On this episode of China Uncensored,
everybody's a winner!
Wait, what's that, Shelley?
Welcome to China Uncensored,
I'm your host, Chris Chappell.
Trade Wars.
That's more than just George Lucas's unproduced spin-off
of the Star Wars prequels.
According to the leaked script,
it follows Jar Jar Binks as he infiltrates the Trade Federation.
Strange that it never got made.
Anyway, trade wars.
That's what some experts are afraid might happen
if President Trump carries out his promise to impose a tariff,
or tax, on goods made in China.
He blames China’s unfair trade practices
for the loss of American manufacturing jobs.
Here today to talk about this issue
is the only person at China Uncensored
with an economics degree from Trump's own alma mater,
University of Pennsylvania, Shelley Zhang.
Thanks, Chris.
How likely is it that Trump is going to impose tariffs on China?
Oh, he's definitely going to do it.
Really?
100 percent.
How can you be so sure?
I'm not sure about anything anymore.
Ok, yes President Trump can be a smidge unpredictable.
But railing against unfair trade practices
is kind of his jam.
In 1987,
he took out this full-page ad in the New York Times.
In it,
he criticized Japan for taking advantage of the US
with its weak yen and trade surpluses,
and suggested that we "tax" Japan and other countries
for the services the US provides,
like keeping the world safe.
Sound familiar?
I guess China is the new Japan?
Yes.
Just a quick find and replace,
and he can still use the same speech
30 years later.
Ok,
so when President Trump imposes tariffs on China,
what effect will that have?
Will that start a trade war?
That I don't know.
It really depends on how high the tariff is,
and how broadly it's applied.
Trump has talked about wanting to impose a 45% tariff
on all Chinese-made goods.
Something that big would probably trigger China
to impose its own tariffs on American goods in retaliation.
That could lead to a trade war.
Of course, you could argue that China
already started the trade war years ago.
You know, when it did things like
artificially lowering the price of their products
through export subsidies,
stealing intellectual property,
and setting up ways to keep US companies
from competing in China.
That's definitely how the Trump administration
sees it.
Well, more important than who starts it, is who finishes it.
Who wins the US-China trade war?
Experts are divided, Chris.
Some say it will hurt America.
Others say China will lose.
Meanwhile, Chinese state-run media
say that China would totally not get hurt by a trade war.
And, like, it's not going to happen.
Plus why would the US want a stupid trade war anyway?
Which means state-run media also think China will lose.
So what you're saying is, America wins.
Well, it's complicated.
Americans will lose in that tariffs mean
companies will raise prices on Made in China stuff.
So we'll have to pay higher prices on most stuff at Wal-Mart,
as well as things like appliances and consumer electronics.
But will tariffs bring American jobs back?
They might bring some jobs back.
But not necessarily the same ones that left.
Jobs might require higher technical skills, for example.
Low-skill manufacturing jobs
probably aren't going to come back.
Lots of those jobs have been replaced by technology.
And US companies can just move to other Third World countries
with cheap labor.
Like the Donald J Trump Signature Collection
has already started moving from China to other countries.
Yes.
Although in a recent speech,
Trump said he will incentivize US companies with tax breaks
and other things to come back to the US.
Tariffs could also create different jobs.
For example, in industries where China has a virtual monopoly,
like on rare earth minerals,
which are needed to make electronics.
Tariffs could cause a huge shortage in the short term,
but in the long term,
it could encourage American companies
to start mining rare earth minerals.
What about China?
China has more to lose
because they sell us more stuff
than we sell them.
And in a trade war,
generally the country with the trade surplus
gets hit the hardest.
China could lose millions of export and manufacturing jobs.
And at a time when economic growth is slowing,
that could cause not only huge problems with their economy,
but it could lead to political instability as well.
After all,
one of the big reasons
people put up with the Communist Party
is economic growth.
Very true.
And if China loses more,
does that mean America wins?
It's not so cut and dried.
There are other things that would probably happen.
Like the cheap manufacturing that's currently in China
would move even faster to places like Southeast Asia.
And it might create a gray market
where goods are manufactured in China
but shipped to another country,
where they are officially exported to the US
to avoid the tariffs.
Are you really saying that people will find loopholes
to avoid taxes?
Anyway, I guess we'll have to wait and see what happens.
Well, we actually have kind of a test case.
What I like to call the Rubber Chicken Skirmish of 2009.
That's when President Obama set a tariff
of 35% on Chinese tires.
It did manage to save 1,200 US tire jobs
and increased US tire production.
However, tires also got way more expensive
for US consumers.
And China raised retaliatory tariffs on chicken parts
from the US,
which cost chicken producers about 1 billion dollars.
I'm glad that wasn't actually about rubber chickens.
I was starting to worry about you.
Would it help if I told you I didn't sleep last night?
No?
Ok, one thing to note here Chris
is that I have been talking about this tariff in generalities,
since Trump hasn't talked yet about the specifics
of his plan.
However, economist Peter Navarro,
who’s the new director of Trump's National Trade Council,
has defended the tariff.
He says that it would be applied not on everything,
but with a "flexible case-by-case approach.”
And that tariffs would be used strategically
to negotiate with China.
Remember,
the Chinese regime is scared to lose manufacturing jobs—
because it could affect China's political stability.
That means the threat of a trade war
could be a powerful bargaining chip for the US.
So, if these tariffs are targeted to give the US
greater political leverage over China
and expose the ways the Communist Party
has gamed the system,
they could maybe get the Party
to change some of their trade practices.
And that would make the tariffs successful,
even if they don't bring back millions of manufacturing jobs.
So what you're saying is, America wins.
Trade isn't exactly a zero sum game, Chris, and...
Ok, you know what, yes, America wins.
Thanks, Shelley.
That's what I like to hear.
Go get some sleep.
And thank you for watching this episode of China Uncensored.
What do you think of the possible US-China trade war?
Leave your comments below.
Once again, I'm your host, Chris Chappell.
See you next time.