r/ProfessorFinance • u/LeastAdhesiveness386 Goes to Another School | Moderator • 2d ago
Geopolitics The world’s tariffs on Chinese tech
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u/darkestvice Quality Contributor 2d ago
Perceived? IP Theft, currency manipulation, and impossibly huge government subsidies is not "perceived", lol.
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u/ravenhawk10 Quality Contributor 2d ago
A bunch of bull shit reasons for those ridiculous EV tariffs. US was barely in the EV game, they don’t have the IP to begin with. There’s a bunch of currency manipulators so obviously singling out China is more geopolitics, not to mention in recent months manipulation has been about propping up the yuan not weakening it. With regards to subsidies the US subsidises their EVs more than China with the IRA.
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u/LayerProfessional936 Quality Contributor 1d ago
No its not. The tariffs are totally reasonable. Western countries trust China to have their products made there, with paying a fair price and company penalty for creating them in China. The products are shipped back to the west and everybody wins.
Yet what do they get now? China reverse engineer d and fully remakes the same stuff without the penalty and with a lot of state funding, and ships these cheaper to the western countries.
So when these countries decide to do the work back home instead, and start to block these chinese products, it suddenly is unfair to block them? No its not, china played a foul play and pissed off many players.
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u/ravenhawk10 Quality Contributor 1d ago
not remotely relevant to EVs. West is playing catchup with EVs, their tech is inferior outside of Tesla, which is happy to churn out cars from Giga Shanghai and makes up a large chunk of chinese EV exports.
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u/LayerProfessional936 Quality Contributor 1d ago edited 1d ago
Sure it is. China is deliberately destroying western car companies, and this is undesirable in many ways. They started with dumping steel for years, now finally the US, Canada and EU said stop this. A solution is still far aeay unfortunately
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u/ravenhawk10 Quality Contributor 1d ago
it’s just disruption from a new technology. west was slow in investing in EV tech. its desirable creative destruction of markets.
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u/Dear-Old-State 2d ago
China is run by evil psychopathic communists who are single-mindedly driven by a desire to destroy America and everything we hold dear.
Relying on them to manufacture everything is bad, actually.
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u/ravenhawk10 Quality Contributor 2d ago
yeah but don’t come out with bullshit economic reasons and just admit it’s all geopolitical.
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u/AwarenessNo4986 Quality Contributor 2d ago
Every country in east Asia does what you just wrote, including US "allies". Also not sure since when have subsidies or currency control became religious dogma. Btw please check the exchange rate for CNY . The sub is obsessed with it without even knowing it's trajectory.
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u/ThePickleConnoisseur 2d ago
IP theft isn’t. They’ve had industry plants to take company secrets. Half of their tech is stolen US stuff
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u/AwarenessNo4986 Quality Contributor 2d ago
Corporate espionage isn't exclusive to China, and happens across the region and has been happening since decades.That's the point I'm making. Even if manufacturing moves to other countries in Asia IP theft will remain.
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u/ThePickleConnoisseur 2d ago
It’s not about Asian IO theft, it’s about adversary IP theft. They aren’t allies
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u/AwarenessNo4986 Quality Contributor 2d ago
What came first? Adversary or the theft? Because the theft has been happening anyway
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u/ThePickleConnoisseur 2d ago
Adversary
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u/AwarenessNo4986 Quality Contributor 2d ago
Exactly....everything else is an excuse
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u/ThePickleConnoisseur 2d ago
It’s more problematic as its state sponsored theft of basically everything
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u/AwarenessNo4986 Quality Contributor 2d ago
Again, it's not the only state sponsor of IP or Tech theft....and as we have established, that's not the issue here as that happens across Asia even by US allies.
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u/BassOtter001 Quality Contributor 2d ago
All of these would've happened even under a democratic China.
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u/darkestvice Quality Contributor 2d ago
Oookay? What's your argument here? Not talking politics right now. I'm talking technological and financial fuckery.
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2d ago edited 2d ago
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u/paragon60 Quality Contributor 2d ago
right, yeah, but what does this have to do with democracy? are you saying the other countries in southeast asia are democracies and that is why they dont do similar even though china would still do it if they were a democracy? does what you are saying have literally anything to do with the very real parallel to japan boosting its own tech subsidies because they want to reclaim their role? or does this have literally nothing to do with democracy?
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u/Friedyekian 2d ago
You can’t “steal” an idea, only copy. That distinction is important because while China isn’t respecting international state granted monopolies, they aren’t harming anyone, merely free riding off of their work. Just like you and I free ride off of the work and charitable estates of our ancestors and our neighbors ancestors.
The international impossibility of enforcing IP is part of why I argue IP is a bad system. We don’t NEED IP to incentivize innovation, it’s merely a system we’ve chosen to do so.
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u/vhu9644 2d ago
IP is both incentivization of knowledge dissemination and development though. The point of IP is to encourage innovation details to be shared.
Without it, things get stuck in trade secrets and lost when key people die. Or it causes stagnation over time as inspiration or cross pollination stops.
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u/Final_Company5973 2d ago
As I understand it, the pertinent point here is Chinese theft of *military* secrets, e.g. that fella who was caught shipping technical documents on the F-35 program a few years ago. Nobody gives a fuck about fridges and hairdryers.
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u/OpportunityLife3003 Quality Contributor 2d ago
No, IP is crucial to encourage sharing of technology. All technology is important, as they can lead to developments in other fields. Without IP, people would protect their secrets themselves. When they die, those ‘trade secrets’ go away.
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u/Lars_Fletcher 2d ago
Long story short: consumers will get more expensive stuff, while (maybe) getting more money to spend on said stuff.
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u/Hot-Celebration5855 Quality Contributor 2d ago edited 2d ago
I think the western world should start a “tariff clock” on China. All NATO countries plus our Asian allies should increase tariffs on all manufactured goods coming out China at x% a year, to send a clear message to manufacturers that they cannot continue to invest in a country that is rapidly (if not already) a clear enemy to democracy and the western world.
In this way we can boil the frog slowly and give businesses time to adapt but also force them to reinvest in local manufacturing or, at the very least, manufacturing in friendly countries
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u/vhu9644 2d ago
A lot of money would be made by any defectors. You’re essentially asking to get long term collaboration, misaligned with economic incentives, where any small scale defections would yield outsized rewards. It’s impractical as a legislation.
And who’s to say, for example, some U.S. politician bought out, suddenly pulls out or stops enforcing it? Or if a poorer EU country decides it’s their way up in relative economic chain by using foreign manufacturing? Or Korea thinks it can gain by not leaning to hard on the U.S. wrt North Korea?
It’s nice in theory, but impractical as diplomacy. You’d have accusations of actual economic warfare against China, while also giving them a lot of time to solidify their sphere of influence.
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u/Hot-Celebration5855 Quality Contributor 2d ago
Global diplomacy is never easy. We already have all of the problems you deserve or with China right now
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u/vhu9644 1d ago
There is not easy, and there is doomed to fail.
Most of the countries wouldn’t be primary beneficiaries. You’d mostly just have the U.S. Japan, and maybe Germany. You could maybe make an argument for Korea, India, France and Spain.
So what concessions are you giving to make everyone else fine with having no alternatives except the U.S. for many of these industries, losing out on Chinese manufacturing and resources, and keeping them in line as administrations change?
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u/Hot-Celebration5855 Quality Contributor 1d ago
Pretty sure Japan and Germany (and most other countries) know how to manufacture stuff on their own
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u/vhu9644 1d ago
It's not about knowhow, it's about supply chains and price for manufacturing.
Americans can manufacture, it's just expensive. We had economic growth from making china our manufacturer, because it saved us money and made things economically viable. For example, the entire mechanical keyboard segment exists because we had cheap plastic iteration and manufacturing enabled by China. Consumer electronic drones is a segment that started up from cheap Chinese electronic components (camera and motors).
Now, let's say you're Germany, and you've just announced tariffs on china. China plays ball and enacts tariffs and trade restrictions on you. Your cost to manufacture just went up 30%, but so did everyone else you're competing with. 3 years later, the next administration realizes that what they could gain is essentially cheaper manufacturing from breaking with everyone else, use the fact that most of them can't replace German high-tech tooling manufacturing, and say "Hey China, we'll promise to relax these tariffs if you give us a good deal.
China in this scenario will take a deal, because well, they have no market except some developing nations. They need an advanced market to move up the value chain and it'd be economic suicide if they don't take it. You break with the U.S. because you stand to gain, quite significantly. And for the short to mid-term, your complex tooling actually can't be replaced.
But this happens with every advanced economy. You'll need to convince all of them to not break off. And for what? So that they will help the U.S. advance its interest to kill another large economy. After you've broadcasted to them that if they get uppity, they might be next. You also need to somehow convince all of them that not only will the U.S. never break from this agreement, but also convince them all that no major economy will break with this. It's a doomed piece of diplomacy from the start.
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u/Hot-Celebration5855 Quality Contributor 1d ago
I think all of these are surmountable with the right diplomacy and pacing but it’s Christmas Day so i am gonna end it here. Happy holiday!
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u/vhu9644 1d ago
I remain very skeptical about the long-term viability of such diplomacy without some major guarantees, but clearly there isn't anywhere else to go.
Happy holidays! Hope you and your family have a Merry Christmas
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u/Hot-Celebration5855 Quality Contributor 1d ago
Maybe it’s not the right answer but the western world needs to get off the heroin that’s cheap manufactured goods in China
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u/vhu9644 1d ago
You'd need a really compelling reason. Security and defense trump all, but you'd have to demonstrate that for most of the people there, and as far as I can tell, it seems most of the world consider the spat a mostly economic one that only becomes security related with the U.S. because it threatens the hegemony, not because they are directly threatening invasion.
You can convince, for example, Taiwan, Japan, Vietnam, and the Phillipines, but getting Europe to agree is probably a tough sell. They'd go along with targeted tariffs, but probably nothing sweeping like you're suggesting.
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u/HumbleFigure1118 2d ago
Who are they protecting by applying 100% tariffs on EV cars ? I'm genuinely asking the question.
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u/Positron311 Quality Contributor 2d ago
Battery requirements are probably a lot more strict in US/Canada/EU than they are in China. I'm reminded of the Samsung lithium battery fiasco a few years ago.
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u/Jolly_Mongoose_8800 Quality Contributor 1d ago
I've worked for a company that produces batteries in America. The requirements to get the CE mark for a battery require an internal protection circuit. You can have this be as cheap as a fuse or as complex as a current sense feedback controller that prevents deep discharge.
Can't say too much, but I did some investigating into a Chinese battery company (i dont even remeber its name), and I was able to devise a test that replicates common use, but also will explode the battery causing injury to the user.
The competitor didn't have any current control, obviously no loading specs, and had an insane leakage current when disconnected. Also, the competitor was selling in Europe with what I suspected to be fraudulent use of the CE mark.
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u/Spider_pig448 2d ago
If you aren't good enough to compete, just tariff!
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u/starkguy 1d ago
I mean, yes? That's literally the point of tariff. To protect ur industries. Tariff, quotas, fdi, and other regulations are all various measures that china used in the past to grow and protect its industries. And it seems that they did succeed considering how good their manufacturing capabilities currently are.
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u/vhu9644 2d ago
Ultimately, it seems rather small. 7 industries of which there are only 7 players.
I wish they’d let us know how much of the market this is and how much of Chinese tech leads are wrapped up in this.
And I would like to know what the tariff situation looks among the largest countries. Is this amount of tariffs an aberration? Or is this rather normal?
I guess the meta question is how does a smaller or poorer country fairly move up in the value chain? Most tech is locked behind IP, and cutting edge technologies tend to be considered part of national competitiveness or security. There aren’t many technological industries that are there to be created if you can’t even do mid-level tech. Are poorer countries just doomed to be poorer except by the whims of a richer country?