Author: Lone Candle

“a one percentage point increase in imports from China caused a 1.9 percent decline in U.S. consumer prices, saving a representative American household roughly $1,500 a year”

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“prices are not just about prices. When consumers have more purchasing power, they use it to buy goods and services in other, more high-productive sectors. Higher tariffs would lead to lost jobs, and inputs would become more expensive for American producers.
Some research suggests that competition from international trade can lead to better wages in new roles for U.S. workers. A 2017 paper by the economist Ildikó Magyari estimates that the American companies most exposed to Chinese imports expanded employment 2 percent more per year than other companies did. Some of these were manufacturing jobs—with higher wages, because they are in the stages of production where workers add more value—and some were complementary service jobs, in such areas as engineering, design, research and development, and marketing.

Apple offers a fascinating example. Trump has often complained that China is the biggest beneficiary of the iPhone, just because the devices are often assembled there. But when researchers Kenneth L. Kraemer, Greg Linden, and Jason Dedrick disassembled an iPhone 7 in 2018, they found that almost all of its value was captured by Western producers of parts, including hundreds of thousands of American researchers, designers, programmers, salespeople, marketers, retailers, and warehouse workers. China just got 1.3 percent of the price paid for an iPhone, and that offshoring made it possible to move U.S. labor to the more value-added parts of the supply chain.”

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“more than a million American jobs depend directly on exports to Chinese consumers. About 0.5 percent of the U.S. work force would lose their jobs if the U.S. lost access to its third-largest goods exporting market.”

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“more opportunities would be lost in the future, since protectionism reduces competition and innovation. If the United States shuts its doors to the best manufacturers of, say, electric cars, that may save some jobs in the short term, but it will turn the U.S. into a fenced-off auto show for more expensive and less efficient vehicles. American consumers will have to pay much more, and foreign consumers will be much less interested.”

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“A United States bent on decoupling from China risks pushing many more innovators and entrepreneurs to the Far East. On paper there are good reasons to stop the export of sensitive technologies to geopolitical rivals, but what good does it do to fence in a geopolitical rival if cutting-edge producers feel the need to join that rival behind the fence?

One German producer of lasers and chip toolmakers, Trumpf, has faced increased obstacles and costly delays after the U.S. government pushed Germany to restrict its exports to China. In response, Trumpf moved some of its 3D-laser-cutting production to China.”

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“This comes from a company in one of America’s closest allies, a country dependent on America’s security guarantees. Imagine how countries diplomatically closer to China will react if forced to choose between Beijing and Washington.”

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“When economies slow, governments have a harder time keeping the populace satisfied. That often leads them to crack down on dissent. China is now doing the bare minimum to fit into the global order, and it has an awful human rights and civil liberties record at home. There is a great risk that a declining, more isolated, and less interdependent China could be much worse on both fronts.”

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“If a rising power can see a future in which it prospers and is allowed to take its place in the established world order—or become so dominant that it can easily replace that order—it makes sense to hide its strengths and bide its time, as Deng Xiaoping encouraged the Chinese to do. But delay is defeat if further rapid growth seems impossible: if it suffers demographic decline, or if geopolitical rivals decide to starve it of resources or markets. Then the country must either accept that it will never realize its grand ambitions, or lash out.”

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“Xi knows an invasion of Taiwan would result in an economic war with the West that would cause China tremendous pain. But what if China had already been deprived of those lucrative markets and had already lost access to investments and technologies it needs?”

https://reason.com/2025/01/18/the-real-threat-is-an-isolated-china/