Winners And Losers When Trade War Breaks Out Between The US And China

The small of trade war between China and the US is becoming ever more rancid.

In the latest development, this morning we reported that the Trump administration is planning a probe of what the U.S. sees as violations of intellectual property by China. Against a backdrop of Trump’s frustrations with domestic policy, sliding approval ratings and disagreement with China over North Korea, the chances of protectionist action are rising according to Bloomberg while CNBC adds that the official start date of the trade war will be this Friday.

But who stands to lose - and win - if the U.S. takes aim at the unbalanced trade relationship? Bloomberg has done the math and found that with total trade of more than half a trillion dollars a year, the list of potential losers is very long. The most notable examples include:

  • U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.
  • U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.
  • Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.
  • Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.
  • Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total -- below Vietnam.

And while conventional wisdom is that the US has a chronic trade deficit with China - it does - the U.S. also runs a nearly $17 billion trade surplus with China for agricultural products. China consumes about half of U.S. soybean exports, America’s second largest planted field crop. Soybean farms are mostly located in the the upper Midwest (Illinois, Iowa, Indiana, Minnesota and Nebraska). The volumes are so significant that a spike in soybean exports was a noticeable contributor to GDP growth in the second half of last year as readers may recall. China is also a major buyer of U.S. aircraft, perhaps the only areas of manufacturing where the U.S. retains a competitive edge (though not for much longer). The U.S. also has an $8 billion dollar trade surplus with China in the transportation equipment category.

U.S. Trade Balance With China by Product

How about geographially?

It may come as a surprise that on a state-by-state basis, eight U.S. states are running surpluses with China, six of which supported Trump in last year’s presidential election, including West Virginia. In 2016, Louisiana registered the largest surplus, at 2.9% of the state’s GDP. Louisiana’s exports to China are likely inflated given that 60% of U.S. soybean exports are shipped through the Gulf coast. Washington state was second at 1.6% of GDP, largely due to aerospace exports.

Tennessee maintains the largest trade deficit with China at 6.5% of GDP, meaning tariff-induced increases in the price of imports could have the biggest impact on this state.

The biggest losers? Mississippi, Georgia, Illinois and  California, all of which maintain deficits at more than 3% of GDP.

For the sake of brevity, we will not discuss another, more troubling, aspect of conventional wisdom, namely that trade wars almost inevitably lead to real wars. Aside for the US military industrial complex, there are no winners there.


lester1 Wed, 08/02/2017 - 22:32 Permalink

China will collapse without access to US markets. We can do without cheap Chinese goods! Don't forget China is still a communist dictatorship. Those millions of Chinese factory workers won't just sit by unemployed. They will riot and protest.  Tienenmen 2.0 !!

Save_America1st The_Juggernaut Wed, 08/02/2017 - 23:13 Permalink

a massive deflationary spiral and crash is coming, followed by a massive hyperinflationary event in the dollar.  Over abundance of nearly everything along with massive debt, loss of all the bullshit excess credit, and further massive devaluation of the dollar will cause hoarding and conservatism in a way which will trigger the deflationary implosion.Next will be the loss of the dollar as the world-reserve currency as the world monetary system shifts away from the petro-dollar.  The domestic U.S. dollar will implode further by 50 to 75 percent...a massive shock to the system........then massive explosion of unwanted dollars back into the U.S. along with desperate sheeple trying to rid themselve of these worthless dollars all at the same time in order to buy anything they can get their hands on as the dollar hyperinflates.We have anywhere from 6 to 18 months, bitchez.  This is Fight Club.  We speak the truth. Keep stackin' phyzz, diversify some funds into cryptos and store them offline in cold storage, and stock up on long-term chow, guns, ammo, etc.  You all know the drill if you've been around here longer than the previous 12 months of troll scumbags, right????Don't get down about it...don't let these assholes confuse you about what's's now closer than ever and getting closer by the day. Oh wait, my bad...the DOW is at 20,000!!!  Everything is Awesome!!!!!!  Right???Fuck that...paper tigers will perish from the Earth.  We know better by now and we aren't weak hands who will sell out before the collapse. Most of you all know what the right thing to do is. 

In reply to by The_Juggernaut

philipat Save_America1st Wed, 08/02/2017 - 23:54 Permalink

All of the presented data is misleading because the bulk of the "defecits" are accounted for by US CORPORATIONS who keep most, if not all, of the profits accrued through the offshoring of US jobs, offshore to avoid paying US taxes. And these jobs will NOT be brought back to the US they will simply move to Vietnam, India, Bangladesh, Sri Lanka, Indonesia etc, so the only loser will be the US consumer who will have to pay more because of imprt tariffs. This at a time when she is already stretched beyond hope. Even China itself will not suffer other than through unemployment because China doesn't make the profits from the manufacturing, that again is the US Corporations who "hide" the profits offshore using transfer pricing (In and Out) using offshore tax havens, together with Royalties, Trademark License Fees and other "Fees" for the use of IP, again ALL paid to an offshore entity or SPV.

In reply to by Save_America1st

BarkingCat fattail Thu, 08/03/2017 - 10:17 Permalink

Those in the cities, whom knows,.Those in the countryside have probably more than a year of food stored and they are growing their own constantly. However, many people in the cities have families in the countryside. They would simply go back home. They don't want to, because going back is like takinga trip back to the 1600s.Still, it beats starving. 

In reply to by fattail

Doom Porn Star Xena fobe Thu, 08/03/2017 - 06:40 Permalink

New made-in-the-USA textiles and clothing made of hemp grown in lieu of soybeans will solve several of these problems.  Can the whining and the diversity undermining of quality: start hiring and investing, promoting and contracting based on merit and results.  America can indeed be great if those who are naturally endowed with great ideas, great ethics, and great courage are finally freed of the shackles of the vicious rentier and financialization rackets and the false associated duopoly enforced theiveries and frauds of the avarice and victimhood complexes...

In reply to by Xena fobe

Perimetr db51 Wed, 08/02/2017 - 23:14 Permalink

Yeah, right.  Obviously the US can make everything it needsdespite the fact that we have offshored 90% of our industrial base.Last year China's exports to America amounted to$481.8 billion or 21.4% of its overall imports.  1. Electronic equipment: $131.7 billion  2. Machinery: $100 billion  3. Furniture, lighting, signs: $31.6 billion  4. Toys, games: $24.9 billion  5. Plastics: $15.6 billion  6. Footwear: $15.4 billion  7. Knit or crochet clothing: $15.1 billion  8. Vehicles: $14.3 billion  9. Clothing (not knit or crochet): $14.2 billion10. Medical, technical equipment: $11.7 billion

In reply to by db51

AllBentOutOfShape Perimetr Thu, 08/03/2017 - 06:39 Permalink

“Made in China” is the backbone of retail trade which indelibly sustains household consumption in virtually all major commodity categories from clothing, footwear, hardware, electronics, toys, jewellery, household fixtures, food, TV sets, mobile phones, etc.  Ask the American consumer: The list is long. “China makes 7 out of every 10 cellphones sold Worldwide, as well as 12 and a half billion pairs of shoes’ (more than 60 percent of total World production). Moreover, China produces over 90% of the World’s computers and 45 percent of shipbuilding capacity.…

In reply to by Perimetr

Doom Porn Star Perimetr Thu, 08/03/2017 - 08:03 Permalink

The walk-in closets and storage units of America have more than enough cheap shoes and concert t-shirts, more-than-enough tupperwear and stack bins, more-than-enough Disney-branded kiddie distractions and video games.Substitution of hemp for soybeans in the fields of the heartland, and the domestic production of textiles and clothings and pseudo-plastics from hemp will provide most of the necessary outputs to solve clothing and container/packaging and fabrication issues.    The garages and dealer lots of America have more-than-enough rigs and cars, more-than-enough used farm and construction equipment, more-than-enough furniture and gardening equipment, more-than-enough coal and LNG to fire the converters and furnaces to shape the more-than-enough aluminum and steel to make more-than-enough ingots and coils to make more-than-enough signs and lighting fixtures, more-than-enough parts, plates, rails, sheets, pipes, casts, etc., etc.. New Jersey and California have more-than-enough expertise to design and generate more-than-enough medical and communications equipment, Texas and Virginia have more-than-enough expertise to design and generate more-than-enough technical equipment and electronics, Alabama and Massachusetts have more-than-enough expertise to design and manufacture more-than-enough robotics and textiles, etc. etc.; -to meet domestic demand.America has millions of people with ideas and ethics and drive and hope that hungrily await opportunitities to avail themselves and succeed.  They will all get busy and most will do quite well for themselves -and the country, if only the globalist industrialist and international financialization rackets are restrained and divested, and the politics of punishing merit and restraining liberty are defeated...I trust the great silent majority of disenfranchised labor and entrepreneurs, native sons and girls-next-door, set-aside 'whites' and ghettoed 'minorities' and stepped over legal immigrants.I TRUST my fellow citizens not to fail themselves if unleashed.  They WANT to succeed.  They do most ardently desire to taste the fruits of their labor, savor success, and revel in the realization of their dreams. Let my people go!   Let me, and all my fellow peoples get to work!    We can and we will make this nation great; no matter whether it really ever once was or not!We will make this nation great by making ourselves great; by remaking our economy and ourselves to suit our own interests!Let my people go!  Let me, and all my fellow peoples get to work!

In reply to by Perimetr

HenryHall Doom Porn Star Thu, 08/03/2017 - 09:03 Permalink

Indeed America could be self-sufficient and prosperous. By the simple expedient of closing the military bases all over the world and bringing the troops home. Import substitution for just about everything is very possible, as the Russians are demonstrating.Will it happen?Not a chance. American people want status, not prosperity and peace.

In reply to by Doom Porn Star

BarkingCat Doom Porn Star Thu, 08/03/2017 - 10:49 Permalink

Thumbs up .....but.There are millions of useless eaters that do not want to work and have no ambition. There are lots of white and latino and black people who seem to be dumber than a box of rocks yet have the depth of knowledge and skill necessary to navigate the complex and numerous laws and regulations governing various social programs, and do it efficiently. They don't want to work. In order for the US to be self sufficient,  the government teat will have to be taken away as it drains too many resources from those who produce to those that leach. Only way that can happen is if there is a complete collapse or a war that actually hits the US mainland and destroys huge portions of large cities and kills off millions. Only then could the politicians get the cover to scrap the welfare system and go back to basics. 

In reply to by Doom Porn Star

Antifaschistische lester1 Wed, 08/02/2017 - 23:24 Permalink

legitimate hypothesis...I have another hypothesis...rather than wasting trillions and trillions of RMB on unnecessary high rises...what if the Chinese decide to commit a million smart guys to replacing Microsoft's operating system or Oracle DB's.   Let's see, they'd probably have a lot of Russians and Germans who'd be interested in chipping in to help....and an entire blue planet who would be interested in their success.

In reply to by lester1

Cashboy Antifaschistische Wed, 08/02/2017 - 23:38 Permalink

You will find that they are probably already well into that.It would be interesting if Alibaba became a serious player in the USA and started competing against Amazon.Westerners think that China can just copy and make cheap crap.Remember in the 70's when Japan started exporting their cars that were cheap but poor quality how the quality improved and they became innovative.Just think of China as the same but ten times bigger.The USA have basically outsourced their manufacturing to China so are dependent on China.  USA needs China more than China needs the USA.China could start printing money (if it hasn't already) to pay its citizens to supply its own market.  The USa is not the only market in the world and from what one can see that market is going to get smaller as credit runs out and more and more people are dependent on state welfare.If the USA puts tariffs on imports from China, the USA consumers will have inflation and with wages in stagnation could see a lot of complaining desperate Americans.

In reply to by Antifaschistische

philipat Cashboy Thu, 08/03/2017 - 00:12 Permalink

The Chinese ARE already well into that which is why, amongst other things, they have by far the world's fastest super-computer.And all those vacant high-rises will one day be lived-in by real people. You need to consider whether (albeit excessive) investment in infrastructure is ultimately preferable to blowing financial bubbles with the (printed) excessive debt and in the process transferring all the wealth to the top 0.1% like some other countries?

In reply to by Cashboy

Oldwood Cashboy Thu, 08/03/2017 - 00:31 Permalink

The game is for China to use US markets to build its economy. Once their own population can consume their productive output, our industries will be gone and they can name their price...BUT, they ain't there yet. Look at the violent riots they have with each plant closure. Look at the products they ship us now....well below ANY reasonable cost of production....they are GIVING away their production to keep plants running and printing the money to do it. It is their race to develop their markets while watching our production capacity evaporate leaving them no competition. As our ability to offer any competition dries up, they will be able to raise profits and bring more of their own population on line as not just producers but consumers.We are living the dream that we don't have to work, that robots or Chinese or illegals will do it for free (we know our fiat and debt is empty promises), that WE are "entitled" to some indoctrinated notion of existence. We are WRONG. We still have time to prevent the worst of it but it won't be without pain. We will have to pay more for most everything if we are going to buy american, but if we don't, the ultimate pain will be so much worse. They still need us, but not much longer. America, in its belief that it is an "indispensable nation" will allow itself to be dispenced with.

In reply to by Cashboy

smithcreek Oldwood Thu, 08/03/2017 - 08:17 Permalink

You are correct sir.  I'm not a lefty in the least, I'm a libertarian that believes in free trade with countries, but not with those that subsidize their own long term goal of destroying the US economy.  So when I say, bringing manufacturing jobs back to the US will lead to more equitable distribution of wealth, it's not some Occupy Wall Street stupidity, it's based on workers getting back the power they lost when they were made obsolete by offshoring.

In reply to by Oldwood

gunzeon lester1 Thu, 08/03/2017 - 06:30 Permalink

yeah, you wish, Tienamen my arse, it was a beat up by the western cheerleader press ... erhmmmThe compliant chinese factory worker, when laid off, will trudge back to his village and subsist on some cold rice and a little rat meat; tens of millions we're talking about here.The "more equal" will barely notice they're missing.If he - the redundant worker - decides to "go bolshie" he'll get seriously re-educated, or sold for scrap.Here some folks want to revel in schadenfreud but China's jobless rate is one number they won't get it from.

In reply to by lester1

Demologos lester1 Thu, 08/03/2017 - 10:31 Permalink

China will replace exports to the US with their One Belt One Road (OBOR) projects. Instead of making cheap plastic crap to sell to Walmart, they are already inking billions in major infrastructure projects to connect countries with a new Silk Road.

These deals are reciprocal with each side contributing engineering, equipment, labor and raw materials in a quasi barter exchange that bypasses the Wall Street-City of London loan sharks. If a medium of exchange is needed, China and Russia will use the tons of gold they are amassing to back a new form of currency similar to the Greenback. Now, who runs Bartertown?

In reply to by lester1

db51 Wed, 08/02/2017 - 22:31 Permalink

Fuck it.  I raise soybeans.    I could give a flying fuck if they go to $2.00/bushel.   Cause Fed Crop Insurance guarantee for this year is $ 10.50.   After that, fuckem...leave the planter in the fucking shed.   No problem   Starve you little fuckwits.   10.50 a bushel is just breakeven anyway.   If you're a stock broker, bankster or Pol.   this economy is great.   for everyone else it sucks.   Let's crash and buirn the bitch and get it over with