Economics: Trade War - China Haters Gonna Hate

(Drivebycuriosity) - Trump`s trade war against China shows the first casualties in the USA. In April US retail sales & industrial production dropped and stocks fell sharply. The weak economic numbers aren´t a surprise. Tariffs are taxes on imported goods. Climbing tariffs on Chinese products are slowing the US economy because the consumers have to spend more money on computers, furniture, clothing, chemicals and plenty other goods which is curtailing their budgets and companies have higher costs (marketwatch). Even the allegedly protected automobile industry is losing because they have to spend more for steel and many other pre-products. The Fed Reserve of Atlanta already cut her estimate for the second quarter economic growth to meager 1.2% (frbatlanta ).

But surprisingly many economists seem to support Trump`s trade war. Bloomberg commentator Tyler Cowen, who is seen as a libertarian, claims that Trump will win. He dismisses the described damages and assumes that Vietnam and other countries could soon replace the cheap Chinese exports  (marginalrevolution). Other economists support Cowen`s view and Trump´s bullying (scottgrannis  econlib).

I think that suddenly replacing China as a trading partner comes with extremely high costs and might slow down global economic growth considerably.  Vietnam - for example - is much smaller (population 94 million) and cannot replace China (population 1,3 billion) and it would need time to inherit a considerable share of China´s exports. If the demand for cheap goods would suddenly swap to Vietnam the wages there would explode - pushed by the demand explosion for Vietnam`s products.

The trade war supporters claim that Mexico and other countries could join Vietnam in replacing China. If so, why did the demand for computers and other goods not go to Mexico in the first place?  This country is much closer to the US. Why does the world buy so much from China and not from other cheap low wage countries in Latin America, Africa & Asia? It seems that China has more advantages other than just cheap labor. I think that China became the world`s workbench because the Chinese have also a high work ethic. The strong exports of  high-wage country Germany show that work ethic may be as  important as low wages. If Mexico, Brazil, Nigeria have a similar work ethic like China why is their economy so weak?

Trump´s trade war is based on a deep dislike of China. The US President wants to stop the ascent of the Asian nation, whatever it may cost. I think that the trade war supporters share the anti China bias.`Cowen, for instance, is a China hater, which he had revealed  in many posts in his blog Marginal Revolution (marginalrevolution). Some of the trade war supporters might dislike Trump, but their hatred of China seems to be larger than their antipathy of Trump.