Trump’s tariffs don’t directly cost China a penny, rather their expense is solely borne by American consumers and paid to their government. As is the nature of all governments dealing with free (other people’s) money, they will waste much of this windfall.
China will bear an indirect cost in presumably selling less goods to Americans, given their tariff-induced reduced spending power. All of this applies equally to Chinese consumers because of China’s counter tariff measures on American imports.
So the question is, who’s the winner? It’s not hard to answer. There are no winners. Obviously Chinese and American consumers are worse off with their reduced spending power, so too both nations’ exporters with their reduced buyer markets. And while the tariff proceeds go into the Chinese and American governments’ pockets, they too are worse off. Why? Because these measures hit economic activity with a consequential reduced tax take and higher welfare outlay. In short they are dumb.
A great explanation of why tariffs are stupid and hurt both countries.
An excellent example is the Warehouse. I’ve long held the view that Stephen Tindall with his Warehouse chain has done more for low-income folk than any other New Zealander. I’m staggered when I study their full-page advertisements and see the incredibly low prices on clothing and other items. Children’s leather shoes for example, at $8. When I was a kid in post-war working-class New Zealand it would have taken my father, a welder, two weeks wages to buy me a pair of shoes.
I agree – The Warehouse has been excellent for many families.
Much the same can be said about the sale of land to foreigners, particularly those nations, invariably Third World, which naively prohibit foreigners owning their land. Complaints that foreigners are buying up our land is a constant cry.
First , it’s not our land, rather it belongs to one of us and whether owned by a foreigner or a local has no adverse effect on anyone. It remains private property.
Second, foreigners are not Martians; they’re people and do us all a service bringing their cash here. If every farm in the country was sold to a foreigner we’d all be immensely wealthier with such a massive influx of cash which inevitably would feed into the wider community. Meanwhile, exactly as before, we’d indirectly reap the benefits of the farmers’ export earnings.
I wish more people understood this.
In a perfect world there’d be universal free-trade and no restriction on business and land ownership. As I alluded to earlier, the most restrictive countries are invariably the poorest and the wealthiest are the most open. Draw a conclusion.
The link between how free an economy is and how well off people are is very strong.