For our topic today I will be discussing our views on trade wars. I have wanted to do this topic for a while as I feel it is one of the few legitimate concerns people would have over President Trump and the alt-right.
To begin with a trade war or economic war is another form of war so it follows all the rules that I outlined when I discussed our views on war. Trade wars should only be done out of national interest and once started there should be no limits to return to peace as fast as possible. I would also like to add that the objective of a trade war does not necessarily have to be economic. We started embargoes against states like North Korea or Iran, not because we need them to open their markets, which no one cares about but because we wanted to inspire societal change by replacing their form of government and political change by correcting the attitudes of their leaders. At the end of the day Economic wars are just another tool in our quiver to further our national interest.
People who do not follow our philosophy wonder why we are not more concerned with a trade war. More than anything our views are pragmatic. We believe that the poor state of the American economy and our trade balance gives us certain advantages in a trade war. These advantages disappear once the economy and trade balance get better but we should use them while they are here. In the Alt Right view trade wars follow two rules.
The Customer is Always Right
Think back to your own life. If something happens and the local Mcdonalds does something to annoy you then you can easily switch to the neighboring KFC , Wendy’s, or Burger King. Due to the number of choices you have available about the only thing that will happen is that the seasoning in your fried chicken changes. The price does not even go up as Wendys, Burger King, and KFC will still have to compete amongst themselves.
The US faces a similar situation with China. From Clothing (34B) to computers (40B) to toys (28B). Almost everything that China sells to the US is a product with multiple competitors. In fact you may not even notice if the Chinese brand is not available as there is a Korean, Philippine, or Japanese one you could buy instead. In fact the other countries would step up production to fill in the void left by the Chinese. The volume of trade is another consideration. The top 10 products that China sells to the US totals over 250 billion in volume. If the US market was closed off or restricted to them there would be no other market available to take that volume and they would have to reduce production.
Contrast this with the US economy. The product we sell in the most volume to China is soy beans(10B). The total of the top 10 products the US sells to China does not even hit 40b. It is a lot easier to find new costumers for 40b worth of goods than it is to find them for 250 b worth of goods. The fact that we produce so little is not a good thing and if we succeed it will change. Yet this is the reality we are dealing with as of the moment.
There is also a misconception that since there is more Chinese than Americans that China is a more important market to enter which is why companies would prefer it. This is wrong. America is the most important market in the world and companies would always prefer access to it over China. Due to social security, welfare, credit cards, and other devices each American has more purchasing power than what his salary would suggest and even that salary would be much higher than his Chinese counterparts. The only real value the Chinese have is low wages and even that is being taken over by the Indians, Vietnamese, and others.
At this point people will then ask. Isn’t the main beneficiary Vietnam, India, and the other countries production will shift to? Why yes. Thank you for noticing. In an age where China is flexing its muscles in Asia its greatest fear next to a US- Russia alliance is having its production transferred to the other Asian countries by the same methods American production was transferred to it. Remember the trade war does not always have to have an economic goal. As for the US dealing with multiple smaller countries is easier than dealing with one major superpower. Some of the jobs which require more infrastructure and those involving restricted technology may find its way back as well.
Unless You Have a Monopoly
This is the second that overrides the first. Think back to your life. When Sprint or Verizon pisses you off what can you do? Cry harder. Unless of course you have actual competition in you area. I mention this rule for the sake of completeness as it does not apply to the situation in China and the US. If one did have a monopoly they could use that to great advantage in a trade war.
Having a monopoly does not necessarily mean having a monopoly in the classical sense. You could supply so much of the demand for the product worldwide that you have a functional monopoly. For instance in World War 2 so much of the demand for oil was spoken for that even if the US was not the only supplier of oil for Japan it could still cripple them by refusing to sell even if they are the consumer as they had no one else to buy from.
You could also have a created monopoly because of technology. This usually applies to the military and other things of that nature. While there are many different tanks for example once you buy an American one then you would have to keep buying ones from American defense contractors as the spare parts would not be compatible if you suddenly started buying Chinese ones. Incidentally this is why forcing European countries to double their defense budgets is a great move as it creates a lot of new business for US defense contractors and jobs for the industries involved in it.
The Customer is Always Right Unless You Have a Monopoly. Which is why we are not worried about a trade war with China.