What's the argument for #1? Assuming a tariff is equally damaging to the exporting and importing country (or actually even if the damage is unequal as long as China and the USA are imposing tariffs on the same number of goods), the damage to each economy would be equal in both countries, and since the US's economy is still larger than that of China, the damage would be proportionately smaller.
Yes, I should have clarified that. What I meant can be illustrated by two statistics. Here are the top 10 categories of imports from China to the US:
1. Electronic equipment: $150 billion
2. Machinery: $112.4 billion
3. Furniture, lighting, signs: $34.8 billion
4. Toys, games: $26.7 billion
5. Plastics: $17.6 billion
6. Vehicles: $15.6 billion
7. Knit or crochet clothing: $14.9 billion
8. Footwear: $14.8 billion
9. Clothing (not knit or crochet): $13.5 billion
10. Iron or steel products: $12.4 billion
Now, here are the top 10 categories of imports from the US to China:
1. Soybeans: $15 billion
2. Civilian aircraft: $8.4 billion
3. Cotton: $3.4 billion
4. Copper materials: $3 billion
5. Passenger vehicles (small engines): $3 billion
6. Aluminum materials: $2.4 billion
7. Passenger vehicles (large engines): $2.2 billion
8. Electronic integrated circuits: $1.7 billion
9. Corn: $1.3 billion
10. Coal: $1.2 billion
See the difference? Most of what we get from them are finished goods. Most of what they get from us are commodities.
It’s easier to switch to another supplier for commodities, especially if that commodity can be swapped out for another. Soybeans, for instance, which they already plan to tariff (yes, the Chinese went directly after our #1 export in retaliation for Trump’s tariff on their #10 export). Not only can they get soybeans elsewhere, they can replace it with other, cheaper food sources if need be. The populace might grumble, but they won’t starve.
On the other hand, their exports are woven into several points of our economy. If Trump decides to go after
their #1 export to us, electronic equipment, he’s not only attacking them but the US companies that design the equipment (hardware companies), make it function (software companies), create demand (marketing, media) and physically sell it (retail). That’s a lot more disruptive and damaging than finding an alternative to soybeans.
For #3, that model only works if you assume there is only one domestic manufacturer. If you have multiple domestic manufacturers competition is going to prevent the price from rising rapidly.
I wish! Unfortunately, since there’s now a set point, a clear price threshold that cuts off the Chinese competitors, everyone tends to migrate to the vicinity of that set point. “Competition” becomes a matter of shaving off a point or two from that, rather than being a direct response to the marketplace.
It also assumes the chinese manufacturer doesn't have any capacity to cut pre-tariff prices to remain cost competitive with domestic manufacturers while still paying the tariff.
Of course. But that defeats the supposed purpose of the tariff, which is to make it no longer worthwhile to pursue US markets, thereby helping US companies by scaring off their competition. If the US government isn’t willing to ratchet up the tariff until that’s achieved, you’ve simply created a leaner, hungrier competitor. Which will be an even more unpleasant prospect if and when those tariffs go away.