Actually it is great news and probably good for China that US impose tariff. Many countries will be happy to assist China spread the wealth. Look for more goods with labels "Made in Honduras, Pakistan, Mexico, Abu Dhabi, Ceylon, Indonesia, Phillipines, Chile, etc". This will improve trade relations between China and the rest of the world. The 27% tariff is plenty enough to spread China made goods to be packaged and labeled in those other countries that do not have to pay tariffs on their exports to the US.
This is great and it will force the opening of China's presence to the rest of the world. This is a new era of diplomacy, and who knows? it could be the beginning of strong ties between China and the rest of the world's third world countries.
Unfortunately US will not get much revenue from the tariff, as imported goods directly from China will dwindle down to just half of today's numbers. That expected revenue will be distributed around the world.
RMB will be floated within a certain range, but based on a basket of currencies. And the basket of currencies will be floated as well. That means the percentages and what currencies in the basket can be changed whenever necessary. The implication is huge and difficult to predict.
In the meantime, US consumers will have to pay 20% to 30%more than what they are paying now at Walmart.
This is truly time of amazing developments.
Furthermore, China's economy needs some adjustments, i.e. lower rate of growth and inflation.
If someone wants to play around with free enterprise system and how to maneuver trading of goods, one should only remember that the oldest trade route is the Silk Road and it goes to all directions out of China. |
