Let’s say Apple pays a factory 1M yuan to make 1000 iPhones. For simplicity, let’s assume 1 yuan = $1. Trump imposes 10% tariff. That’s means Apple is going to have to pay Chinese factory 1.1M yuan, which is equal to $1.1M. Now, Chinese government wants the US companies to continue to do assemblies in China, so it drops its currency from 1 yuan = $1 to 1 yuan = $0.90. So, now Apple still pays the factory 1.1M yuan but it costs Apple $990,000 to buy so much Chinese currency. Apple or US consumers didn’t end up paying more. Average Chinese workers ended up getting paid less. That’s what currency devaluation does. And it’s a dangerous game for China because it diminishes the ability of average Chinese to buy imported goods, which include the common food like soybeans.
The problem is that communist dictators dont care if it hurts their people or not Thats their ace in the hole
1. American consumer still pays the tariffs. It is a fact, and you can't spin your way out of it. 2. China will buy even less US products which will make trade deficits worse.
It doesn’t matter. You pay $1000 for the iPhone. Whether 100% of it goes to Chinese workers, or 90% to Chinese workers + 10% to US government makes no difference to you, the consumer. Small price to pay to force them into compliance. Also, Chinese still buy rights to use US designed semiconductors, software and a whole bunch of electronics. Agriculture is a tiny part of the equation. To them it’s more important to sell their stuff to us than to us to sell our stuff to them.
I'm not "raving". I'm laughing at your inability to recognize that the 2 largest economies crapping the bed is terrible news for the entire world. How obtuse can you get?
Firstly, the income from tariffs goes to the country that imposes the tariff, hence the $100K in tariff will stay in the US and is effectively a tax on the importer which will be passed on to the US consumer. Secondly, the transaction will be priced in dollars hence will still cost $1M resulting in the Chinese company getting more than 1M yuan due to the devaluation. The effect of devaluation is that imports into China will become more expensive
Yes, but the net totals stays the same. I made a very simple illustration. You can replace 1.1M yuan to factory with 1M to factory + $100k to Uncle Sam. China drops the currency to make it cheaper to buy it and pay its workers. All wire receipts are converted to local currencies. That’s the rule almost everywhere in the world, and I’ve done a ton of international wire transfers in my career. All contracts with foreign entities that are performed in a foreign country are always priced in local currency. Speaking, again, from my professional experience. Yes, currency drop = higher prices for Chinese citizens to buy imported goods. And not just from the US - from any country.
BS. If you can afford the taxes, them good for you. I am tired of all the new taxes your boy is imposing on the American people without the approval of the Congress. Is it? We are blowing billions into bail outs because of it, and it will only get worse. Starting a currency would seem like a natural progression to Trumps economic ideas, but it will only hurt the US more. Trump accuses China of it, although the value of the currency is changed only a tiny fraction, and such accusation indicates Trump intends to start a currently car with such false flag accusation.
china is mostly export economy, devaluation benefit them right now, otherwise they wont do it. beside they can make pretty much everything domestically, so it doesn't hurt them. devaluation for them means they import less, export more and produce more for their own use, which widen the gap of trade deficit. they did this for years in the early 2000s which provide double digital growth. furthermore they have $1.5T US treasury with total $3-5T surplus, which they can use to import stuff with other countries using dollars. Meanwhile US continue to import china stuff by using $$$. and china can use that US $$ to purchase more oil, iron ore, soybean from other place. its win for them because trade gap only get bigger not narrower
Consumer pays the same amount. You don’t seem to understand the concept, so I’ll let you marinate in your own juices of ignorance. If the objective of rebalancing the trade with China then the costs are definitely worth it. If not - we can find another country to assemble our stuff, or assemble it ourselves. By the way, I thought liberals are pro-union. Do you think your local unions hate on the idea of manufacturing jobs coming to the US? I don’t even understand what you wrote here. Go back to school!
Devalued yuan is a win to Chinese factory workers and a loss to their buying power. While China can make a lot, their land is limited and overpopulation forces the land to be used towards industry and residencies. So, they must rely on some imports. While the pain to the farmers is regrettable, it’s not the deal breaker for the whole country. China not buying soy beans does not mean farmers lost their land. They’ll grow something else next year.
I know what you are trying to sell, and trying to support it with numbers pulled out of the seat of your pants. US Consumer is paying through the nose, and US businesses are suffering and you are pretending its all balancing out. It is not even close to being balancing out. Chinese currency dipping a fraction means nothing other than it gives Trump an excuse to accuse them of currency manipulation, which is what you are parroting, without even understanding what is going on. You are trying to defend the idiocy of your leader, and it is not making you look good. Personally I am neither liberal or pro-union.
A month ago 1 yuan = $0.15. Now its 1 yuan = 0.14. That’s a 7% drop, which will eat into the tariff. You are the one pulling things out of thin air. You don’t seem to understand the concept of currency exchange. US consumer is not paying through the nose.