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Back-of-the-envelope calculation I just made. Trump economic advisors also should do them before trade war with China was started. (And show this calculation to Trump!).

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China GDP 2017  about 12000 billion USD

Manufacturing as % of Chinese GDP in 2017 was 29%, make it 30% so 12000 * 0.3 = 3600 billion USD worth of Chinese manufacturing.

Chinese goods exports to United States in 2017 was over 500 billion USD

Manufacturing products make vast majority of Chinese exports to United States, so manufacturing goods exports to United States is 500 billion USD.

Products sold to United States make 500/3600=13.89% of Chinese manufacturing, lets make it 14%.

Chinese employment in industry in 2017 was about 220 million people, manufacturing is about 100 million out of this. (But these are better paid than average industry jobs)

So exports to United States provide employment to about 14%*100 million = 14 million people in China.

Chinese exports to United States are cheap necessities, negligible part of budgets of US families so these are goods of low price elasticity of demand. Big change in prices makes low change in demand. Lets assume we impose 30% of duties across the board on all Chinese exports to United States. We cannot assume sudden substitution as no countries have spare capacity of these magnitude. Plus Chinese suppliers will slash prices and take some pain. United States imports from China would decrease by maximum 25% first year.

So maximum we can optimistically get is 25% * 14 million people = 3.5 million people loose jobs.

China creates about 12-15 million new jobs in services every year, lets assume a bad year so 12 million new jobs in services created.

Unfortunately for our plans these 3.5 million people could be easily absorbed by Chinese services. And the number of 3.5 million is maximum optimistic projection, better would be 2 million. Chinese will switch some exports to other countries. There would be some temporal head aches for many Chinese families and a few provincial bosses, but we cannot bring China to its knees by imposing tariffs.

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3 hours ago, Marcin said:

but we cannot bring China to its knees by imposing tariffs.

Did anyone say they would or suggest that was the plan?

Man, this pro - China stuff is getting so desperate seriously. I have a feeling national economic advisors go into a bit more detail than your 'back of envelope' workings.

This gets a trophy from the squirrel. Should tell you everything.


Edited by Guest

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