I am trying to understand to what degree tariffs (or other restrictions like quotas) were the cause of the trade imbalances between the US and China. One might imagine that it was simply a matter of the Chinese making goods more efficiently... So what exactly were (pre-Trump) the level of tariffs (or other restrictions) in US-China trade? Were they actually asymmetric?

EDIT: I found a page about quotas by country on Wikipedia here. It suggests that typical Chinese import tariffs are 7.5% and those in the US are 1.66% - that doesn't feel like enough of an asymmetry to explain the massive trade imbalance... maybe there are some legal or quota issues I have yet to discover...


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First a disclaimer: Trade imbalances are something that we should expect to happen, especially between two massive economies like the US and China. In fact, it will probably be very hard to find a pair of countries that don't have a trade imbalance (unless they don't trade at all).

This does not mean that there is something wrong necessarily, however, a lot of the discussion seems to think that tariffs are solving a problem or making it worse when trade balances are not necessarily positive or negative.

Now, more directly to your point, the trade balance depends on many things. To list a few: the economic growth of both countries, their relative efficiency on tradable goods, the terms of trade, the relative exchange rates, and whether they are controlled or not, the tariffs or restrictions to trade, the relative purchasing power, the real interest rates in each country, etc. I think that the US and China are very different countries, so it will be quite heroic to try to explain everything with a single variable like tariffs. The trade imbalance is certainly the result of multiple economic conditions.

Sure enough, if you want to reduce how much you import from a country, tariffs will help, but the real question is why would you want to do this?

  • $\begingroup$ Re "it will be quite heroic to try to explain everything with a single variable like tariffs" that slightly depends what the tariffs are. If the Chinese had tariffs of 30% and the US had zero tariffs then that would be most of the explanation. I hope to get an idea of what the tariffs actually are. $\endgroup$
    – Mick
    Commented Jun 15, 2019 at 20:15
  • $\begingroup$ China's investment restrictions would also cause a higher level of exports from China. The financial industry is only now becoming less restricted in that foreigners will buy a financial institution or start one. In manufacturing, historically there was the incentive or pressure to form joint ventures; that is, foreigners would not simply buy a factory or start one. Concerns about true accounting and the legal system were a factor. If the U.S. fails to "import" ownership then it will import manufactured goods instead. $\endgroup$
    – H2ONaCl
    Commented Jul 16, 2019 at 20:50

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