Weapons of trade war: What might China have up its sleeve?
(Updated: )
Ricky Lim
Simple explanation of :-
(1) Why US experience trade deficits with many Countries in the World.
(2) Why Trump is wrong about harping on the trade imbalance that US face.
(3) Why Trump trade tariff harm US and others - without having a full understanding of how World Trade operates.
(1) Why US experience trade deficits with many Countries in the World.
(2) Why Trump is wrong about harping on the trade imbalance that US face.
(3) Why Trump trade tariff harm US and others - without having a full understanding of how World Trade operates.
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Ricky Lim
(1) US in the olden days produce and manufactured most of their goods in US and feed their domestic markets internally.
(2) However, as domestic market grow, wages increases, price rises - and domestic consumers will find the prices rising - and US business in order to keep price low - will think of ways to contain the high prices at home.
(3) Thus US businesses decide to move production plants into other Countries where wage cost and production cost is lower - and then sell back to US domestic consumers at a lower prices compare to if it produce at home.
(4) Also by setting up production plants, marketing and sales offices and regional HQ in other Countries will also allow US businesses to export and sell its products in other Countries - and thus increase sales and revenues to US businesses.
(5) As a result, US experience trade deficit with many Countries in the World - because US businesses and production plants are located in many Countries worldwide and then export back to US.
(6) US Economy is about US$19 trillion - where its import from other Countries is about US$2.3 trillion.
This mean, US Economy is gaining from trade to supply to its local Economy of about US$16.7 million from lower production cost in other Countries.
--- Trump failing to understand this ---- by brute force levy trade tariff on other Countries --- will cause US business cost to suddenly shoot up due to :-
(i) trade tariff
(ii) inefficient production cost, supply lines - cause by Trump ignorant actions on trade
--- will hurt US business badly, be uncompetitive in the trade market, other Countries retaliate by boycotting US businesses and US consumers suffer from higher product costs due to all the above.
(2) However, as domestic market grow, wages increases, price rises - and domestic consumers will find the prices rising - and US business in order to keep price low - will think of ways to contain the high prices at home.
(3) Thus US businesses decide to move production plants into other Countries where wage cost and production cost is lower - and then sell back to US domestic consumers at a lower prices compare to if it produce at home.
(4) Also by setting up production plants, marketing and sales offices and regional HQ in other Countries will also allow US businesses to export and sell its products in other Countries - and thus increase sales and revenues to US businesses.
(5) As a result, US experience trade deficit with many Countries in the World - because US businesses and production plants are located in many Countries worldwide and then export back to US.
(6) US Economy is about US$19 trillion - where its import from other Countries is about US$2.3 trillion.
This mean, US Economy is gaining from trade to supply to its local Economy of about US$16.7 million from lower production cost in other Countries.
--- Trump failing to understand this ---- by brute force levy trade tariff on other Countries --- will cause US business cost to suddenly shoot up due to :-
(i) trade tariff
(ii) inefficient production cost, supply lines - cause by Trump ignorant actions on trade
--- will hurt US business badly, be uncompetitive in the trade market, other Countries retaliate by boycotting US businesses and US consumers suffer from higher product costs due to all the above.
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Ricky Lim
In short, to explain in simpler term so that Trump and Trump supporters can understand how Global Trade mechanism and trade war affect them :-
(1) US business cost will shoot up phenomenally due to market distortion, trade tariff, market inefficieny as Trump mess up the whole Global supply chain
(2) US consumers will suffer badly as prices of products and services shoot up phenomenally. As a result, US consumers buy less.
(3) Rest of the World boycott or buy less of US products and services
(4) US business suffer - profit fall, investment fall, business bankrupt - cut jobs and US workers loss their jobs - US Economy suffer.
So a US US$19 trillion Economy may plummet to a say US$10 trillion Economy if the full weight of the trade war bear disastrous consequences.
Such scenarios will also happen to other Countries in the World affected by the trade war.
But US will suffer more - as other Countries co-operate by forging more multi-lateral trade deals - while no other Countries want to forge trade deals with Trump-led US.
US Economy will be disastrous.
(1) US business cost will shoot up phenomenally due to market distortion, trade tariff, market inefficieny as Trump mess up the whole Global supply chain
(2) US consumers will suffer badly as prices of products and services shoot up phenomenally. As a result, US consumers buy less.
(3) Rest of the World boycott or buy less of US products and services
(4) US business suffer - profit fall, investment fall, business bankrupt - cut jobs and US workers loss their jobs - US Economy suffer.
So a US US$19 trillion Economy may plummet to a say US$10 trillion Economy if the full weight of the trade war bear disastrous consequences.
Such scenarios will also happen to other Countries in the World affected by the trade war.
But US will suffer more - as other Countries co-operate by forging more multi-lateral trade deals - while no other Countries want to forge trade deals with Trump-led US.
US Economy will be disastrous.
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Ricky Lim
The current scenarios of Global trade war started by Trump - is the exact scenario in 1930 Deep Depression - that started World War 2
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Posted in – Fri 20 Jan, 2017 3:26 AM IST
Avatar
ricky l 0 seconds ago
1930s Deep Depression --- hopefully it will not occur.
It is trigger by US trade war - increase trade tariff against the World - that trigger 1930s Deep Depression.
Hope Donald Trump learned from this - and not repeat the mistake of the 1930s Deep Depression.
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"The decline in the U.S. economy was the factor that pulled down most other countries at first; then, internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade.[17] By late 1930, a steady decline in the world economy had set in, which did not reach bottom until 1933."
ricky l 1 second ago
And Deep Depression 1930s --- trigger the 2nd World War.
0
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World War II and recovery
The common view among economic historians is that the Great Depression ended with the advent of World War II. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression, though some consider that it did not play a very large role in the recovery. It did help in reducing unemployment.[11][90][91][92] The rearmament policies leading up to World War II helped stimulate the economies of Europe in 1937–39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 ended unemployment.[93] When the United States entered into the war in 1941, it finally eliminated the last effects from the Great Depression and brought the U.S. unemployment rate down below 10%.[94] In the U.S., massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.[cit
--
Posted in – Fri 20 Jan, 2017 3:26 AM IST
Avatar
ricky l 0 seconds ago
1930s Deep Depression --- hopefully it will not occur.
It is trigger by US trade war - increase trade tariff against the World - that trigger 1930s Deep Depression.
Hope Donald Trump learned from this - and not repeat the mistake of the 1930s Deep Depression.
----
"The decline in the U.S. economy was the factor that pulled down most other countries at first; then, internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade.[17] By late 1930, a steady decline in the world economy had set in, which did not reach bottom until 1933."
ricky l 1 second ago
And Deep Depression 1930s --- trigger the 2nd World War.
0
----
World War II and recovery
The common view among economic historians is that the Great Depression ended with the advent of World War II. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression, though some consider that it did not play a very large role in the recovery. It did help in reducing unemployment.[11][90][91][92] The rearmament policies leading up to World War II helped stimulate the economies of Europe in 1937–39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 ended unemployment.[93] When the United States entered into the war in 1941, it finally eliminated the last effects from the Great Depression and brought the U.S. unemployment rate down below 10%.[94] In the U.S., massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.[cit
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Ricky Lim
However this time ---- if the Whole World co-operate by building a "Trade Firewall" against US ---- it is possible to prevent a "Deep Depression of the 1930s that trigger World War 2".
This is by :-
(1) Forging multi-lateral trade deals like CPTPP, RCEP, EU-ASEAN FTA, BRI etc among many Countries in the World - minus Trump-led US.
(2) Forging bilateral trade deals like China-Singapore FTA, EU-Singapore FTA, India-Singapore FTA, etc....
By doing so, the World is re-configuring the Global Supply chain, Global Trade, Business and Investment (without US) to come out with a new Global Supply chain, Global Trade, Business and Investment.
By doing so, what Trump try to do in Global trade - will have minimal impact on the World.
Whether Trump-led US economy will survive or not is Trump's business - the World can hear less of Trump or what he want to do ---- Trump become a "Total Isolationist" and a "Fully Erected Trade Firewall" is build against Trump led US ----- averting a similar "1930 Deep Depression and the subsequent World War 3".
This is by :-
(1) Forging multi-lateral trade deals like CPTPP, RCEP, EU-ASEAN FTA, BRI etc among many Countries in the World - minus Trump-led US.
(2) Forging bilateral trade deals like China-Singapore FTA, EU-Singapore FTA, India-Singapore FTA, etc....
By doing so, the World is re-configuring the Global Supply chain, Global Trade, Business and Investment (without US) to come out with a new Global Supply chain, Global Trade, Business and Investment.
By doing so, what Trump try to do in Global trade - will have minimal impact on the World.
Whether Trump-led US economy will survive or not is Trump's business - the World can hear less of Trump or what he want to do ---- Trump become a "Total Isolationist" and a "Fully Erected Trade Firewall" is build against Trump led US ----- averting a similar "1930 Deep Depression and the subsequent World War 3".
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John Low
Ricky Lim Cannot help it ROFL. So long story, not sure how to reply in simple form so as not to bore others. In short the world co operate and make America bankrupt is the gist of what you say. All the American have to do is to print money. That will cause you to bankrupt together with them. Trade is not done in Yuan, its in US dollars. First to go down the chute is SIngapore. Say good by to your CPF money.
Ricky Lim
John Low - The above trend is already happening.
Total World trade of goods and services are $41.6 trillion.
US trade contribute only $4.9 trillion.
EU trade = $5.4 trillion (more than US).
China and HK trade = $5.6 trillion (more than US).
Japan trade = $1.6 trillion.
S Korea trade = $1.1 trillion.
Canada trade = $0.984 trillion.
Singapore trade = $0.917 trillion.
India trade = $0.917 trillion.
Mexico trade = $0.824 trillion.
The World by cooperating (without US) contribute = $36.7 trillion.
You think the World cannot live without US?
Total World trade of goods and services are $41.6 trillion.
US trade contribute only $4.9 trillion.
EU trade = $5.4 trillion (more than US).
China and HK trade = $5.6 trillion (more than US).
Japan trade = $1.6 trillion.
S Korea trade = $1.1 trillion.
Canada trade = $0.984 trillion.
Singapore trade = $0.917 trillion.
India trade = $0.917 trillion.
Mexico trade = $0.824 trillion.
The World by cooperating (without US) contribute = $36.7 trillion.
You think the World cannot live without US?
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Ricky Lim
John Low - No Country in the World can live alone without opening up its Economy and without trade.
Not China many years ago.
Not EU.
Not even US.
Trump is leading US into what China is 20 years ago (which Trump thought US can operate alone) --- that is why Trump is starting a trade war against China, EU, Canada, Mexico, Japan, India, S Korea, etc.
Not China many years ago.
Not EU.
Not even US.
Trump is leading US into what China is 20 years ago (which Trump thought US can operate alone) --- that is why Trump is starting a trade war against China, EU, Canada, Mexico, Japan, India, S Korea, etc.
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Ricky Lim
John Low - the moment Trump fight a trade war against the World - the US dollars will start losing significance - as World trade are also traded in EU dollars, Yen, Yuan etc as they are traded in the World Financial Market.
And when Trump cause US trade to fall vis-a-vis the World, less US dollars will be used ---- and even if Trump decide to print more US$ - it will lose its value and become more and more like banana money.
BTW, Singapore have been trading with China using Reminbi since 2014 not US$.
Singapore trade with EU in Euro dollars.
Singapore trade with Japan in Yen - though Yen have been fluctuating more recently.
And when Trump cause US trade to fall vis-a-vis the World, less US dollars will be used ---- and even if Trump decide to print more US$ - it will lose its value and become more and more like banana money.
BTW, Singapore have been trading with China using Reminbi since 2014 not US$.
Singapore trade with EU in Euro dollars.
Singapore trade with Japan in Yen - though Yen have been fluctuating more recently.
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Ricky Lim
John Low - If you think Trump can 只手遮天 - Trump may have over-estimate himself - including you.
Yes the World in total will be hurt - where multi-billion dollars could be lost in the World Trade.
But when the World re-configure themselves - Trump will one day find himself - leading US into isolation - where the whole World will trade without Trump-led US.
Else why many US business groups and lawmakers are making big noise to Trump - but Trump still press on ignoring all the US internal noises make?
Yes the World in total will be hurt - where multi-billion dollars could be lost in the World Trade.
But when the World re-configure themselves - Trump will one day find himself - leading US into isolation - where the whole World will trade without Trump-led US.
Else why many US business groups and lawmakers are making big noise to Trump - but Trump still press on ignoring all the US internal noises make?
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Ricky Lim
Ricky Lim
This global trade war triggered by Trump and his trade team - is one that no one in the World wants - as it will hurt everyone.
But Trump and his trade team - despite warnings from everyone - decide to wage it on everyone.
The World got no choice but to respond - by cutting Trump off - and bring the damages to the minimal.
But Trump and his trade team - despite warnings from everyone - decide to wage it on everyone.
The World got no choice but to respond - by cutting Trump off - and bring the damages to the minimal.
Richard Chak
Oh John, don't be fool by the trade Statistics of unbalance trade. Actually the trade is pretty balance. The Western media does not report the services trade earn by the American in thier favour. That what economists call the invisible trade balance. The trade sat only report the physical goods but not the services. I will be glad to co-operate with anyone to do research on this.
Richard Chak
You know what this is the beginning of the down fall of the US. The US since the formation of UN has been clambering about human right when it suit them. As they were against the commie. But today they have officially abandon it, when the recent announcement of withdrawing from human right organisation. Ha Ha ha...... that Westerners spining the rest of the world.
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