(Collected from Asia Times www.atimes.com)
Answer 60% by Donald Trump
By DAVID P. GOLDMAN
14/02/2024
Trump’s proposal to increase tariffs on Chinese imports by 60% would cause the US economy to fail. Because right now America has to rely on capital goods imported from China in huge quantities.
Someone has to convince Donald Trump to abandon the idea of suicide.
During an interview on Fox News TV on February 12, This person has served as President of the United States for 1 term and may be president for another term in the future. When asked if he really wanted to slap 60% tariffs on all imports coming from China, Trump’s response was: “Not at all. I would say it could go up to more than more”
Definitely This kind of thing will never happen. The US will no longer be able to slap an additional 60% tariffs on Chinese imports, just as Trump himself will not be able to fly off the roof of Trump Tower. It might come out similar.
When Ronald Reagan was still president. Imports of capital goods from abroad account for about one-tenth of total US business equipment spending. But by 2023, imports have increased to staggering levels, accounting for 63% of all US business equipment spending. The United States now imports more capital goods than goods for further consumption.
China today is no longer America’s largest source of imports. Mexico is number one. An important reason is that Mexico imports Chinese components and assembles them into products. and then shipped to the United States But the United States continues to import huge amounts of capital goods from China. From the circuit boards that power everything, to generators. and changing equipment for utilities, industrial turbines, and, of course, Raw materials that are difficult to find from any other source, such as rare earth metals -This is just an example.
Trump wants the US to reduce its own trade deficit significantly. After all, this deficit has grown steadily over the last 30 years. In fact, in the end It is inevitable that the United States will do that. Because the US is selling its own assets to foreigners. To use the money earned to cover the difference in income that is not enough to cover costs. as well as using it to pay for various purchases in trade Until the United States was in a position to receive almost 20 trillion dollars more of foreign investment than net foreign investment.
But the kind of shock treatment he proposed here will only drive American businesses to the brink. A massive tariff increase on Chinese products will not help encourage American businesses to invest and produce the same products domestically. Before American companies could produce anything they needed to buy a variety of capital goods. which most importantly come from imports Especially from China, other countries can only partially compensate for these deficiencies in American capital goods. But China is responsible for about a third of the world’s industrial production. Therefore, there are not enough resources outside of China to compensate without having to rely on imports from China.
Not only civilian businesses But the US defense industry will face similar problems, as the Financial Times reports. As reported on June 19, 2023: Greg Hayes, CEO of the defense industry giant Raytheon, said that his company has “Many suppliers There are thousands of cases in China And disconnecting from China … is impossible.”
(See more at https://www.ft.com/content/d0b94966-d6fa-4042-a918-37e71eb7282e)
“We can de-risk, but we can’t de-risk,” Hayes told the Financial Times in an interview. Along with continuing to say He believes this is true “for everyone” too.
“Think of the $500 billion worth of trade that leaves China for the US every year, 96% of which is rare earth metals. Is it from China or is it processed in China? There is no other choice,” said Hayes. “If we want to withdraw from China, It will take many years before we can establish systems. A new one with adequate performance whether established within the United States itself or in other friendly countries.”
After the 2000-2001 recession, American businesses discovered a new way to invest. investing “capital light”, we have turned to producing expensive software while leaving it to Asia to make low-margin hardware. — The first episode was in Japan. Then there is South Korea and Taiwan. And then in China
Our capital stock of manufacturing equipment has not grown since 2001, according to estimates from the Federal Reserve. We are in a state of underinvestment in equipment worth nearly $1 trillion at current prices. Compared to long term trends This figure is equal to the total value of the capital investment in machinery and equipment calculated at the current rate for a period of 5 years.
(See more at https://www.federalreserve.gov/releases/g17/related_data/manuf_invest_capital.htm)
Rebuilding American manufacturing will take years. which requires the strongest encouragement and promotion from the United States government also It cannot be accomplished without imports. Because the capital goods industry of the United States is now in a hollow state. and American manufacturing industries depend on imports. It’s a matter of simple arithmetic. Trump is right when he says that the American economy is sick. But the treatment methods he proposed would only kill the patient.
Revival of American Manufacturing As I have written and suggested in a little book. Published by the Claremont Institute, it calls for large-scale change. including tax regulations, environmental laws, worker training, and US federal support for high-tech research and development. With every effort the parties put in such dedication. The United States could significantly reduce its dependence on imports in five years. But not in the way Trump intends to do.
(See more at
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