This fact calls into the question the 3% figure. What percentage of China’s GDP and exports balance are for components sent to intermediaries for US demand? These are levers available to the US to pull on as well beyond its direct trade relationships.
The whole thing with intermediaries is that they’re very difficult to track. So, real exports from China might indeed be higher, but it’s very difficult for the US to root them out. You can just look at the whole farce with sanctions on Russian energy as an example of what happens in practice.
IMO the russian sanctions are very easy to follow no? India freely reports a 60% increase in oil imports from Russia and EU imports from India double almost overnight to 40% of India’s daily production. Although that is much more macro-scale and easier to track then like the origins of the bolts in an imported car part.
Right, everybody knows it’s happening, but there’s little interest in actually enforcing these sanctions since Europe needs energy and as long as they can pretend it’s coming from India that’s good enough politically. I expect the same thing will happen with Chinese tariffs, companies will still want to minimize their costs by sourcing from China, but it’ll be done in a way that’s politically palatable.
This fact calls into the question the 3% figure. What percentage of China’s GDP and exports balance are for components sent to intermediaries for US demand? These are levers available to the US to pull on as well beyond its direct trade relationships.
The whole thing with intermediaries is that they’re very difficult to track. So, real exports from China might indeed be higher, but it’s very difficult for the US to root them out. You can just look at the whole farce with sanctions on Russian energy as an example of what happens in practice.
IMO the russian sanctions are very easy to follow no? India freely reports a 60% increase in oil imports from Russia and EU imports from India double almost overnight to 40% of India’s daily production. Although that is much more macro-scale and easier to track then like the origins of the bolts in an imported car part.
Right, everybody knows it’s happening, but there’s little interest in actually enforcing these sanctions since Europe needs energy and as long as they can pretend it’s coming from India that’s good enough politically. I expect the same thing will happen with Chinese tariffs, companies will still want to minimize their costs by sourcing from China, but it’ll be done in a way that’s politically palatable.