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Culture War Roundup for the week of April 7, 2025

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China has retaliated with 84% tariffs on US goods:

https://www.bloomberg.com/news/live-blog/2025-04-08/trump-tariffs-stock-market-updates

Trade war is now on for real.

The trade flow diversions across the globe, who will receive what runoffs and to what effect, will be the most interesting part of these interesting times. One of the most pressing macro-economic questions of the trade war is 'who in the world is supposed to absorb the Chinese exports no longer going to the US?'

One of the limits of a lot of the recent discussion has been that it focuses on the Trump tariffs as a bilateral or even unilateral effect, i.e. how bad this will be for the US specifically. Part of that is understandable- the way you generally try and end a trade war is to sap political willingness from the pursuer, and convince them it's worse for them than pursuing. Totally normal, and I'm not implying that's necessarily wrong on any sort of factual or ethical level, though such arguments do have an incentive to exaggerate. (You can probably find plenty of online threats of, say, the EU cutting the US service exports at the knees in retaliation- instead, the EU so far as gone after certain red state good exports, a fraction of the fraction. This is a strategy tailored for political effect, not maximizing cost, which is what discussions/threats over the service economy exports would have been. However, those are focused more in Blue states, so...)

But what those types of arguments don't address is that the mountains of trade goods and oceans of trade flows will go elsewhere, and when they do that will cause second and third order trade conflicts that don't directly involve the initial party.

Take the US goods exports to China. On page 5 it breaks down various categories by share and volume of trade. While no category measured in the billions of US dollars should be considered 'small', note what some of the larger categories are. Food products. Oil and gas. Basic chemicals. Other forms of input products.

A lot of these are relatively fungible goods, but also where global demands itself is relatively static. If China refuses to buy, say, oil and gas from the US, that doesn't mean that china does without and stops all things that previously used the US export. It means China pays for an equivalent amount of oil and gas from somewhere else, possibly outbiding other market equilibriums for the privilege. Which takes that oil and gas off the market, and leaves the customers who would want them available for... the US oil and gas not going to China.

Now apply this to other categories. If you price-out, say, medical equipment via tariffs, then either you go without or you go elsewhere. If you go elsewhere, then you're taking from that status quo. The American goods are, nominally, available to fill the void. There may be complications- quality standard disputes, language and labeling barriers, etc.- but the underlying fundamental demand (the people who had been willing to buy Good X before China came in and bought it), and the potential supply (the American goods no longer going to china) exists.

At the end of the day, economic actors don't either produce to make maximum products or not produce at all. They will continue to produce as long as even decreased margins are preferable to no income. As long as it makes economic sense for the producers to keep producing rather than shut down, the goods will continue to be produced for the market while substitute transactions are sought. This is why input-producers, such as Russia, are often able to survive disruptions with major established trade partners as long as they have the ability to get their goods to global markets. The former-importer still needs to import something like the no-longer imported [thing], and the former-exporter can now export to whomever the former-importer is buying up the [thing] from.

This substitute process is generally not economically efficient. It costs more, in absolute and opportunity costs. It often gives less profit due to higher transaction costs (though politically-influenced deals are a wild card). This is less beneficial to most people involved, though the intermediaries who can make the connections can make a killing. There will be all sorts of compliance costs to try and access the demand that opened up when China bought out [thing] from [elsewhere], whether it's relabeling to new languages or trying to regulate regulatory approval or whatever else. Not all businesses will be able to survive that transition, and will be bought up or close down when they otherwise would have carried on. The people who say this entails high economic costs are not lying.

But that economic inefficiency does not change that an absolute mountain of goods are about to be redirected and crash into national markets that are magnitudes smaller in scale, and upset the political-economic equilibrium in different ways.

It also is not an argument that is specific to the US. A point was made that the US goods to China were in some respects relatively fungible. People gonna eat and put gas in cars to go to work or fuel factories. Demand for these is relatively inelastic. If China buys food and gas from elsewhere, then elsewhere will want to buy food and gas to make up what they would have been consuming but China purchases.

But if the US isn't buying from China due to the trade war...

Above I linked a product to show the US exports to China. If you looked at it, did you notice anything that ought to have been there, but wasn't? I'll link again. Can you spot it? It breaks down exports by type, exports by US state sending to China, exports volumes...

Can you find the word 'import', and find where it is used outside of the context of what China imports from the US, i.e. US exports?

Here is another (Biden-era) product of exports and imports by category.

Three of the top US import from China categories include-

  • Machine appliances ($268.5 billion)
  • Textiles ($50.3 billion)
  • Misc. Manufactured Items ($69.4 billion)

$388 billion dollars, or $388,000 million dollars, is a significant-but-not-overwhelming amount to the scale of the US economy, which in 2023 the world bank estimated was over $27,360,000*... million USD.

*Edit: used wrong box in first post, corrected. Same point to argument.

But if you sort that wiki-list by size and scroll down, that $388,000 million starts to match and then even exceed, by multiple magnitudes, the GDPs of the smaller countries in the world. Which- if the China-originated formerly US-bound trade flow of manufactured goods has to go elsewhere- are not going to be the only places that good surplus will redirect. After all, countries can't subsist on nothing but machine appliances, market saturation will be reached, which means going to the next markets and so on.

Except, some of those countries like having their own manufacturing economies of their own. And would want to protect their own markets from Chinese dumping. When even the EU is in internal conflict over the implications of the forecasted wave of Chinese products no longer going to the US...

Manufactured goods aren't necessarily fungible in the same way that production inputs are. Arguably if the Chinese had the same sort of tariffs overall as everyone else, they'd keep (or even slightly grow) the same general market share of American imports for these categories as long as it remained a roughly even playing field with everyone else. But the nature of the US-China trade war in particular vis-a-vis the rest is that as the US and China put higher tariffs on eachother, then every exporter-to-the-US isn't hitting the same impact. Americans will still buy goods, even if at higher prices, just not as efficiently. Which also means that those manufactured goods that previously would have gone to [place] because China had such a share of the US market are now subject to go to US as the China market share in the US is up for grabs.

Which also means that there's fewer goods in [other markets] even as China's manufactured goods are looking for a place to go.

Anti-dumping practices exist for reasons, but it's less obvious that it isn't the US most at threat of price-dumping. And while the World Trade Organization has historically tried to discipline anti-dumping practices, the WTO dispute resolution mechanism (i.e. judges to make rulings) wasn't exactly resurrected before Trump came back. Which is to say, there's no WTO authority to make a formal and binding judgement against you, the national politician, taking actions in your national (and domestic political) interest.

None of this is an argument that the US will 'win' a global trade conflageration. Whether you think that's because there is no way to win / that Trump won't cut any deals / whatever reason, this isn't an argument about what will happen for the US. The US outcome is separate from the point.

The point is that the more that China's trade-to-the-US is diverted by the US-China trade war, but still produced by the economic incentives within China to keep producing, the more that will put China into its own trade tensions / conflicts with other states, as it seeks to have them absorb the consumption of China exports that the US no longer is. It's not like China has no cards to play- the rare earths mineral supply chain has been a topic of concern for years, as China has used it to coerce and punish neighbors on various issues.

And that will have its own interesting follow-on effects, both for the success and political dynamics for pressuring countries to accept the export flood not going to the US, but also the impacts to states that resist those pressures. But also the impacts on relations between those countries who took the Chinese exports and their neighbors who might not want the same sort of deal and now face overflow from their neighbors who they previously had a tolerable equilibrium with.

That is the sort of global trade issues that I feel have been under-recognized in the last week's focus on arguing about the American-specific element of the Trump tariffs. It's not all about the United States, and the longer the trade system upheaval goes on, the less proximal the US (and Trump) will be to future, predictable, trade conflicts.

Part of that is understandable- the way you generally try and end a trade war is to sap political willingness from the pursuer, and convince them it's worse for them than pursuing.

The problem is the tariff boosters don't care. They believe in some unicorns-and-rainbows benefit from tariffs that's never going to happen, and they'll continue to believe in it even as it doesn't happen.

People gonna eat and put gas in cars. Demand for these is relatively inelastic.

Unfortunately not. People can eat less and put less gas in cars, because prices have gone way up and/or availability has gone way down. This is called "poverty".

The problem is the tariff boosters don't care. They believe in some unicorns-and-rainbows benefit from tariffs that's never going to happen

I don't think that tariffs are going to result in a magical surge for the US economy, no.

I am happy to accept a net reduction in wealth, even a significant net reduction, as long as we get something in return. A weakened China, a more self-sufficient US, manufacturing jobs for the working class. Something.

If we just get literally nothing in return, not even pain for our enemies, then yeah, that would be a bit silly and that should ideally be avoided. But the PRC online army is calling us bitches and saying that we'll back down because we can't take the pain. So we may have to keep going even if it turns out to be purely self-destructive. Because the one thing you can never do under any circumstances is look like a bitch.

I am happy to accept a net reduction in wealth, even a significant net reduction, as long as we get something in return. A weakened China, a more self-sufficient US, manufacturing jobs for the working class. Something.

We might get a weakened China, in as much as we'll weaken the entire world. I'm not sure why you want manufacturing jobs for the working class -- what difference does it make if they bust their butt in a shoe factory rather than an Amazon warehouse? But you won't get it. Nor self-sufficiency.

what difference does it make if they bust their butt in a shoe factory rather than an Amazon warehouse?

There is one, and it's that one of these can be transformed into an arms factory and the other can not.

That's most likely not why this is being done but it's still conspicuous.

An Amazon warehouse is more likely to be transformed into an arms factory than a shoe factory is. Unless your arms are slings and such.

Soldiers need boots.