Protectionism here we come

[Jay]

Just like clockwork.

http://biz.yahoo.com/ap/080620/china_steel.html

[phirang]

Re: Protectionism here we come

Just like clockwork.

http://biz.yahoo.com/ap/080620/china_steel.html

It's the beginning of the inevitable cooling of China's economy and this whole commodity boom...

Now, here's the real doozy: is this part of the Fed's () plan to fight inflation, i.e. by curbing Chinese overproduction to reduce commodity prices globally? More tariffs like these on Chinese imports are not only politically popular but also deflationary.

[Jay]

Re: Protectionism here we come

It's the beginning of the inevitable cooling of China's economy and this whole commodity boom...

Now, here's the real doozy: is this part of the Fed's () plan to fight inflation, i.e. by curbing Chinese overproduction to reduce commodity prices globally? More tariffs like these on Chinese imports are not only politically popular but also deflationary.

It's a nice fit in the wage spiral theory for sure.

[touchring]

Re: Protectionism here we come

It's the beginning of the inevitable cooling of China's economy and this whole commodity boom...

Now, here's the real doozy: is this part of the Fed's () plan to fight inflation, i.e. by curbing Chinese overproduction to reduce commodity prices globally? More tariffs like these on Chinese imports are not only politically popular but also deflationary.

Chinese overproduction is a big problem. But i do not think that tariffs are deflationary, in fact, it will be inflationary.

Let's take a hypothetical example of US imposing 100% tariffs on all chinese computer part imports. Virtually all computers and laptops are now made in China, the effect will be inflationary.

Chinese direct exports to the US is less than 20% a year ago, but by now with the depreciation of the dollar, probaby only 15% of total exports. This means that the world export market is at about 4 times the size of the US market.

Tariffs imposed on Chinese products will disadvantage US exporters versus German and Japanese competitors. So ironically, US exporters will have to move their factories to China to avoid American tariffs, accelerating the deindustrialization of america.

[phirang]

Re: Protectionism here we come

Chinese overproduction is a big problem. But i do not think that tariffs are deflationary, in fact, it will be inflationary.

Let's take a hypothetical example of US imposing 100% tariffs on all chinese computer part imports. Virtually all computers and laptops are now made in China, the effect will be inflationary.

Chinese direct exports to the US is less than 20% a year ago, but by now with the depreciation of the dollar, probaby only 15% of total exports. This means that the world export market is at about 4 times the size of the US market.

Tariffs imposed on Chinese products will disadvantage US exporters versus German and Japanese competitors. So ironically, US exporters will have to move their factories to China to avoid American tariffs, accelerating the deindustrialization of america.

I see it as deflationary, too, because your COGS has now increased, and so the project's NPV is now lower: with steel etc more expensive, return on building homes is lower, and so fewer will pass the stress-test etc.

[touchring]

Re: Protectionism here we come

I see it as deflationary, too, because your COGS has now increased, and so the project's NPV is now lower: with steel etc more expensive, return on building homes is lower, and so fewer will pass the stress-test etc.

Deflationary as in causing falls in pricing? Or deflationary as in dampening the economy? Taxation is always deflationary. Subsidies are inflationary.

[phirang]

Re: Protectionism here we come

Deflationary as in causing falls in pricing? Or deflationary as in dampening the economy? Taxation is always deflationary. Subsidies are inflationary.

Subsidies are deflationary if you import them.

[touchring]

Re: Protectionism here we come

Subsidies are deflationary if you import them.

Depends on what you're importing.

Is america going to setup toy factories to make $3 stuff toys instead of importing them?

Is America going to setup electronics factories that make $150 cellphones?

GM and Ford and is losing to Honda and Toyota, and this is a war that can't be won, so the media talks about $3 stuff toys instead? No one wants to talk about failure, especially one which they know they can't reverse it.

No politician wants to say that the American industry is losing out to Japan and Europe gradually and nothing that they can do about it.

[phirang]

Re: Protectionism here we come

Depends on what you're importing.

Is america going to setup toy factories to make $3 stuff toys instead of importing them?

Is America going to setup electronics factories that make $150 cellphones?

GM and Ford and is losing to Honda and Toyota, and this is a war that can't be won, so the media talks about $3 stuff toys instead? No one wants to talk about failure, especially one which they know they can't reverse it.

No politician wants to say that the American industry is losing out to Japan and Europe gradually and nothing that they can do about it.

Sure it can be won: we just copy the japanese and crash the USD and impose tariffs on asian imports.

But wtf do i know :cool:...

[touchring]

Re: Protectionism here we come

Sure it can be won: we just copy the japanese and crash the USD and impose tariffs on asian imports.

But wtf do i know :cool:...

This is possible, except, america will just be gradually left out of the equation. Europe can still trade with Asia and the world economy continues.

The world's biggest markets for broadband, cellphones, wireless technologies, RFID, mobile commerce, are already in China, so everyone will still be having fun there, except American companies.

Protectionism doesn't work in a global trading economy, whichever country that practices protectionism will simply shut itself out of global trade.

There will always be trade disputes but i don't see how any economy can return to wholesale protectionism without destroying itself.

The only way to compete in a global economy is become competitive.

[metalman]

Re: Protectionism here we come

This is possible, except, america will just be gradually left out of the equation. Europe can still trade with Asia and the world economy continues.

The world's biggest markets for broadband, cellphones, wireless technologies, RFID, mobile commerce, are already in China, so everyone will still be having fun there, except American companies.

Protectionism doesn't work in a global trading economy, whichever country that practices protectionism will simply shut itself out of global trade.

There will always be trade disputes but i don't see how any economy can return to wholesale protectionism without destroying itself.

The only way to compete in a global economy is become competitive.

speaking of retail sales of made in asia goods... first decline ever in cell phone handset sales...

U.S. cell phone sales take a dip

Sales of cell phones in the U.S. declined during the first quarter of 2008, as the maturing market was hit by a slowing U.S. economy.

Nearly 31 million handsets were sold in the U.S. during the first quarter of this year, down 22 percent from the same period a year ago, according to the NPD Group. Sales of mobile handsets generated $2.7 billion, down from $2.9 billion for the same period a year ago.

This is the first time since the NPD Group started tracking mobile handset sales in 2005 that it a saw a decline in the first quarter after the holidays. And the market research firm believes the decline could be tied to economic troubles.

"Cellular phone service has become a practical necessity in modern life," said Ross Rubin, director of industry analysis for NPD. "However, with looming economic concerns on the horizon, many consumers may be holding back on new handset purchases, especially those tied to new pre-paid plans."

--

ej says when the usa stops being the demand engine for asia growth, 'deal's off' on low interest lending. should treasury rates start to rise soon?

[touchring]

Re: Protectionism here we come

http://business.theage.com.au/byebye...0528-2j0l.html

Global mobile phone sales rose 14% to 294 million units last quarter, with Nokia and Samsung Electronics, the world's two biggest producers, taking market share from Motorola.

At the same time, mobile sales in Western Europe dropped for the first time since at least 2001 as higher costs of living crimped consumer spending. Total unit sales in Western Europe slipped 16% to 35.9 million from a year earlier, according to a report by researcher Gartner.

Western Europe slipped 16%.

[c1ue]

Re: Protectionism here we come

Japan could do what it did because of its 'virtual protectorate' status with the US. The US does not have an entity which can act the same, thus the policies which Japan follow are not useable here.

Nothing like having minimal defense expenses plus a nice fat market to leech onto to make economic life easier.

Which half of the world is willing and available for the US to suck off of?