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CHINA TARIFFS:
We export $143 Billion worth of our goods to China, that they buy from us – but we import $438 billion worth of goods from China, that we buy from them. In other words, we purchase more than 3 time MORE from China, than China buys from the United States – leading to a ‘trade deficit’ that the Trump Administration wants to put an end to, or – at least negotiate.
Initially, this started out with Trump proposing a 20% Tariff on Chinese Imports back in March. In response to that, China implemented an additional 15% tariff back to the United States across a variety of food products – this of course, resulted in Trump retaliating with a 54% tariff back on China – which resulted in China escalating to an 84% tariff back on the United States – and now, tariffs are at 145%.
BENEFITS OF TRADE WITH CHINA:
First: We Get Access To Lower Prices.
A 2019 study found that “increased trade with China boosted the annual purchasing power of the average U.S. household by $1,500 between 2000 and 2007.” This means everyday electronics get cheaper, clothing gets cheaper, and you can buy more,for less.
Second: Exports to China supported more than one million jobs in the United States, or about 0.5 percent of the civilian labor force. American companies earn hundreds of billions from their sales in China, that they can then invest back through their US operations.
Third: We benefit from China’s Hyper-Specialization…
China is really efficient at heavy industries like steel, machinery, or assembly-line production, and performing every one of those jobs domestically would be a huge waste of resources…
Fourth: We get access to China’s Growing Population.
China makes up over 17% of the worldwide population, and a large portion of those people are now being lifted from poverty, while consuming more goods and services
DOWNSIDES OF TRADE WITH CHINA:
One: Job Losses throughout Manufacturing.
For reference, In 1970, more than a quarter of American workers held jobs in the manufacturing sector. Today, it’s only about 8%.
Second: National Concerns
Even though this isn’t exactly a ‘financial’ issue, policymakers have been worried about the possibility of spreading wrong information and collecting sensitive data throughout America.
Third: Currency Issues.
It’s rumored that China purposely devalues their own currency as an incentive for other countries to buy their goods – this allows them to accumulate US Dollars.
Fourth: Violations.
Many have been critical about the working conditions that allow us to buy inexpensive goods and services.
Of course, best case – we negotiate really great deals and everyone moves on – but, that’ll take some time – and even if we do come to an agreement, manufacturing won’t shift overnight.
In terms of what you could do, this is a great time to save money, invest long term, and buy what you need to, ahead of time – just time case, even though I don’t think it’ll have to come to that.Realistically, I think it’s most likely that we see a 30 to 90 day pause to give enough time for negotiations – but then again, I’m just a dude in a half converted garage making YouTube videos and I know nothing. Don’t listen to me. Thanks.
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