The relationship between the U.S. and China is like a live-in girlfriend who doesn’t work and relies on her boyfriend for everything.
One day, she tells him she’s leaving. He gets upset because he thinks he needs her more, but really, she depends on him way more.
So what’s actually happening between the U.S. and China when it comes to trade?
First off, the U.S. isn’t China’s only customer. If America stopped buying about 75% of the stuff it imports from China, excluding important things like rare earth minerals, China would lose around 2% of its GDP. That’s a hit, but China could make that up by selling more to other countries or focusing on its own market.
On the flip side, the U.S. would feel it way more. Cutting off cheap Chinese imports would drop the U.S. standard of living by around 5 to 10% because prices on everyday goods would go up and supply chains would get messed up. We simply don't have the labor, domestically, to replace China. Americans are the ones getting the better deal here, enjoying low-cost products.
So the girlfriend leaves, and at first, he’s hurt and distraught. But after a couple of months, he checks his bank account and thinks, “Hey, I’m actually saving some money now.” Maybe next time, he will find a partner that is mutually beneficial.
So what’s actually happening between the U.S. and China when it comes to trade?
First off, the U.S. isn’t China’s only customer. If America stopped buying about 75% of the stuff it imports from China, excluding important things like rare earth minerals, China would lose around 2% of its GDP. That’s a hit, but China could make that up by selling more to other countries or focusing on its own market.
On the flip side, the U.S. would feel it way more. Cutting off cheap Chinese imports would drop the U.S. standard of living by around 5 to 10% because prices on everyday goods would go up and supply chains would get messed up. We simply don't have the labor, domestically, to replace China. Americans are the ones getting the better deal here, enjoying low-cost products.
So the girlfriend leaves, and at first, he’s hurt and distraught. But after a couple of months, he checks his bank account and thinks, “Hey, I’m actually saving some money now.” Maybe next time, he will find a partner that is mutually beneficial.
