> On Mar 22, 2018, at 6:14 PM, Sam Gindin sam.gindin at gmail.com [SocialistProject] <SocialistProject at yahoogroups.ca> wrote:
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> I think this is basically accurate. But China is also very vulnerable to a breakdown in the “liberal” world order and a retreat from US leadership. It does have the material base for not being cowed and US capital is with them re concern about Trump (though US does want some concessions on IP and crazy Trump may actually help with that). Seems that a compromise is there to be had but who knows - such things can obviously spin out of control.
Yes, this seems to have less to do with “protecting” uncompetitive US industries at home - the pitch to Trump’s base - than pressuring the PRC to further open its markets to the US high tech, financial, and manufacturing multinationals with respect to procurement, intellectual property, limitations on foreign ownership, and other irritants. The tariffs will likely be withdrawn in exchange for some movement in these areas and commitments to buy US liquified shale gas which is in the works anyway. Even if there’s a failure to reach agreement, the tariffs only represent about 1% of its GDP and China has plenty of its own cards to play, including its huge pile of US Treasuries. Still, as you say, unintended consequences…
> On Thu, Mar 22, 2018 at 8:09 PM Marv Gandall marvgand2 at gmail.com [SocialistProject] <SocialistProject at yahoogroups.ca> wrote:
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> British Marxist economist Michael Roberts examines this week's tariff policies announced by the Trump administration in his latest blog post.
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> As Roberts notes midway through his post, Trump’s threatened trade war on China would redound to the US’s disadvantage in two major ways, which is why it's almost certainly more bark than bite.
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> 1) High trade barriers would accelerate The PRC's redirection of outward capital flows away from the US to other countries. China's foreign direct investment - two thirds of which is in Asia - has surged in the past decade and now ranks only behind the US.
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> "China is also pushing aggressively into ‘the belt’ countries of its ‘one road’ project. That’s reflected in its exports, with sales to these states double those to the US", adds Roberts. "So any restrictive measures taken by the Trump administration against China can only accelerate this reallocation process.”
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> 2) Multinationals domiciled in the US increasingly rely on profits from their foreign operations rather than exports - think Apple, Walmart, Boeing, Caterpillar - and a Trump- initiated global trade war would both leave them vulnerable to retaliation from China and other countries and make their own exports from their subsidiaries into the United States more costly.
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> "Back in the 1940s, foreign subsidiaries of US-based corporations accounted for only 7% of all US profits –the same proportion as exports... Globalisation of US corporate operations and capital investment has changed that in the last 35 years. In 2016, the share of domestic profits has shrunk to 48% of total profits, while the shares of foreign operations and exports have grown to 40% and 12%, respectively."
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> Full: https://thenextrecession.wordpress.com/2018/03/19/trumps-trade-tantrums-free-trade-or-protectionism/
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> sam gindin
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> Posted by: Sam Gindin <sam.gindin at gmail.com>
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