I have the feeling that the whole trade war starts from a pile of nonsense.

[paulca]

https://www.investopedia.com/articles/investing/040115/reasons-why-china-buys-us-treasury-bonds.asp

[orion242]

No mention of the forced technology transfers here which IMO are a bigger aspect than just the trade deficit.

America lead the world not so much with military strength but with a moral standing which lead most free countries to side with her. Now that is gone

Guess long as our interests align with what’s publicly thought as “moral”.  Not sure Saddam & his imaginary nuclear weapons, Muammar Gadhafi, or the handful of American citizens that had a hellfire dropped on them would agree.

[technix]

No mention of the forced technology transfers here which IMO are a bigger aspect than just the trade deficit.

If you think technology transfer is too high a price tag for you, you could have just rejected the deal in the first place. It is pure capitalist bargaining, you took the deal without calming your heads first, and and you are just having buyer’s regret. Nobody is forcing you to take the deal in the first place.

There is a reason why there is no 250km/h rated bullet trains in China based on Siemens technology. Technology transfer have always been part of the deal when China Railways bought their trains, and Siemens rejected it when the first round of negotiations happened. You can reject the deal too if you don’t agree to the terms.

[orion242]

It is pure capitalist bargaining, you took the deal without calming your heads first, and and you are just having buyer’s regret.

Good point.  If these companies don't like it, go elsewhere or quit crying.

[CatalinaWOW]

Persistent large trade deficits cannot persist.  Eventually the money runs out and something changes.  So what is being argued about is how that change occurs.

One approach has been indirectly mentioned already on this thread.  You do nothing, and the old empire dies, crashing into poverty.  Horrible for the crashing country, and not really pretty for the former big exporters.  Even if it isn't a dominant market the loss of sales hurts.  Tariffs are another approach.  The 1930s proved that they aren't infallible as a solution, but they have worked in other places and times.  Can make for a softer landing.

In any case it will require the US in general to get hungrier, willing to work harder.  Is 25% harder the right answer?  In spite of the millions of experts willing to speak on the subject, no one knows.

[rstofer]

It is pure capitalist bargaining, you took the deal without calming your heads first, and and you are just having buyer’s regret.

Good point.  If these companies don't like it, go elsewhere or quit crying.

In effect, that's what we're doing.  If we raise the tariffs high enough, other players will enter the market.  The tariffs don't help the US as much as they create a more profitable environment for second tier players.  If products from China are priced higher, maybe similar products from Viet Nam become more attractive for buyer and manufacturer.

It's true that a high percentage of graduate students are here on a student visa.  Here's the problem I have with that:  Why should we spend taxpayer money, my money, to give foreign students access to PUBLIC universities in preference to our own citizens.  I paid for that university (not literally) and I expect my offspring to get preferential treatment.  That doesn't happen because my offspring pay a lower rate and the universities want more money.  In my view, we shouldn't admit any foreign students until all capable citizens have been accommodated.  As to PRIVATE institutions, well, they can do whatever they want, as long as they don't take federal money to do it.

I'm thinking here about the University of California system.  UC Berkeley, UCLA, or any of the other Cal State or UC campuses.  The taxpayers own those universities and their offspring should get preference.  Stanford and Cal-Tech can do what they want but they do receive a lot of federal funding so maybe there ought to be limits there as well.

So why is it that the US is a target for students?  It's clear from this thread that we are woefully inadequate and yet students keep coming.  Why don't they go to their own universities where their studies will be much more advanced?  I would think universities in the UK would be more attractive.  In a choice between UCLA and Oxford, I would pick Oxford every time.

Trump has tightened up on student visas and particularly the problem of overstaying the visa.  Undergraduate degree holders don't bring much to the dance but post-graduate students need a path to remain in the country.  There are at least 3 such paths but two of them are pretty well known:  The H1B Visa and the ever popular Green Card.  Heck, I had a Green Card when I worked in Singapore.  Stapled to the back of my passport!  Still have it...

There has been some tightening on H1B visas because the companies employing such workers were substantially underpaying them and dragging down wages for the natives.  There have been some prosecutions but not nearly enough.  But you can see why the natives don't want the H1Bs dragging wages down.

I don't know much about the Green Card process but it would seem to me that if the process is begun early enough, there should be a seamless transition.  Much of it depends on the employer doing their part and this is difficult considering that the student is probably not allowed to work on a Student Visa.  It's complicated...

Were it me, I would be heading to every university in the world and slurping up all the STEM post-grads I could find.

We are starting to talk about 'points based' immigration.  We assign a certain score for various attributes (education, age, skills, etc) and if a candidate passes the threshold, they are admitted.  Australia has done this for a very long time.  I looked at their score sheet one time back around '86.  Even with my MS degree, I couldn't make the cut.   So far, it's just talk.  And it's going nowhere as long as we have a flood of illegal immigrants coming over our southern border.

As to taking the deal:  Well, now we want to renegotiate the deal.  Things have changed and we don't like the old deal.  We want to make some changes.  Both sides need to give and take and there is no motivation on the part of the Chinese to give anything.  Why should they?  They can simply wait out the next 6 years and see what happens next.  The long game works for China.  The US messed up when they granted Most Favored Nation status back in the '90s.  We wouldn't be in this mess had we not done that.  Clinton...

Apparently we were able to renegotiate NAFTA to Trump's satisfaction.  A new deal has been signed by the parties but not approved by Congress.  It's dead in the water as a treaty until it is approved and that's not likely given the current state of Congress.

[rstofer]

One approach has been indirectly mentioned already on this thread.  You do nothing, and the old empire dies, crashing into poverty.  Horrible for the crashing country, and not really pretty for the former big exporters.  Even if it isn't a dominant market the loss of sales hurts.  Tariffs are another approach.  The 1930s proved that they aren't infallible as a solution, but they have worked in other places and times.  Can make for a softer landing.

If China thinks the new dominant market is the EU, good luck.  Their economy is healthy as long as the US is healthy.  No country is an island and if we crash, as we did in 2008, we tend to take a lot of other countries along for the ride.

https://en.wikipedia.org/wiki/Great_Recession_in_Europe

I read an article a couple of years ago where a small town in Finland was going bankrupt because they had invested in US Mortgage Backed Securities.  Somehow you don't imagine a quaint village in Finland being a victim of our housing crisis but there you have it.

As to scrapping NATO and letting the new and improved EU Army handle things, well, that works for me!  Of course you need to think of the new and improved EU Army as the newly reconstituted German Army but that's just a scary detail.

And how is it that the EU charges 10% tariff on US auto imports and we only charge 2.5% on German cars?  That doesn't seem fair as in Fair Trade.

https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-germany-japan-toyota-volkswagen/index.html

[Mr. Scram]

If China thinks the new dominant market is the EU, good luck.  Their economy is healthy as long as the US is healthy.  No country is an island and if we crash, as we did in 2008, we tend to take a lot of other countries along for the ride.

https://en.wikipedia.org/wiki/Great_Recession_in_Europe

I read an article a couple of years ago where a small town in Finland was going bankrupt because they had invested in US Mortgage Backed Securities.  Somehow you don't imagine a quaint village in Finland being a victim of our housing crisis but there you have it.

As to scrapping NATO and letting the new and improved EU Army handle things, well, that works for me!  Of course you need to think of the new and improved EU Army as the newly reconstituted German Army but that's just a scary detail.

And how is it that the EU charges 10% tariff on US auto imports and we only charge 2.5% on German cars?  That doesn't seem fair as in Fair Trade.

https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-germany-japan-toyota-volkswagen/index.html

The EU is China's largest trading partner. One could argue globalization means we all go down if one hurts badly. The US would suffer greatly if either the EU or China runs into serious issues as well, especially considering how much of the US is in Chinese hands.

[rstofer]

The EU is China's largest trading partner. One could argue globalization means we all go down if one hurts badly. The US would suffer greatly if either the EU or China runs into serious issues as well, especially considering how much of the US is in Chinese hands.

We had a similar situation with Japan coming here and buying up all kinds of real estate including some premier golf courses.  They got their collective asses handed to them when things slumped.  You don't hear much about Japan any more.  Are they still in business?

And, yes, all the countries are tied together but there are two classes of countries and the effects can be different.  There are net buyers like the US and net sellers like everybody else.  When the net buyers can't buy, net sellers see their markets disappear.  Other net sellers can't help because, well, they are net sellers, not buyers.

Whether you believe in trickle up or trickle down, it's buyers that build the economy.  Consumer Confidence is a seriously important statistic and it is at record highs right now.  That may change if we get very many more days like today.

[soldar]

Exactly, the economies of countries are more intertwined than they have ever been and changes should be negotiated, agreed by all and implemented in cooperative ways.

NAFTA has been renegotiated
https://www.worldpoliticsreview.com/articles/26188/who-won-in-the-nafta-renegotiation-a-preliminary-assessment
and it seems it was good for all but Trump is not content with that, he does not want cooperation, he wants triumph and defeat for the other side and that is how he presents it. It is nonsense but his base buys it and that is dangerous. 

It is the same with China. He does not seek fair relations, he seeks to humiliate China. He cannot achieve that but whatever he gets he will present it that way and his base will eat it up whole.

Trump lives in an alternative reality where he is Superman.

China can afford to play a long game which Trump cannot. His time is very limited.

America would be better served by policies of stability and international cooperation. Instead Trump thrives in creating chaos and instability.

[soldar]

And, yes, all the countries are tied together but there are two classes of countries and the effects can be different.  There are net buyers like the US and net sellers like everybody else.  When the net buyers can't buy, net sellers see their markets disappear.  Other net sellers can't help because, well, they are net sellers, not buyers.

It must be good to be able to make up your own reality and live in it.

[2N3055]

@Rstofer
Whoa, so much wrong in single post.

If you raise tariffs enough, there will be 100 million people in USA that will barely survive, because they are already at the edge of poverty. But those that are well off don't care about that.. Let's play stupid games with China.

It is not high number of graduate students. It is 80% of STEM graduate students, meaning USA citizens are in minority. And no, it is not because they pay them so little. It is because their knowledge is such that those coming from USA school system cannot compete well with them.
And they come because school system in USA is not really good, up to graduate level. On graduate level, USA universities are excellent and have good integration with industry and do very advanced projects and have great budgets. So yeah at that education level, it is top notch.

Taxpayers don't own crap. Taxpayers pay a due (tax) for services rendered to them by state. Public services are rendered to public, valued by utility to public good. So if it serves public to let genius Chinese girl/boy study in USA because they will invent new processor, or reactor or whatever, and that will enhance public good of USA citizens, than yeah, they will give them seat instead of some USA born kid.
Sorry, it is how it works.
It isn't fair, but I thought Americans hate socialism. Which is what you are proposing, equality at all cost. You (and myself too) are living  in capitalism, meaning results at all cost.
We don't care for people, only results. If you are not good enough, your problem. No mercy.

Many moons ago I lived in USA for 4 years. On H1B. Met many nice people, made friends. Had great time. Good times.
But I was not underpaid. If anything, in my consulting agency, my recruiter constantly reminded me not to say anybody how much I make. Most of the time I made much more than people I worked for on projects. And I'm talking NYC... Yes, I was that good at what I was doing.

And no, you didn't need to go around the world recruiting students. They were coming to USA, on their own and at their own expense. All you had to do was to pick the brightest ones and tell them they can come. It worked great. For everybody. They got their learning opportunity, you got premium research, and got to keep both research and continuity of greatest universities in the world and technology.

But now, even before they start considering where to go, USA is now sending the message over all available media that these dirty foreigners are not welcomed and that even if they come, they will be treated as scum.
So they might even go to Oxford rather than UCLA. Or some of universities in Germany or elsewhere in Europe. It is already happening.

And did you really just said :"You don't hear much about Japan any more.  Are they still in business?"

That is just disrespectful on so many levels to such a great country, great people and long time strategic USA partner.
Which is a great example of how USA treats their friends and partners nowadays...
Disrespectful and with great arrogance.
Such a shame for a once great and proud country..

[rstofer]

America would be better served by policies of stability and international cooperation.

At a net loss of $335B per year in trade imbalance?  I don't think so.  Fair trade would probably have a much smaller imbalance.  Maybe $1B, give or take.

The U.S. goods and services trade deficit with China was $335.4 billion in 2017. China is currently our largest goods trading partner with $635.4 billion in total (two way) goods trade during 2017. Goods exports totaled $129.9 billion; goods imports totaled $505.5 billion.

There are two ways to balance the equation:  Tariffs, which nobody wants, or rebalancing the buy/sell ratio.  We should buy less and China should buy more.  Or we can wait 6 years and see what happens next.

[rstofer]

And did you really just said :"You don't hear much about Japan any more.  Are they still in business?"

That is just disrespectful on so many levels to such a great country, great people and long time strategic USA partner.
Which is a great example of how USA treats their friends and partners nowadays...
Disrespectful and with great arrogance.
Such a shame for a once great and proud country..

No disrespect intended.  They were a big topic of discussion back in the '60s and '70s maybe even into the '80s.  I haven't read an article about Japan in 10 years or more.  They no longer make headlines and that's a good thing.  Yes, they are a huge player in automotive and electronics but, for whatever reason, the US doesn't seem to have trade issues with Japan.  They sit back quietly and make lots of money.  They really do have the quality control thing nailed.  Their products are excellent.

Maybe the reason for the lack of press is that their GDP is shrinking (short term) and essentially flat for 25 years.

https://tradingeconomics.com/japan/gdp

With a negative short term interest rate, you would expect to see a lot of growth.  It isn't happening.  They may have hit a logistics limit.

But they have quality control nailed!

[rstofer]

Taxpayers don't own crap. Taxpayers pay a due (tax) for services rendered to them by state. Public services are rendered to public, valued by utility to public good. So if it serves public to let genius Chinese girl/boy study in USA because they will invent new processor, or reactor or whatever, and that will enhance public good of USA citizens, than yeah, they will give them seat instead of some USA born kid.
Sorry, it is how it works.

Not really!  Taxpayers are voters and when they get pissed off, things change.  Do you suppose that if the issue of foreign students plugging up our universities became a popular issue that it wouldn't change overnight?  Foreign students can't vote and legislators take care of voters first and foremost.  Their reelection depends on it.

If you want to see an example of 'change', you don't need to look far!  Those pesky voters...

[2N3055]

Taxpayers don't own crap. Taxpayers pay a due (tax) for services rendered to them by state. Public services are rendered to public, valued by utility to public good. So if it serves public to let genius Chinese girl/boy study in USA because they will invent new processor, or reactor or whatever, and that will enhance public good of USA citizens, than yeah, they will give them seat instead of some USA born kid.
Sorry, it is how it works.

Not really!  Taxpayers are voters and when they get pissed off, things change.  Do you suppose that if the issue of foreign students plugging up our universities became a popular issue that it wouldn't change overnight?  Foreign students can't vote and legislators take care of voters first and foremost.  Their reelection depends on it.

If you want to see an example of 'change', you don't need to look far!  Those pesky voters...

Voters are simply repeating what they are being served by propaganda. Only minority of people think rationally, and most of others are not qualified to make important decisions about welfare of their community. They mean well, but make wrong conclusions /decisions based on partial or wrong data. They can be easily manipulated.
Don't make a mistake to think other people are rational if you are..

[rstofer]

Voters are simply repeating what they are being served by propaganda. Only minority of people think rationally, and most of others are not qualified to make important decisions about welfare of their community. They mean well, but make wrong conclusions /decisions based on partial or wrong data. They can be easily manipulated.
Don't make a mistake to think other people are rational if you are..

Voters ALWAYS vote in their own self-interest.  I have never in my life voted for a Democrat and I've been voting for more than 50 years - higher taxes and increased welfare spending are not in my own self-interest.

I think data is over-rated.  People vote with their heart and gut, not their analytical brain.  That's both the beauty and difficulty of allowing people to vote on how they will be governed.  We don't really have an elite group making unrestricted decisions about how things are going to go.  If the voters don't like something, they can change it.  Assuming enough voters agree.  Yes, mainstream media (the propaganda machine) influences elections.  It's a problem.

Despite the efforts of the media, Trump STILL got elected.  People are smarter than talking news anchors think.

[MT]

Why should Trump care? Trump represents the basket of deplorable, not the elites.
Those international elite business people got benefits from setting up shops IN China, not shipping TO China.
Trump's blue collar supporters only care about their OWN jobs, not how much money the capitalists in this country make abroad.

Weeeell, yet he surrounds himselfs with neoconservativeliberals and other globalist elite crocks. It dont bother you China is a Technocracy land?

Despite the efforts of the media, Trump STILL got elected.  People are smarter than talking news anchors think.

Trump didnt come to power by the people but by the Electoral College, US citizens barely makes a recommendation
on whom to become president,the deplorabels are already throw under the bus without knowing it.

People may disslike Trump for all kind of right issues but on the geopolitical theater he's one of few counterweights against the Globalist Technocrats. Trump became the monkey wrench thrown into Technocrats totalitarian machinery against his own will. The lefti, progressives even Marxist next to be eaten alive by the Technocrats, yet they have no idea they are on the list, they think they are part of their inner circle.

[magic]

So the reason we have a trade war at hand is because of the US-China trade deficit: China is importing way less things overall from US than vice versa. Meanwhile inside China I am feeling the pressure of US trade embargo, from FPGA's to computer parts. This give me the feeling that the thole US-China trade deficit is a manufactured situation by US in the first hand, hence the title "it starts from a pile of nonsense."

I don't think it's that simple. US trade deficit with China in 2018 was $420B, that's an order of magnitude more than the entire 2018 revenue of companies like Intel, nVidia or Analog. I don't know how many sales to China were blocked by US embargo, but I doubt they would suffice to plug the deficit.
We also need to mind that many of those Chinese products incorporating American components would be sold back to America, cancelling the original US to China sale and adding even more to the China to US flow. Or they could be employed to produce goods/services sold to America.

It also isn't anything specific to Trump, the deficit has been large and continuously growing for many years. Relevant US census data.

I think Americans screwed themselves up many years ago, when they drank the "knowledge economy" and "outsourcing" kool-aid. I guess it's nice and convenient when you can design things for others to manufacture and have them made by poor people working for peanuts, but inevitably those people learn how to design stuff themselves and you end up with dependency on their manufacturing and nothing to sell back to them, because all you have for sale is ideas and they are starting to have ideas of their own and don't give rat's ass about yours anymore.

This happened to simple consumer electronics which can now be bought for $1 at AliExpress, fully designed and produced in China, it is happening to smartphones, increasingly happening to ICs and will be happening to pretty much everything.

And there is another problem which is domestic low-skill workforce. Now matter how much some people wish otherwise, it exists. The idea that everybody will "learn to code" is nuts IMO. What actually happens is that millions of people are either losing jobs, or getting lower wages or simply know that their jobs will disappear anytime soon. Something has to be done with them.

Taxpayers don't own crap. Taxpayers pay a due (tax) for services rendered to them by state. Public services are rendered to public, valued by utility to public good. So if it serves public to let genius Chinese girl/boy study in USA because they will invent new processor, or reactor or whatever, and that will enhance public good of USA citizens, than yeah, they will give them seat instead of some USA born kid.

So you want me to pay for educating a foreigner, not spending that money on educating myself, getting a shitty job and not even being able to afford the processors the foreigner designed for my own good?
I think you should run against Trump, people would totally vote for that

Many moons ago I lived in USA for 4 years. On H1B. Met many nice people, made friends. Had great time. Good times.
But I was not underpaid.

Google "Indian H1B sweatshops". It's not about you.

But now, even before they start considering where to go, USA is now sending the message over all available media that these dirty foreigners are not welcomed and that even if they come, they will be treated as scum.

As far as I know, H1B isn't getting slashed and I think Trump even said something recently about making the path to full citizenship easier. OTOH, if you plan on going as a student, overstaying your visa and getting a black market job, yep, that's another story.

[rstofer]

Trump didnt come to power by the people but by the Electoral College, US citizens barely makes a recommendation
on whom to become president,the deplorabels are already throw under the bus without knowing it.

The genius of the Electoral College is almost always underestimated.

Back in the day (during the Constitutional Convention of 1787), the framers were worried about an imbalance in population disenfranchising smaller states.  Something had to evolve that would prevent the large population centers from running the country.

So, they gave each state 2 senators and at least 1 representative and progressively more representatives based on population.  The number of electors each state has is the sum of the senators plus representatives.

To be sure, California's 55 electors still outweighs the sum of a very large number of states but not as badly as if it were based on popular votes.  A whole lot of small states can overcome a very few large states.  If that weren't the case, only California, Texas, Florida and New York would matter.  Nobody else has to even bother to vote.

https://en.wikipedia.org/wiki/United_States_Electoral_College#/media/File:ElectoralCollege2016.svg

As you can see from the map, a whole lot of states disagreed with the liberal population centers.  Of course, Texas and Florida helped.  Don't count on Texas or Florida voting 'red' any more.

In general people don't understand the genius of the system so they want to change it.  Some states are now deciding that they will throw all their electors to the party that wins the national popular vote.  This is a huge mistake!  Suppose everybody in California voted for candidate 'A' but candidate 'B' won the popular vote.  Every vote in California would be meaningless because all of the electors would be required to vote for candidate 'B' even though nobody in California wanted them.

Yes, California has adopted this approach for the next election.  Nothing really changes because California will always vote for the Democratic candidate but at least the voters had some chance of making an impact.  Now there is no point in wasting a perfectly good postage stamp to mail in a ballot.  The electors are going to be given to the winner of the popular vote.  Even if they don't win California.  Won't it be funny when this backfires and the electors have to be given to Trump!  Biden wins the state and the electors go to Trump!  The irony...

Several other states are doing the same thing.  They don't like the Electoral College and realize they can't change the Constitution so they are doing an end-run around the requirements.  Nothing in the Constitution compels the electors to vote for any particular candidate regardless of the results in the state.  It's only by convention that they vote for the winner in the state, not by law.  But they need cover if they are going to vote against the wishes of the voters so this new scheme provides that cover.

Allowing the popular votes of other states to determine the outcome of your state just seems wrong.

[rstofer]

As far as I know, H1B isn't getting slashed and I think Trump even said something recently about making the path to full citizenship easier. OTOH, if you plan on going as a student, overstaying your visa and getting a black market job, yep, that's another story.

Apparently, H1B renewals are getting hammered and the end result is less H1Bs overall.

https://www.wired.com/story/h-1b-visa-rejections-spike-under-trump/

The gist of it is that the Trump administration is revisiting whether some 'specialty' is really special.  Over time, one could imagine that certain skills become more available in the homegrown market.  As a result, the specialty is downgraded and the H1B visa no longer applies.

More important, 3rd party employers (body shops) are getting hit the hardest.  Direct employment less so.  Body shops got most of the visas because they could flood the system with applications and hope for the best under the lottery.  Individual companies could only apply for openings they actually had.

Where I worked, we had a Canadian fellow working on an H1B connecting up the network infrastructure for a small subsidiary.  I knew a dozen people on our site alone the had those skills, we clearly didn't need an H1B holder to plug in network cables.  He was a nice enough guy, he really had the skills but those skills just didn't seem all that unique.  Look, it was Silicon Valley!  How far would you have to look to find a domestic network guy?

It makes sense to hire the best and brightest but not at the expense of canning a domestic employee or pulling down the wage structure.  There is no 'right' to an H1B visa.

[thm_w]

Because we make more research outcomes than a similar American student, in most of the cases.

The problem with using number of papers as a metric is it will get gamed: https://qz.com/978037/china-publishes-more-science-research-with-fabricated-peer-review-than-everyone-else-put-together/
https://www.natureindex.com/country-outputs/generate/All/global/All/score

Your point may be valid, but they need to be more strict about the quality of stuff that gets released. It seems to be getting better the past few years though.

[hermit]

I had a customer tell me once that he was invited to join an investing group of mainly US military officials.  The group made a killing using insider trading on military contracts.  This situation is no different.  Insiders knew/know in advance what moves will be made and when and which stocks will be affected and how.

If  you think this is about anything other than funneling money to the 'right people', well.....

[soldar]

So much winning!
Trump unveils $16 billion in farm aid to offset trade war losses
https://www.msn.com/en-us/news/other/trump-unveils-dollar16-billion-in-farm-aid-to-offset-trade-war-losses/ar-AABNwF2

[maginnovision]

So much winning!
Trump unveils $16 billion in farm aid to offset trade war losses
https://www.msn.com/en-us/news/other/trump-unveils-dollar16-billion-in-farm-aid-to-offset-trade-war-losses/ar-AABNwF2

Farmers have always been subsidized here.