Thursday, November 07, 2019

Quora: Why is president trump trying to take on China in this "Trade War"? What will happen if we lose?

Bob MacKenzie, former Business Owner and Manager. at Private Business Self Employed Thinker (1973-2019) answered

China is out preforming the US at various levels. China’s GDP ppp is better than the US by at least 20%. China is also very independent minded and not subservient to US demands like many other countries are.

The US has enjoyed control of world affairs now for about 75 years and they can feel it slipping away to a successful communist government.

For economic and political reasons the US has become desperate to put China down so US hegemony will continue to reign over the world.

The excuses the US is using of trade imbalance, IP theft and forced technology transfer as reasons for the trade war are all lies.

There is no IP theft where no agreement to protect IP has been made. China did not agree to any rules the US has made about IP protection. I think there is an understanding in place now because China is producing more IP that needs protection than the US is, but it may still be at the negotiation stage.

There was no forced technology transfer, if the company wanting to enter the dynamic Chinese market place did not want to abide by Chinese rules they did not have to enter China.

There is a trade imbalance with almost every country the US deals with because the USD is the world’s most used reserve currency. The US buys goods and services from other countries to keep their USD in high circulation and allows the US consumer to enjoy lower prices of imported goods.

The goods China sells to the US are sold mostly at wholesale. The goods China buys from the US are retail. China buys about 200 billion retail priced goods and materials and the US buys about 459 billion in wholesale priced goods. The US companies mark the Chinese made goods up by more than 100% in most cases. So that becomes one trillion dollars of retail goods at least.

To give you an example that I experienced myself and maybe you have to. I bought a really good package of shaving razors made in China from a store here in Canada. There were three in a package for $1.25. They were exceptionally good so I went back to get more, there were none left. I kept looking for them. The next time I saw the same razors in the same package with a US name on it, was in the local drug store. The same three razors were now selling for $9.95 about a 900% mark up. I have seen the same thing with similar mark ups I have bought directly from China. Tools I bought from China for $9.95 each with free shipping I saw for sale here and in the US for $85.95 plus shipping.

Even with this kind of economic imbalance in favour of the US, China is still building a bigger GDP and the US can not allow that to happen, as far as they are concerned.

One of the main reasons the US GDP is holding up is because of the advantage China gives them on wholesale prices, now Trump has added to that by putting tariffs on Chinese goods making US consumers pay more so the US treasury can pocket 100 billion dollars, according to Trump.

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