CHINESE ECONOMIST LOOKS AT IMPACT OF TRUMP TRADE WAR ON US ECONOMY

Below is our translation of a Chinese-language article from hainaxinwen.com, with commentary by Vince Dhimos.
 
Not long after Trump took office, I came to the alarming realization that the expectations of voters that a successful business man would have the necessary skills and experience to manage the US economy effectively were false because the ability to game the capitalist system to one’s own advantage does not teach anyone about macroeconomics and Trump’s clumsy handling of the economy was a sure sign of this. This was compounded by the fact that Trump does not consult with experts, believing that he is the only competent person on the planet. His own failures as a CEO leading to 6 bankruptcies was a harbinger of things to come.
 
On the other hand, due to the mental disease that has long affected Washington, Congress is all too eager to slap killer tariffs on China, and these lawmakers’ motivation has nothing to do with economics. They don’t care a fig about economics or the US economy – which is doing well only if you believe that the stock bubble currently being blown is not a stock bubble. Their goal is to harm China at all costs in order to weaken it. After all, they know Trump can spin a tornado into a nice day.
 
Back in the 80s when Congress was debating granting Most Favoured Nation status to the PRC, one of the talking points was the possibility of bringing China into the Western sphere of influence as a means of driving a wedge between that country and Russia, and I had the impression then that Russia was in fact the target, not so much China. US think tanks had for years imagined scenarios wherein Russia and China were at odds with each other over this or that issue but it was mostly wishful thinking, the product of their overheated fantasies. I suspect that now, after decades of denial, much of the US Establishment has finally realized that this imaginary wedge never existed and never will. It should have been obvious considering all the vicious US aggression toward both countries that could not but have driven them together in an effort to escape US fury. So now at long last, the psychopaths in Washington are conspiring to bring down China by various means: the sanctions on Huawei, inducing Google and other tech giants to stop doing business with the company, and now the absurd, crippling tariffs that, as the author of our translated article points out, are rejected by every sector of US society. As is shown here and elsewhere, the tariffs and counter-tariffs are costing US businesses and households billions (I just read this a.m. that the global tech markget is down cool trillion). Yet Trump and his cronies in Congress plough ahead with no signs of relenting. Their goal is the same as in Venezuela and Iran – make the economy scream to trigger the overthrow of the government and achieve a pro-US government in China. The mood among the Chinese grassroots suggests this will not happen.
 
A series of Reuters Interviews on the Chinese street show that some of the people are developing hostility toward the US and some refuse to buy US products:
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https://www.reuters.com/article/us-usa-trade-china-sentiment/the-chinese-streets-view-of-the-trade-war-some-say-they-wont-buy-u-s-products-idUSKBN1KY0LA

A Pew survey shows the Chinese see US power as a major threat

https://www.theguardian.com/world/2016/oct/05/china-us-power-top-threat-survey

“A survey by the Washington-based Pew Research Centre revealed 45% of Chinese people consider US power and influence to be a ‘major threat’”
 
A CNBC poll shows Trump’s trade war is not well accepted nationwide and is so unpopular in key states that it could cost him re-election in 2020.

https://www.cnbc.com/2019/05/22/trumps-trade-war-gets-poor-marks-in-poll-could-threaten-his-support-in-2020.html
 
The articles on this topic in the US press are surprisingly open and straightforward and almost all indicate the world economy is in for a shaky ride, but, for example, the soybean farmers they interview, whose livelihoods have been ruined, are generally clutching at straws in order to keep believing in Trump – who many Evangelicals believe was appointed by the Almighty – saying things like “I understand what Trump is trying to do but I think he is using the wrong method.”
 
 Pain of Tariffs Tests Farmers’ Faith in Trump: ‘How Long Is Short-Term?’ (from 5-24!!)
https://www.nytimes.com/2019/05/24/business/economy/farmers-trump-trade.html

The trade dispute with China has cost growers their No. 1 buyer, but they say the president is on the right course.
 
So let me get this straight: they understand that he wants to destroy the world economy but don’t agree with his method?
 
The Chinese reports are a little less forgiving, quoting farmers who have already given up on their trade thanks to Trump. They aren’t being nice any more.
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BEGIN TRANSLATION
 
The harm to the US economy from added tariffs has caused strong opposition from all walks of life

2019-05-10
 
Abstract: Adding tariffs to harm the US economy - American society strongly opposes raising tariffs on China's exports to the US. The US Trade Representative Office announced on May 8 that it will start tariffs of US$200 billion worth of Chinese exports to the US from May 10. 10% increased to 25%. Sino-US economic and trade consultations are still in progress, and all sectors of the American society strongly oppose the US government to raise tariffs, thinking that this will only hurt
 
American consumers’ pocket book “crushed”
 
The American Soybean Association issued an announcement on the 7th, urging the US government to cancel the plan to impose tariffs on Chinese goods, and expects the US government to establish better trade relations with China through negotiations. Rick Huffenberg, president of the American Apparel and Footwear Association, said raising tariffs would only hurt American families, American workers, American companies and the US economy. Gary Shapiro, president of the American Consumer Technology Association, said that suddenly raising tariffs to 25% would "disturb the market and damage US companies."
 
Mr. French senior vice president of government relations, said that the sudden increase in tariffs will seriously hit US companies, especially those with limited resources that cannot mitigate the impact, "American consumers will face higher prices, and employment opportunities in the US will be reduced."
 
A study by the US-based business consultancy Global Trade Partnership in Washington showed that a 25% tariff on US$200 billion worth of Chinese exports to the US, along with an existing 25% tariff on US$50 billion in Chinese goods and the addition of tariffs on imported steel and aluminium products will result in a reduction of 934,000 jobs per year in the United States and a cost of living increase of $767 for a family of four.
 
 
Consumers’ pocket books will be “crushed”
 
The increased impact of tariffs on American consumers is real, and the people’s pocket book will be “crushed.” The Wall Street Journal reported that the addition of higher tariffs would have a huge impact on the average US consumer because it involved a range of consumer goods, including groceries, textiles, clothing, sporting goods, soap, lamps and air conditioners.
 
The US Chamber of Commerce  opened a special page on its website called "Trade Works, Tariffs Don’t" last year, arguing that American companies and consumers are experiencing the impact of trade wars and marking the ongoing damage caused by trade wars to US states and businesses using shades of red from light to dark. Click on any state to find out the impact of trade disputes on the state's major businesses. The most severe damage, in dark red on the map, covers nearly 40 states.
 
Recently, a joint study by the University of Chicago and the Federal Reserve Board used the "example of washing machines" to prove the impact of increasing tariffs on consumer goods. The results show that since the United States imposed tariffs on imported washing machines in January 2018, the average price of washing machines has increased by 12%. The annual spending of American consumers on washing machines and dryers has increased by 1.5 billion US dollars. For $86, each dryer costs $92 more.
 
A study by economists at the Federal Reserve Bank of New York, Columbia University, and Princeton University found that the tax burden from US government tariffs—including tariffs on steel, aluminium, solar panels imported from China falls entirely on US consumption, costing US consumers and businesses at least $1.4 billion per month.
 
American farmers are experiencing "hard economic times"
 
American farmers have also been hit and their livelihood has been severely affected. In 2018, US net agricultural income fell by 12%. Soybeans, pork, dairy products and wheat prices suffered a precipitous decline, while equipment prices rose, resulting in a sharp drop in profits.
 
Lovi Nezl, a fourth-generation farmer of Bismarck Farms in Kansas, told this reporter that his farm has experienced "tough economic times" since last year because of tariffs. Last year the US government announced the issuance of $12 billion in agricultural subsidies to help American farmers who were damaged in trade disputes provoked by the United States. Nezl said that the subsidy money was obtained, but compared to the lost market and the reduced income, "this subsidy is not nearly enough."
 
Dr. Dar Fjell, Director of the Research Management Department of the Kansas Corn Association, told this reporter that most of the farmers' income has been invested in agricultural machinery, not only because of the increase in tariffs, but also because of the decline in sales, the decrease in income, and the increase in equipment costs. The construction of warehouses for the placement of agricultural machinery and equipment requires the use of iron, aluminium and other raw materials, which are subject to heavy taxes due to the trade wars, resulting in rising costs in this area. "I don't know how long this situation will last. The farmers have been waiting for good news, but they are waiting only to be disappointed again and again," he said.
 
Looking at the major media in the United States, examples of American farmers being affected by tariff increases are everywhere. Jim Tapon, a grain farmer in Kansas, said: "We have survived the difficult times of the 1970s and 1980s, but we are not making it this time." The family had to give up their farms after nearly 100 years of operation. Iowa’s pig farmer Howard Hill is losing money. He said: “We have patience, but we don’t have unlimited patience.” John Boyd, a farmer who grows soybeans, corn and wheat in Virginia, can't afford the equipment he needs, "I didn't buy anything"... The US Department of Agriculture's Bureau of Economic Research said that the trade war may have reduced the US agricultural trade surplus in FY 2019 to its lowest level since 2007, in part because "exports to China are expected to drop sharply."
 
Trade frictions between the world's two largest economies have also raised concerns about global economic growth. The International Monetary Fund, the World Bank and other institutions recently lowered their expectations for world economic growth. The World Trade Organization lowered its global trade growth forecast for 2019 from 3.7% to 2.6%, the lowest level in three years. Gian Maria Milesi-Ferretti, deputy director of the International Monetary Fund's research department, said in an interview with this reporter that the increase in trade barriers due to US trade policy and the trade tensions it creates will undermine the global supply chain and are one of the major threats to the current world economic outlook.
(This newspaper, Washington, May 9th)

END TRANSLATION

http://www.hainaxinwen.com/world/26387.html