNZ
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JamesInNZ

One thing that they could do is decrease tariffs and non-tariff restrictions on American made goods and services. That would make them cheaper and more available in China and therefore Chinese people would buy more of them.

I totally understand the trade deficit meaning somewhere close to bugger all for Americans; but if the good that comes out of this is more choice and cheaper prices for the Chinese then I’m all for Trump’s negotiating tactics!

bloke in spain
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bloke in spain

Come on Tim. You know & I know there are other ways of restricting trade than tariffs. French did it with Japanese cars in the 70s. The bureaucratic barrier. Made importing a Japanese car into France a lengthy & complicated procedure. The demand for the cars was no doubt there. Supply wasn’t. So how easy is for an American company to sell into China? I know from personal experience, there are impediments to importing Chinese goods into Spain. Although I wouldn’t put it down to any policy necessarily hatched in Madrid. Could be simply the ever present lazy incompetent dago… Read more »

Southerner
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Forgive me if I sound cynical, but government departments, like trade for example, are there to be seen to be doing something. What they do does not necessarily have to be productive or alleviate problems. In fact it’s better if they don’t because if the problem goes away their raison d’être disappears. In my country we have a department of trade, the purpose of which is to deter trade. We have a department of minerals and energy which prevents the exploitation of minerals and the production of energy. As far as the department of housing and the jobs czar go,… Read more »

jgh
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jgh

Decades ago, America persuaded Japan to drop import restrictions on American cars so that “Japan” would buy American cars. The Japanese though said da ne? and carried on buying Toyotas and Hondas – as did Americans.

Spike
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Of course trade is between individuals, and Trump thinks that a shipment of Chinese potato parers is an act of war. On the other hand, so do blue-collar voters; get “China” to buy more things and their “jobs are safer.” And Trump has Kudlow and Mnuchin in-theater and they know that dollars are necessarily recycled into the US. Trump needs to “do a deal,” Xi needs to save face, everyone knows it, and they will work something out. However, dittos to the posters above, trade to China is not trade between individuals, as no action in China is completely individual.… Read more »

Spike
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Spike

Of course trade is between individuals, and Trump thinks that a shipment of Chinese potato parers is an act of war. On the other hand, so do blue-collar voters; get “China” to buy more things and their “jobs are safer.” And Trump has Kudlow and Mnuchin in-theater and they know that dollars are necessarily recycled into the US. Trump needs to “do a deal,” Xi needs to save face, everyone knows it, and they will work something out. However, dittos to the posters above, trade to China is not trade between individuals, as no action in China is completely individual.… Read more »