How Trumps first tariff crusade against China backfired. (1 Viewer)

[maxparrish]

It's education time.

I requested Grok 3, in its lengthily deep search mode, to estimate TWO hypotheticals using its economic tools, economic studies on China trade, and their elasticities: First

First hypothetical, if in Trump's first term he had accepted China's long-standing WTO approved tariff average (8%) and kept the US tariff average of 3.4 percent (also WTO approved). What would be the 2024 import/export estimated for both nations?

Second, what if in Trumps first term China had immediately capitulated and lowered its average tariffs to 3.4 percent, while US also left it tariffs on China at the same preexisting rate of 3.4 percent. What would be the 2024 import/exports estimated for both nations?

By comparing these numbers one can estimate the impact of "unequal" tariffs on US exports to China.

Results were:




Key finding

- US exporters were not be significantly limited by China's "unfair and unequal" tariffs against US products before Trump's first crusade. If China lowered its average tariff to the US average, and thus equalizing rates in the first term it would have only increased US exports to China by 7 billion dollars, from 154 billion to 161 billion. Ergo, the Chinese businesses and consumers still would not find US products much more attractive than before - meaning average Chinese tariffs were not responsible for the trade deficit nor "ripping us off".

So the next question is, what were actual results of Trump's anti-China tarrif crusade during his first term?

Trump's aggressive meddling resulted in a tariff war of reprocity and it caused China to increase its average tariffs on US exporters to 21 percent (later lowered to 15 percent) while the US imposed an average tariff of 20.8 percent, continuing through the Biden administration.



So, it's fair to ask how did that change both countries imports and exports:



Key findings-

- Trumps "deal" with China cost both nations. It reduced US exports to China about 9 billion from what it otherwise would have been under the 2016 orginal tariffs. More significantly, it reduced US imports of Chinese goods by 65 billion, nudging the trade deficit downward to 295 billion rather than what would have been 360 billion.

- Most of the added tariff costs were passed through to US importers, US businesses, and US consumers.

- Chinese companies mitigated their lost sales by finding new customers, or relocating to other countries to sell to the US from a less tariffed location, but not in relocating to the United States.

Conclusion -

It appears that after analyzing the economic findings of tariff effects by other expert sources, Trumps first term Tariffs war was severe failure and unforced error. He got his "agreement" which, due to his own false premises, only denied Americans the purchase of 65 billion dollars of Chinese goods while imposing the major costs of added tariffs on the US population. Supporting studies show companies did not "reshore" to the US but elsewhere, and that the US did not develop new manufacturing to replace these lost product trade.

That isn't winning, that is losing.


-

 

[Ishm]

Trump isn't looking for 'equal' reciprocal tariffs. He is looking for tariffs that give the US a substantial advantage.

 

[Metric Mouse]

It's education time.

I requested Grok 3, in its lengthily deep search mode, to estimate TWO hypotheticals using its economic tools, economic studies on China trade, and their elasticities: First

First hypothetical, if in Trump's first term he had accepted China's long-standing WTO approved tariff average (8%) and kept the US tariff average of 3.4 percent (also WTO approved). What would be the 2024 import/export estimated for both nations?

Second, what if in Trumps first term China had immediately capitulated and lowered its average tariffs to 3.4 percent, while US also left it tariffs on China at the same preexisting rate of 3.4 percent. What would be the 2024 import/exports estimated for both nations?

By comparing these numbers one can estimate the impact of "unequal" tariffs on US exports to China.

Results were:

View attachment 67568733


Key finding

- US exporters were not be significantly limited by China's "unfair and unequal" tariffs against US products before Trump's first crusade. If China lowered its average tariff to the US average, and thus equalizing rates in the first term it would have only increased US exports to China by 7 billion dollars, from 154 billion to 161 billion. Ergo, the Chinese businesses and consumers still would not find US products much more attractive than before - meaning average Chinese tariffs were not responsible for the trade deficit nor "ripping us off".

So the next question is, what were actual results of Trump's anti-China tarrif crusade during his first term?

Trump's aggressive meddling resulted in a tariff war of reprocity and it caused China to increase its average tariffs on US exporters to 21 percent (later lowered to 15 percent) while the US imposed an average tariff of 20.8 percent, continuing through the Biden administration.

View attachment 67568736

So, it's fair to ask how did that change both countries imports and exports:

View attachment 67568737

Key findings-

- Trumps "deal" with China cost both nations. It reduced US exports to China about 9 billion from what it otherwise would have been under the 2016 orginal tariffs. More significantly, it reduced US imports of Chinese goods by 65 billion, nudging the trade deficit downward to 295 billion rather than what would have been 360 billion.

- Most of the added tariff costs were passed through to US importers, US businesses, and US consumers.

- Chinese companies mitigated their lost sales by finding new customers, or relocating to other countries to sell to the US from a less tariffed location, but not in relocating to the United States.

Conclusion -

It appears that after analyzing the economic findings of tariff effects by other expert sources, Trumps first term Tariffs war was severe failure and unforced error. He got his "agreement" which, due to his own false premises, only denied Americans the purchase of 65 billion dollars of Chinese goods while imposing the major costs of added tariffs on the US population. Supporting studies show companies did not "reshore" to the US but elsewhere, and that the US did not develop new manufacturing to replace these lost product trade.

That isn't winning, that is losing.


-

So it hurt China by 65 billion in lost imports, and hurt the US by 9 billion in lost exports, when your first scenario had the US losing only 7 billion?

I'm not sure Trump wouldn't see this as a win.

 

[Tangmo]

The object of Trump's tariffs during his training wheels presidency was to drive manufacturing out of the CCP to the maximum extent feasible.

Indeed, for several years capital was fleeing the CCP at $1 Trillion annually which caused the CCP Bois in Beijing to institute capital controls. It was a strategic design by Peter Navarro that Trump approved enthusiastically to reduce the CCP manufacturing base for its mercantilist export oriented economy and financial system.

Indeed, tariffs alone were never going to impact the trade deficit in any significant or even notable way. Only a reduction in manufacturing capacity was going to impact the current account deficit which was important to Trump. To Navarro, wrecking the existing CCP manufacturing base by driving manufacturing to even lower wage countries was the goal and it worked well to the extent feasible for the time and conditions.

Currently the CCP economy is radically degraded by its own absurdities such as its relentless deflation which make the CCP much more vulnerable to Trumps tariff carpet bombing than the more targeted and comparatively milder tariffs of his training wheels term. By 2018 Xi was at the zenith of his power whereas presently Xi is flailing and the Chinese know this.

 

[daeler]

So it hurt China by 65 billion in lost imports, and hurt the US by 9 billion in lost exports, when your first scenario had the US losing only 7 billion?

I'm not sure Trump wouldn't see this as a win.

It isn't quite that simple, look at produce, China used to buy produce from the US, after Trump started the tariff China pushed more farming at home and basically quit buying produce from the US. That crashed many US farms, some of those farmers switched to selling to USAID, but they could only take so much. China stopped spending money and became more self sufficient.

Many products that used to be purchased from China increased in price because we had to find alternates to those, so the consumer saw price increases because of that.

Also include the fact that China made deals to increase trade with multiple other countries and their loss goes down more.

 

[maxparrish]

So it hurt China by 65 billion in lost imports, and hurt the US by 9 billion in lost exports, when your first scenario had the US losing only 7 billion?

I'm not sure Trump wouldn't see this as a win.

Remember that the first chart is only comparing two hypothetical "what if" outcomes, neither of which occurred because both the US and China significantly increased their tariffs. It's useful only to illustrate that Chinese tariffs are not the cause of the trade deficit because if tariffs had been made equal, US deficits in business would continue under on an "equal" playing field.

The last chart is that of what REALLY happened compared to what could have happened if tariff war had not occurred, essentially a repeat of Scenario 1 in the first chart. This chart was produced in a separate request and computation - the difference in the hypothetical is inconsequential and so knowing the reasons for the tiny differences in separate runs isn't worth investigating. Be the estimate what would have happened 514 billion or 512.6 billion in Chinese exports (which is also US imports) or the slight difference of between US exports of 154 billion or 152.8 billion i(which is Chinese imports) it is fractional.

So, Trump's actions and Chinese retaliation hurt Chinese businesses by 65 billion in reduced EXPORTS and hurt US business by 9 billion in reduced EXPORTS. That also means these actions hurt US IMPORTS by 65 million and Chinese IMPORTS by 9 billion. Losing export markets and losing import suppliers is a loss on both ends.

Trump may view this as a "win" because he started a fight that was unnecessary and believes the US came out less wounded than China - ignoring the fact we wouldn't have been wounded at all if he hadn't started the fight.

Trump measures "benefits" by how much net pain he inflicts on another rather than how both parties could remain pain free if he doesn't start these conflicts. Moreover, he doesn't get that it isn't a win when Americans are not only are denied 65 billion dollars in desired Chinese products because tariff cost make them unaffordable, but also when Americans do pay more because of his tariffs for the products they purchase.

There wasn't any point in the first term tariff war and nothing of benefit was accomplished for either side. The only folks who gained were other Asian nations who the Chinese companies used as export origins, both real and fake.

 

[Mycroft]

It's education time.


That isn't winning, that is losing.


-

The problem with all that work you made some poor AI do is that the tariff imbalance was only one reason...and not the major reason...for imposing tariffs on China (both during his first term and during his current term).

The major reason for his tariffs is to get the Chinese to the negotiating table to deal with China's seven deadly sins. Another reason, also more important, though related to the trade imbalance, is Trump's goal in increasing manufacturing in the US.

 

[Tangmo]

Supply chains get the mass of the headlines in a US-China trade war because they are important and become visible almost immediately.

There are other vital factors too that get the business pages because they are important but aren't shutting down or in need of immediate emergency relief. There are in fact onerous CCP laws that require US corporations and investors to partner with CCP owned firms and to share American technology and knowhow with the CCP operators of the state firms. There's the virtual collapse of industrial growth and expansion that the tariffs impose.

To wit:


In April 2018, China announced that it would eliminate laws that required global automakers and shipbuilders to work through state-owned partners.[307] President of China and CCP general secretary Xi Jinping reiterated those pledges,[308] affirming a desire to increase imports, lower foreign-ownership limits on manufacturing and expand protection to intellectual property, all central issues in Trump's complaints about their trade imbalance.

As a response to the trade war, China increased the personal income tax threshold from CN¥ 3,500 to CN¥ 5,000 (US$705). In May 2019, China's industrial output growth fell to 5.0%, which was the lowest rate in 17 years.[311] In December 2019, the South China Morning Post reported that, due to the trade war and the Chinese government's crackdown on shadow banking, Chinese manufacturing investments were expanding at the lowest rate since records began.[314] Economic growth rate for 2019 was 6.1%, the slowest since 1990.[310]

China–United States trade war - Wikipedia

en.wikipedia.org

When Xi Jinping assumed power in 2013 GDP growth was just less than 10% but it has since gone downhill relentlessly. Before tariffs and this year, GDP was projected at its measly 3% and now with tariffs, and how long being the variable, 1% or 1.7%. Xi is a dogmatic Maoist who has included Party apparatchiks on corporate boards of private firms and in their executive offices. Xi must control everything which means that as with Trump, Xi too is an obsessive compulsive and an idiot.

 

[jpn]

Trump's ignorance is unshakable. Invincible.

"We were losing hundreds of billions of dollars with China. Now we’re essentially not doing business with China. Therefore, we’re saving hundreds of billions of dollars. Very simple."​

​

Remember those empty shelves during Covid? Americans were doing great! Think of all the money they saved by not buying toilet paper, because there was none to be had. Very simple.

 

[maxparrish]

Trump's ignorance is unshakable. Invincible.

"We were losing hundreds of billions of dollars with China. Now we’re essentially not doing business with China. Therefore, we’re saving hundreds of billions of dollars. Very simple."​

​

Remember those empty shelves during Covid? Americans were doing great! Think of all the money they saved by not buying toilet paper, because there was none to be had. Very simple.

I thought at first you were joking, as I thought not even Trump would babble this kind of incoherent nonsense in a serious tone. So, I was stunned to find that he said it and he doubled down with spouting more economic ignorance as "truth" - primitive and simple-minded stuff without a gram of explanation beyond "we are losing" by buying things.

Presidents are not usually the brightest bulbs when it comes to economics BUT before Trump they all knew that tariffs is economically flawed but that it must sometimes be cynically necessary in order to keep the political support of specific voter groups. Even Obama, who remained unable to grasp Christine's Summer's (a member of economic team) tutoring on some of his own economic myths, was smart enough to know that he couldn't rely on his own homebrewed non expert beliefs over the advice of his economic professionals.

The article also confirmed my view that Trump's MAGA movement isn't conservative but rooted in extremist national populism. American conservatism has always held free trade, free markets, free choice, and non-interference with the marketplace as core principles to our wellbeing. It's opposites, communism (or Fabian socialism), and national socialism believe central state planning, direction, wage and price setting, subsidies of select crony capitalists and crony labor interests, and the wide use of "command economics" to be better.

Trump is a form of national socialist command economics, the only difference in that Trump is a one man "economic" state planner and commander, whose eccentric economic understandings are not subject to professional advice or effective influence.

By the way, the same article discussed the egg shortage and Trumps preening about how he brought egg prices down. How?

Apparently, he ramped up egg imports by more than 400 percent, half or more of the imports from nations with which we have trade deficits; Mexico, South Korea, Canada, Poland, and the Netherlands among them.

Trump was oblivious to the fact he just made the US losers (by his own benchmark) because we bought even more stuff while they hold the trade surplus. So what happened to the mantra that we need to stop "losing" and "win" by embracing austerity to only having 'three or four eggs a month' rather than dozens a month? Why didn't he add an egg tariff to make us winners and great again by increasing prices and decreasing supply imports?

Trump just stumbles from contradiction to contradiction, saying whatever he thinks make him look good to the dull witted.

 

[Metric Mouse]

Remember that the first chart is only comparing two hypothetical "what if" outcomes, neither of which occurred because both the US and China significantly increased their tariffs. It's useful only to illustrate that Chinese tariffs are not the cause of the trade deficit because if tariffs had been made equal, US deficits in business would continue under on an "equal" playing field.

The last chart is that of what REALLY happened compared to what could have happened if tariff war had not occurred, essentially a repeat of Scenario 1 in the first chart. This chart was produced in a separate request and computation - the difference in the hypothetical is inconsequential and so knowing the reasons for the tiny differences in separate runs isn't worth investigating. Be the estimate what would have happened 514 billion or 512.6 billion in Chinese exports (which is also US imports) or the slight difference of between US exports of 154 billion or 152.8 billion i(which is Chinese imports) it is fractional.

So, Trump's actions and Chinese retaliation hurt Chinese businesses by 65 billion in reduced EXPORTS and hurt US business by 9 billion in reduced EXPORTS. That also means these actions hurt US IMPORTS by 65 million and Chinese IMPORTS by 9 billion. Losing export markets and losing import suppliers is a loss on both ends.

Trump may view this as a "win" because he started a fight that was unnecessary and believes the US came out less wounded than China - ignoring the fact we wouldn't have been wounded at all if he hadn't started the fight.

Trump measures "benefits" by how much net pain he inflicts on another rather than how both parties could remain pain free if he doesn't start these conflicts. Moreover, he doesn't get that it isn't a win when Americans are not only are denied 65 billion dollars in desired Chinese products because tariff cost make them unaffordable, but also when Americans do pay more because of his tariffs for the products they purchase.

There wasn't any point in the first term tariff war and nothing of benefit was accomplished for either side. The only folks who gained were other Asian nations who the Chinese companies used as export origins, both real and fake.

So again, China lost by roughly 6:1 under Trump's policies?

China couldn't sell 65 Billion dollars worth of goods, and the United States couldn't sell 9 billion in goods.

I'm not certain Trump would see this as a loss.

He probably sees this as a win.

Reminds me of when Biden kept Trump's tariffs, expanded them, and added more on needed goods.

Just can't tell these guys tariffs are bad.

 

[Sandy Shanks]

This is a ploy by Republicans to keep minds off the damage Trump is doing to the American economy, global trade, and relations with our allies and friends.. 77 million Americans voted for this, and now they are silent.

CNN reports, "The House has passed a Republican-led bill that would rename the Gulf of Mexico to the Gulf of America, moving a step closer to codifying President Donald Trump’s push to rename the body of water.

"The bill, which lawmakers approved in a 211-206 vote, now moves to the Republican-led Senate for consideration. One Republican, Rep. Don Bacon of Nebraska, voted with Democrats Thursday against the measure.

"Sponsored by Trump ally Rep. Marjorie Taylor Greene and backed by House GOP leadership, the bill would require federal agencies to update all maps and documents with the name Gulf of America."

“We’re the United States of America. We’re not Kaiser Wilhelm’s Germany or Napoleon France. We’re better than this. It just sounds like a sophomore thing to do," Republican Rep. Don Bacon of Nebraska said."

When are Republicans going to admit that Trump is not all there?

Instead, they say nothing.

 

[maxparrish]

So again, China lost by roughly 6:1 under Trump's policies?

China couldn't sell 65 Billion dollars worth of goods, and the United States couldn't sell 9 billion in goods.

I'm not certain Trump would see this as a loss.

He probably sees this as a win.

Reminds me of when Biden kept Trump's tariffs, expanded them, and added more on needed goods.

Just can't tell these guys tariffs are bad.

Please clarify, I am assuming you are speaking of Trump's perception that "China lost by roughly 6:1 under his policies", not necessarily by your own standards of "winning" or "losing"?

If so, I agree that "So again" in Trump's perception China lost and the US wins because he only measures the relative damage, and only for each country's exporters, not the pain caused to their respective importers and consumers.

Joe Biden's maintenance of Trump's tariffs wasn't any smarter than Trump starting the tariff war: but his selective additions on some technology items at least has some strategic sense (although not necessarily wise).

You can't tell these guys tariffs fail the simple cost-benefit analysis because the fundamental attitude is motivated by resentment for lost dominance. Given a choice between an America that was 50 percent poorer and the world 100 percent poorer, and a world in which America and all others are 200 percent richer and equal in average income, they would take the former.

There is a need to dominate others either individually or collectively because that is "winning", even if it makes everyone poorer.

 

[Metric Mouse]

Please clarify, I am assuming you are speaking of Trump's perception that "China lost by roughly 6:1 under his policies", not necessarily by your own standards of "winning" or "losing"?

Correct. China lost 65 billion dollars in sales.

And the United States lost 9. (Your numbers.)

So it would seem like a win to some people, if they wanted to hurt China and support the US.

Joe Biden's maintenance of Trump's tariffs wasn't any smarter than Trump starting the tariff war: but his selective additions on some technology items at least has some strategic sense (although not necessarily wise).

Also raw materials.

He literally doubled down on Trump's play book. It was painfully stupid to watch. Not to mention the damage he caused to the US.

There is a need to dominate others either individually or collectively because that is "winning", even if it makes everyone poorer.

Thankfully Trump will be the last president of that age ever elected. We've had these guys leading us for 35 years... it will finally be over soon.

 

[RIP U.S. Democracy]

It's education time.

I requested Grok 3, in its lengthily deep search mode, to estimate TWO hypotheticals using its economic tools, economic studies on China trade, and their elasticities: First

First hypothetical, if in Trump's first term he had accepted China's long-standing WTO approved tariff average (8%) and kept the US tariff average of 3.4 percent (also WTO approved). What would be the 2024 import/export estimated for both nations?

Second, what if in Trumps first term China had immediately capitulated and lowered its average tariffs to 3.4 percent, while US also left it tariffs on China at the same preexisting rate of 3.4 percent. What would be the 2024 import/exports estimated for both nations?

By comparing these numbers one can estimate the impact of "unequal" tariffs on US exports to China.

Results were:

View attachment 67568733


Key finding

- US exporters were not be significantly limited by China's "unfair and unequal" tariffs against US products before Trump's first crusade. If China lowered its average tariff to the US average, and thus equalizing rates in the first term it would have only increased US exports to China by 7 billion dollars, from 154 billion to 161 billion. Ergo, the Chinese businesses and consumers still would not find US products much more attractive than before - meaning average Chinese tariffs were not responsible for the trade deficit nor "ripping us off".

So the next question is, what were actual results of Trump's anti-China tarrif crusade during his first term?

Trump's aggressive meddling resulted in a tariff war of reprocity and it caused China to increase its average tariffs on US exporters to 21 percent (later lowered to 15 percent) while the US imposed an average tariff of 20.8 percent, continuing through the Biden administration.

View attachment 67568736

So, it's fair to ask how did that change both countries imports and exports:

View attachment 67568737

Key findings-

- Trumps "deal" with China cost both nations. It reduced US exports to China about 9 billion from what it otherwise would have been under the 2016 orginal tariffs. More significantly, it reduced US imports of Chinese goods by 65 billion, nudging the trade deficit downward to 295 billion rather than what would have been 360 billion.

- Most of the added tariff costs were passed through to US importers, US businesses, and US consumers.

- Chinese companies mitigated their lost sales by finding new customers, or relocating to other countries to sell to the US from a less tariffed location, but not in relocating to the United States.

Conclusion -

It appears that after analyzing the economic findings of tariff effects by other expert sources, Trumps first term Tariffs war was severe failure and unforced error. He got his "agreement" which, due to his own false premises, only denied Americans the purchase of 65 billion dollars of Chinese goods while imposing the major costs of added tariffs on the US population. Supporting studies show companies did not "reshore" to the US but elsewhere, and that the US did not develop new manufacturing to replace these lost product trade.

That isn't winning, that is losing.


-

China knows all of this....which is why they are more than happy to let Trump's stupid ass tariffs continue.

Trump will eventually fold, he has no choice unless he wants the Republicans in Congress to eventually join Democrats in ending the tariffs.

The cowardly Republicans in Congress don't care about Trump's cruelty, racism, and fascism....but they do care about economic destruction of the country and their future political careers, or lack thereof if they don't stop Trump.

 

[maxparrish]

To drill down on the export market, here is a computation the effects on the exports of the US agriculture market to China due to the first Trump trade war (and Biden's maintenace of it), vs. what the projected volume of agricultural sales would have been to China if Trump's first term tariff war was not launched.



Us agriculture exports to China have lost market share, rather than continue it's prior trendline growth rate if retalitory tariffs by China had never been imposed. That yearly loss has averaged 13.5 billion a year, totalling 94.4 billion dollars in losses to date.

China's private and governmental diversification efforts hit especially hard in 2024, and resulted in 28.4 billion dollars in lost sales to China, 50 percent below forcasted trendlines.

Of course, prior growth might not have been as robust as in the past regardless. None the less penalty to our farmers is obvious.
,