The Idea that the US is 'losing' due to the trade deficit and that reducing trade with China will benefit America is utter tosh and even the administration's own trade advisers and negotiators are saying so (a bit more politely).
[1] There are some narrow cases where trade can be harmful, or where national interest could legitimately be served by restricting trade, but that excuse is being used vastly disproportionately in the current disputes.
That line is just spin repeated again and again until people accept it without questions.
The actual issue for the US is the rise of China as a global power that does not answer to them.
That's a question of being willing to comply with Chinese contents-control requirements rather than trade per se. And if they comply they face a huge public opinion backlash in the US...
At the same time, it is understandable that a developing country try to develop its own companies rather than handed its market to US companies... Level playing field and all that ;)
Get outta here with your "China can do nothing wrong".
The problem isn't so much the deficit as it is the way the US has been seduced into relying upon the Chinese industrial machine.
The US industrial base has been depleting for decades. This presents a serious systemic risk - the US relies more and more on Chinese industry which can (and probably will, at some point) be cut off. This will result in massive inflation.
In (neoclassical) theory getting cut off isn't a problem because the market will simply bring all of that industry back to the United States. In practice, the flow of goods can be cut off overnight but an industrial base on a par with the pearl river delta would take at least two decades to build.
Which is pretty good growth, all things considered.
Mini-rant, feel free to ignore:
The alternative perspective which assumes total US industrial domination up to the present day (MAGA/Trump) is quite irrational considering world history: the US had almost no real industrial competition post-WW2 when all the other industrialized countries were either:
* shattered by wars in their homelands
* or completely cut-off from the rest of the world for 50 years...
So the industrial prowess of the US 1950 - 1970 (relative to the rest of the world) isn't coming back, now we're just headed for a normal equilibrium. One in which the US is still doing quite well from an industrial point of view.
It's not clear the US actually needs a huge boost in manufacturing jobs. Historically, attempts to preserve or boost jobs artificially through trade manipulations have had limited success at massively disproportionate costs. Anyway in absolute terms manufacturing jobs aren't exactly low, it's at about the same level as in 1949.
I hope there was a reliable way to simulate the outcomes.
1) Inflation is one plausible outcome.
2) The trade deficit exists due to US (and most of the western world's) appetite for consumption I guess. Let's say if the price of a gadget (or any other product/consumable) I "may need" goes up beyond a certain point then I am not buying OR I am curtailing consumption. How long will that take to result in deflation ?
3) The for-profit companies may decide (but I guess not) to accept reduction in profits ? But then the securities markets will see the downward trend.
Unless there are smart people who can simulate and say which outcome is most likely... it seems inflation it is.
This is not a "neutral" behavior.
And this is different from the past when "every country stole ideas" because in those other instances the "thief countries" weren't generally trading those products with their target.
It's fine to steal ideas if you use it to make your own country better. It's not fine to steal things which you then use to undercut the people you stole from.
No, it also works surprisingly well if everyone is acting rationally but purely optimizing for self-interest.
One such relevant negative aspect of all-out competition is that trade wars between superpowers backed by massive nuclear arsenals poses not only a risk to the world economy but also to our survival as a civilization if not species.
Working together for the common good seems indeed preferable in this case.
Mountain Pass CA has a reasonably clean process. Even the Sierra Club approved.
Molycorp built the current plant, but once they got going, China cut the price of rare earth metals. Then, once Molycorp went bankrupt, the price from China went up.[3]
[1] http://www.bbc.com/future/story/20150402-the-worst-place-on-...
[2] https://www.google.com/maps/@40.6383411,109.6903271,3872m/da...
[3] https://seekingalpha.com/article/4184580-new-china-rare-eart...
Take iPhone for example, do you think it would cost less if it was manufactured entirely in the USA (down to the components)?
I would love to hear a counter-argument or example. Thanks.
And cargo ships are large sources of pollution and have substantial tax privileges; the costs are externalized.
Tangentially, if you read the “There’s Too Much Stuff” article that was recently on the front page, there’s plenty of cheap junk I’d love to see priced out of existence.
Anyway, the deeper issues we have are not likely to be solved by global trade and cheaper goods. There are other factors which I’d argue are more important.
But if trust in the effectiveness and enforceability of rules is eroded by nationalist bluster and unreasonable demands (e.g balanced current accounts) then there will be nothing left to go back to.
It will just be power politics forever, and that will degrade the world's economic strength and increase the risk of war.