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Comment by bitshiftfaced | Hacker News Reader

China can hit American farmers, but their overall trade surplus is $295 billion. The US has much more leverage.

The USA accounts for 15% of China's exports. That's big. But the US is facing retaliatory tariffs from not just China but also Canada and the EU and others, accounting for over 35% of US exports. China is betting on the rest of the world being tough to the US, and it might well pay off.

Trade surplus is not sufficient to analyze the issue here. It is about commitment. What you want is something closer to the probability that the trade surplus will lead to a policy change. Even if it is true that the average Chinese citizen will be more negatively impacted than the average US citizen that negative impact doesn't equally translate to policy change. The US congress is fairly evenly split. It doesn't take that much to cause a policy shift.

There simply isn't a whole lot of alternatives to Chinese imports to the US.

So while tariffs will stop some importation of Chinese goods due to costs others are just going to cost more for consumers until the proposed US manufacturing capacity is build up.

Same with auto parts, even the US car makers rely on foreign made parts and have no real alternatives.

Until there are alternatives. When the price of a given product increases, it becomes more attractive for competitors to invest in making that product.

Even if companies are convinced they need to manufacture stuff locally (ie they believe these tariffs are never going away, whereas in practice you'd expect that, at absolute most, they're gone within four years, likely two, and maybe within weeks), you're talking about years to build up production capacity. China is likely taking the (reasonable) view that US consumers won't put up with years of higher prices.

Sure, unless they flip-flop on tariffs and make your investment not as attractive as it initially seemed.

People assume there's going to be massive investments into what is essentially an uncertain market. A reversal of the capital outflows of the previous decades or something, dunno?

Why, exactly, would people from other countries chose to invest in the US when they could just keep their investments at home and/or engage with more reliable trading partners like the EU, South America or Asia?

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