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You’re right that everyone suffers. The question in a “war” is who can handle the most losses/suffering before routing. The evidence seems to suggest that the Chinese market is already tanking, with the US barely having taken a first few shots. I see minimal impact, if any, on US markets (there are of course localized pockets of suffering, but we’re talking about the whole picture). So this is more about taking a long term view. When the status quo (pre-Trump-tariffs) continues, the US continues to rack up a deficit, loses a lot of manufacturing expertise, develops a significant dependency on China, while China continues to innovate and raise its standard of living. Of course the US remains engaged in more higher level work, but rampant IP theft renders a large part of it moot, when it can simply be stolen. So a few decades from now, the US is only slightly above its current position while China has advanced considerably. Even better, with China’s large population, and emphasis on STEM, they are better positioned for the next many decades, compared to the US. Now combine that with China’s (or any large power’s) willingness to throw its weight around, and within a century it is not too hard to visualize the US as a secondary power to China. China (or anyone else for that matter) will continue to steal IP as long as they can get away with it. It’d be stupid not to. The point of this is to really force them to come to the table and come to terms that are amenable to the US. It is trivial to issue a “statement” condemning IP theft, but entirely another matter to take actual steps to prevent it. The ultimate goal of US (or any country’s) foreign policy is to maintain long term geopolitical advantage. Continuation of the status quo did not seem like the most realistic path to doing that, so they’re fighting it. From a trade perspective, a rising deficit means the US pays for Chinese goods, while barely getting paid for its products. The US would really like to sell more than it buys. This cannot happen when the Chinese have tariffs on just about everything, in addition to making it nigh impossible for foreign firms to operate on their soil. This state of affairs works strongly to their advantage, so they have no reason to do it differently. The US hopes that these (and future) tariffs will convince the Chinese to be more open to US products and companies in mainland China. |
From what I understood this is not accurate. An iPhone built from China is recorded for the full value when shipped to US/Europe/etc. This makes it appear that there's a trade deficit while it's actually the opposite (controlled by Apple).
Europe works in a similar way when I looked at it (ages ago). There's various data collected (Eurostat). But for trade it's on value and it's not always clear who controls it, nor where it is headed.