Our Silly Attempts To Bully China

Dean Baker:

Trump apparently thinks that by making it more difficult for them to sell stuff here (by charging us high taxes), he is putting enormous pressure on our trading partners. He definitely is putting some pressure, but Trump seems confused on the size of the impact.

Take the case of China, Trump’s archenemy. They sold $440 billion worth of goods to the US last year, about 2.2 percent of its GDP measured in dollar terms. (Their GDP measured in purchasing power parity terms is over $40 trillion, but for this calculation, the dollar value is more appropriate.)

If Trump were to cut off all imports from China, this is the amount of demand in the economy they would have to replace. (Their exports to the US are already down to $330 billion.) By contrast, the United States lost an amount of demand of more than 6.0 percent of GDP when its housing bubble collapsed in 2007-09.

No proccessed rare-warth metals for us.