Becoming and staying competitive is very important. Subsidies are bad when it’s given continuously, like forever? Please go and read up a bit on how some advanced economies continue to provide subsidies to their uncompetitive agriculture sector and then forcing the weaker nations which has nothing else but agriculture to COMPETE fairly. Manual labour vs machines, who’ll win? Unfortunately, one side has no financial strength to buy machines. What happens then when a country has HUGE trade deficits. Trade deficits meant that they IMPORT more than they EXPORT. So, technically this country’s currency should WEAKEN while some countries with trade surplus should strengthen…. Anyway, that’s another story. Today we look at what may happen when the U.S. slaps a US$60 billion tariff on Chinese goods. (China yeah, not the Chinese in Malaysia). Here’s that news in CNBC.com
President Trump says that this will curb technology theft from the U.S. companies. While I am very sure the U.S. companies are full of innovations and continue to file ever more international patents, let’s also note that China is now filing the second most international patents in the world, after the U.S. and is expected to OVERTAKE the U.S. in 3 years time. The article in sciencebusiness.net here. Before anyone thinks the U.S. is the number 2 in 3 years time, well, Japan is expected to overtake the U.S. in 3 years time too. So, if the prediction based on current trends are true, it meant that the U.S. will only be in the top 3 for international patents; last place among the top 3. I do not think slowing down China’s international patents is the major reason for the upcoming tariffs because if it is, then I think their next target may be Japan? Okay, so when the U.S really do ‘slap’ China (with tariffs), what then? Do they expect China to accept it?
Here’s what may happen with the Chinese side. One loser may be Boeing, which has US$1 trillion orders from China. I think perhaps Airbus is a better choice then? At this moment, I think Boeing is also waiting to see what happens. Do note that Chinese companies do follow what their government says quite closely… That’s not all, beyond just the TECHNOLOGICAL stuffs, even the wine sellers may be at the losing end. China counts as California’s top wine importers in 2017 and when tariff war happens, we know very well that there are many other wine country choices. From Australia to South Africa and Chile or even France…. choices are just aplenty. Here’s that article in Bloomberg. By the way, a professor in a U.S. university is saying that the loser in such a tariff war may just be the U.S. Here’s her view. There are many other views and in fact it’s hotly debated. Stock markets are also reacting to this war as well, negatively at this moment. Here’s another ‘doubt’ in an article in The Washington Post. For Malaysia, China is our 2nd largest trading partner and the U.S is 3rd. We have a small trade surplus of US$4.6 billion with the U.S. Hopefully the situation does not affect us too much. Cheers.
written on 23 March 2018
Next suggested article: London property market dwarfs the rest but has stopped booming
