Trade wars

RYAN  By Guest Blogger Ryan Lewenza

“Trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” – Donald Trump

President Trump’s twitter feed can be breathtaking in its volume and level of craziness, but the tweet above really stood out for me as it goes against almost everything I’ve learned about economics and history. In this week’s blog I discuss the prospect of a Trump-led global trade war and its implications for economic growth and the markets.

Let me start out by saying that I actually agree with Trump’s overarching views on China regarding the massive trade deficit with the US and them stealing intellectual property.

Since China’s entry into the World Trade Organization (WTO) in 2001, the trade deficit with the US has risen nearly fourfold from US$83 billion in 2001 to US$376 billion today. The trade deficit stems from the fact that the US imported US$506 billion worth of goods from China in 2017 while it exported only US$130 billion. In the chart below you can see how this trend has worsened consistently for decades and it really picked after China became a member of the WTO.

There are a number of reasons for this massive trade imbalance but the key ones are: 1) China has a much lower standard of living, which allows companies to pay lower wages; 2) China has pegged its currency to the US for years (only recently loosening this up), which allows them to manipulate their currency making their exports more attractive; and 3) the US has a terrible savings problem and therefore requires foreign nations to fund their deficits and savings shortfall, with the trade deficit being one tool to facilitate this.

US Has a Huge Merchandise Trade Deficit with China

Source: Bloomberg, Turner Investments

Trump’s other key beef with China is their stealing of US intellectual property. China has the upper hand with US companies by requiring them to partner up with a Chinese company if it wants to gain access to the large Chinese market. In doing this they cap US ownership of the joint venture at 50% and essentially force US companies to transfer technology and other intellectual property rights to the Chinese joint venture, which in turn, is accessible to the Chinese government. According to the Office of The United States Trade Representative, this costs the US economy between US$225 billion and US$660 billion annually.

Finally, trade with China is not always “free” or “fair” as they impose sizable tariffs on many foreign products. For example, China imposes a 25% tariff on US autos coming into China while the US imposes a much smaller tariff of 2.5%. My uncle, Ken Lewenza, ex-CAW (now Unifor) President brought this to my attention years ago as he felt strongly that North American car manufacturers were at a terrible disadvantage with these high tariffs. He and I don’t agree on much but on this issue we found common ground.

So these are the key issues that Trump is rightly trying to address. My issue with Trump is not his positions, rather how he goes about it and the potential for his impulsive and emotional behavior to have unintended consequences, thus dragging down the US and the global economy and negating many of his pro-growth policies. Here’s a quick list of these potential consequences:

  • The US consumer will feel the brunt of a trade war as they will end up paying higher prices for the goods they consume, much of which come from China.
  • As prices rise this will push inflation higher, which in turn could cause the Federal Reserve to hike interest rates more aggressively. This will lead to higher borrowing costs, provide a headwind to economic growth, and in the worst case scenario could lead to a recession.
  • Globally a trade war would likely lead to weaker economic growth as trade is a major contributor to global growth.
  • And finally a full-out trade war would be greatly destabilizing to the global economy and create significant uncertainty, which is never good for the economy or equity markets. This uncertainty could lead to a compression of equity multiples (i.e., P/Es) and lower stock prices

A Trade War Could Lead to Higher Inflation and Interest Rates

Source: Bloomberg, Turner Investments

Trump and his supporters like to tout his deal-making abilities and negotiating skills. Well he’s going to need them bigtime if he wants to address these issues and get a better deal for the US. So far his tactics are yielding mixed results as China has declared they are going to fight this tooth and nail while also signaling some openness to these grievances.

Chinese President Xi Jinping made an important speech this week laying out his plans for their economy and the changes they intend to make to help address these issues. Specifically he said China will look to significantly lower tariffs on automobiles, ease restrictions on foreign financial firms operating in China and step up enforcement of intellectual property rights protection. The markets liked this, rallying sharply on the news. Hopefully Trump will accept the olive branch that China has extended and can get to work on addressing these issues while not going off the rails and continuing down this path of an all-out trade war, where few people actually win despite his tweet proclamation that “trade wars are good, and easy to win”.

Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

135 comments ↓

#1 Honey Dripper on 04.14.18 at 4:15 pm

I really hope this risk off risk on market trend ends soon. It’s pretty tough to know what to invest in here.
OTOH it is a pretty amazing time in history to be witness to all this.

#2 Fish on 04.14.18 at 4:21 pm

Nice photo! faithful soldier

#3 Grey Dog on 04.14.18 at 4:23 pm

Why does China not respect intellectual property? At my place of employ back in the 80s, we had a visiting group of Chinese professionals, an order from my manager who had never said anything negative about anyone stated, “keep them away from the photocopiers”.

Meanwhile I’ll share a poem I have stolen from a commenter on MSNBC site discussing the Comey book…
“Tinkle tinkle little czar, Putin placed you where you are”

#4 Reynolds531 on 04.14.18 at 4:33 pm

The whole president for life thing doesn’t exactly instill confidence that China will be a great trading partner and neighbor.

#5 akashic record on 04.14.18 at 4:35 pm

No previous US president cared about the trade deficit before to the extent of actually doing something about it – even with the most sophisticated diplomatic language.

It was a political taboo in the religion of globalism, actually.

Let’s talk about the horrible tweets and how they may derail the change.

#6 cecilhenry on 04.14.18 at 4:42 pm

So. You have no problem with Trump’s position and admit he is right, but want to disparage superficial issues.

That behavior is part of the problem, not the solution.

So much of the MSM’s chief occupation is now deciding what facts they are going to try to hide from the people and what they will ‘allow’. This is where the ‘fake news’ attitude comes from.

#7 FOUR FINGERS WATSON on 04.14.18 at 4:49 pm

Whoever has the lowest labor costs and fewest environmental regulations will always win.

#8 Mark on 04.14.18 at 5:05 pm

“More falsehoods from Mark. Rents in Vancouver and Toronto have skyrocketed.
“Average Toronto condo rents up 11% over last year: report”

Sure, because there’s been an onslaught of new luxury supply added to the rental pool as construction is completed and the speculators are unable to resell them to owner-occupiers at desirable prices due to the stagnation/declines in Toronto RE prices. But on individual identical units, rents have not meaningfully increased in Toronto/Vancouver, and in some cities, particularly Edmonton, they appear to be deflating.

Don’t believe everything you read, at least the headlines. If you’ve been following the Toronto RE scene, or seen the cranes building new RE over the past number of years, the reasons for such alleged ‘rise’ in rents should be obvious, and they’re not due to rent rising on individual units, but rather, the composition of the rental stock itself changing quite dramatically.

#9 Mark on 04.14.18 at 5:11 pm

“#3 Grey Dog on 04.14.18 at 4:23 pm
Why does China not respect intellectual property? “

Its not in China’s economic interest to respect intellectual property as licensing IP properly from its creators would be a massive outflow of cash from China.

One thing you need to keep in mind about China is that its run by a whole bunch of incredibly intelligent people. The average Chinese politician is most likely to come from a science or engineering background, instead of Canadian politicians who are most likely to be either lawyers, teachers, or other servants of the public. When it is in China’s national interest to start respecting IP, believe me, they will respect IP. But as a nation, they’ve conveniently been able to take advantage of successive US administrations who have basically turned a blind eye to IP theft whether through IP piracy in China itself, or allowing major US R&D organizations to be infiltrated by foreign nationals on the H-1B visa program.

What can I say, good luck to Trump, he and the US are going to need a lot of it in dealing with that juggernaut. Better quality leadership is probably required.

#10 cal on 04.14.18 at 5:22 pm

#6 Cecil
But you have no problem implying someone you don’t know that their view is wrong…respect the writer man, he knows far more about what HE is talking about than you. As Canadians we should butt out of American politics. Not our buisness because we voted and allowed our politicians to tangle our finances with Merica in the first place. You don’t like Trump, blame yourself and your fellow voters…i didnt hear you 2 years ago when they were debating weather or not to allow women to drive…perspective people…

#11 cal on 04.14.18 at 5:23 pm

*in Saudi

#12 Ace Goodheart on 04.14.18 at 5:27 pm

The real reason why Trump is trade warring China:

No Trump tower or hotel in China.

Just let him build a Trump casino in Bejing and the Chinese will solve their problem.

Latest s$#t to hit the fan in Ontario: Syndicated mortgages. These allow many middle class folk to register low priority mortgage liens against condo buildings and office towers, whose owners then go bankrupt, emerge as fresh new companies and clear their balance sheets of these pesky subprime lenders/middle class retired people who risked their life savings on what appear to be pre-planned financial catastrophes with well executed recovery plans.

What better way to fleece people? Taxation? Followed by corporate welfare? The syndication process is much more direct and involves less red tape.

#13 crowdedelevatorfartz on 04.14.18 at 5:30 pm

@#148 Lorne
“Horgan is the most popular premier in the country…”
++++
When low double digits beat low single digits thats nothing to brag about.

As for Horgan’s “lead” in the polls ….
Means absolutely nothing when you’re the “leader” in a minority govt hanging on by its finger nails.
Dont be too smug with your hand picked “stats” there Lorne
Less than half of the voters that even bothered in the last provincial election voted for Horgie Porgie.
Lets give rising interest rates, a slowing economy and the Green Party’s “on again off again” Bro-mance with the NDP to play out to its inevitable conclusion…..another election in less than a year.

#14 Smoking Man on 04.14.18 at 5:30 pm

China and USA put their countries interests first.

Not in Canada. Christ, we can’t even get a pipeline built to export our energy. Butts is crazy.

The good news is liberalism goes extinct in Ontario in June then again federally in 2019

#15 Stan Brooks on 04.14.18 at 5:35 pm

Trade wars will re-balance world economies.

The current consumption model and lack of production/life on credit of the west has to change in order to stop outsourcing of production to the developing world, the developing countries need to start consuming more.

The growth in the west is pretty much credit driven so inflation is a given anyway.

Interest rates should be north of 8 % with current inflation so if trade wars are the way to get there let it be.

#16 Ace Goodheart on 04.14.18 at 5:45 pm

Just as a pet peeve to people who are building high end houses: hardwood is for living rooms, dining rooms, bedrooms, hallways, rec rooms.

It is NOT for entrance ways and kitchens. Please stop putting delicate hardwood floors in kitchens and entrance ways.

It takes so little extra effort to put good strong tile in the entrance to the house and the kitchen. Why can no o e get this right ?

#17 Trump is right on 04.14.18 at 5:45 pm

His approach in intellect may be questionable, but president Trump is correct about China and their one-sided mindset when it comes to international trade and blatant theft of intellectual property.

One small example I can offer as a guitar collector, is how Ali Express is riddled with literally hundreds and hundreds of manufacturers in China that try to pass off Gibson, Fender, Gretsch and Rickenbacker guitars, each of them prestigious brands, along with so many others as genuine items copied to the very last detail with the manufacturer logos replicated and even stolen serial numbers to tempt international buyers in paying two or three hundred dollars for guitars that normally cost $2,000 to $5,000 when they’re made in the factory and custom shop facilities in America.

Obviously they are pure garbage when compared to the real deal, but the point is thousands and thousands of these are sold to unscrupulous resellers here in North America who try to pass them off as the authentic item thus ripping people off royally because they try their best to copy the item aesthetically as possible. Buying them and selling them is actually a federal crime in the United States but the sellers on those websites are more than happy to ship them find the container full for next to nothing and once again blatantly using the logos and serial numbers from the actual guitars that come out of the American factories. If anyone thinks for a single second that this hasn’t hurt American jobs and ingenuity, just Google the financial situation of Gibson guitars in the United States and their financial problems as evidence of just one of the major reasons that the company finds itself facing imminent bankruptcy. Truly a pity for such a iconic brand that has been so respected for more than 100 years.

#18 Joe Schmoe on 04.14.18 at 5:49 pm

I spent some considerable time in China working in heavy manufacturing…some perspectives:

1) Awesome people. The intellectual property issue is not about morality for them…they came to the technology party late and were encouraged to copycat to get stuff done to modernize internally. I think they are careful to avoid IP infringement on export. Internally? Different story…they cars they have that look like Toyotas (even the emblem) is comical.

2) They still have no where near the environmental/labor law standards we have in Canada. I was auditing a facility and asked to see a safety report where a guy had his arm torn off in a piece of rotary equipment. He was “sternly reprimanded” for losing his arm…

My brother and I fight about this all time. He is pro china and I am con.

We jumped into cheap consumer goods too easy. NAFTA countries should slow consumerism down a few notches. If that happens through inflation so be it.

I use TVs as my measuring stick. I am old enough to have grown up with one monstrously wood encased TV in our family. It was made in the USA. It cost a sizable portion of my parents income.

Now that TVs are cheap, we all own 6 of them…probably still the same % of income spent but for some reason they become a necessity in every room.

How is this “better”?

#19 TnT on 04.14.18 at 5:52 pm

The biggest gamble in Western Civilization was allowing China to enter the WTO

Western citizens were sold on the notion that China’s entry into the WTO was a means of easing China into a more democratic nation.

This was done in spite of Tienanmen Square when the world really saw what China was all about.

30 years later and China is no more Democratic and they recently scraped presidential term limits granting President Xi lifetime power.

Thanks to greedy corporate interests who are no longer beholden to Western values have bent the trade rules & ignored the cheating that allowed China to become a global super power that will surpass the US and dominate economically and culturally (Thanks Boomers!).

The world is more polluted because of China’s non-existent environment laws. Had the manufacturing stayed in the USA then we would have a cleaner planet and less tribalism between rural and urban factions.

China is a Communist country and there is a concerted effort by China to dominate the world culturally. I don’t blame them, let the strongest survive because “iron sharpens iron”. We have been getting too soft and our Millennials need to have their lunch money taken for a few years before they wake up.

Open your eyes and simply look at every piece of crap within eye sight of where you are sitting right now AND know it was made in China.

You voted for that with your wallets.

You were easily distracted with eye candy and crap that adds no value to your life.

Anything worth having cannot be done easily or bought cheaply.

#20 espressobob on 04.14.18 at 5:55 pm

Trade wars and the unfortunate Syria situation provide volatility. Investors are a greedy bunch.

A good correction for whatever reason will just provide one of those rare buying opportunities some of us relish.

Life just ain’t fair. Sometimes I wonder?

#21 Barney on 04.14.18 at 6:00 pm

#7 FOUR FINGERS WATSON on 04.14.18 at 4:49 pm
Whoever has the lowest labor costs and fewest environmental regulations will always win.
######################

Capt. Obvious, what else do you have for us that we don’t know?

#22 Gravy Train on 04.14.18 at 6:00 pm

#15 Stan Brooks on 04.14.18 at 5:35 pm
“Trade wars will rebalance world economies.”

Are you an economist? Have you even taken a course in economics? Just wondering!

Oh, and just one last question: Do you enjoy paying taxes? (Tariffs are taxes.) :)

#23 Penny Henny / A tribute to Whatcha Minnie on 04.14.18 at 6:03 pm

Today while I was walking my dog I came across a beautiful chestnut brown border collie mix. I’ve seen this dog a few times in the neighbourhood but we never actually met. I love the look of this dog because it looked so much like my dog Penny which we had to have put down last summer (except Penny was black).
Anyway as I was petting the dog he sat down and leaned right against me. I can’t describe how happy I felt!

#24 For those about to flop... on 04.14.18 at 6:04 pm

Weekend rewind.

This week in howmuch articles.

Check it out.

No slimeballs allowed…

M43BC

The Cheapest and Most Expensive U.S. Cities to Start a New Company.

https://howmuch.net/articles/cities-with-lowest-highest-startup-costs

See which Americans Have the Highest Tax Bills in the Country.

https://howmuch.net/articles/how-much-americans-pay-in-taxes-in-every-state

These are the Hottest Jobs in U.S. in 2018: Lots of Openings and Dream Salaries.

https://howmuch.net/articles/there-are-the-hottest-jobs-in-us-2018-lots-of-opening-and-dream-salaries

#25 Smoking Man on 04.14.18 at 6:11 pm

Gravy Train on 04.14.18 at 6:00 pm
#15 Stan Brooks on 04.14.18 at 5:35 pm
“Trade wars will rebalance world economies.”

Are you an economist? Have you even taken a course in economics? Just wondering!

Oh, and just one last question: Do you enjoy paying taxes? (Tariffs are taxes.) :)
…..

There you go again. “Did ya take a course?”

Honny no courses required internet has every bit of knollage for free. Hell if I could get some yellow uranium I know how to build a nuke. It’s all on the web.

You got to be a teacher. Am I right?
;)

#26 Stan Brooks on 04.14.18 at 6:11 pm

#22 Gravy Train on 04.14.18 at 6:00 pm
#15 Stan Brooks on 04.14.18 at 5:35 pm
“Trade wars will rebalance world economies.”

Are you an economist? Have you even taken a course in economics? Just wondering!

Oh, and just one last question: Do you enjoy paying taxes? (Tariffs are taxes.) :)

=====================

Absolutely/having business/economist background.

To have trade you meed to have an economy.
Period.

We did not have economy for quite a while so we needed credit expansion.

That drives inflation/not just tariffs.

#27 Penny Henny on 04.14.18 at 6:17 pm

Ryan
.As prices rise this will push inflation higher, which in turn could cause the Federal Reserve to hike interest rates more aggressively. This will lead to higher borrowing costs, provide a headwind to economic growth, and in the worst case scenario could lead to a recession.

.And finally a full-out trade war would be greatly destabilizing to the global economy and create significant uncertainty, which is never good for the economy or equity markets. This uncertainty could lead to a compression of equity multiples (i.e., P/Es) and lower stock prices

/////////////////

sooner or later a recession is coming and with that a depressed stock market

#28 Danny on 04.14.18 at 6:18 pm

Trump will not accept an olive Branch…..it goes against his basic way of operating…..a dishonorable real estate developer with a thug fixer.

A thug who wants to play like the Tough Guy.
He may have watched many Mafia fictional movies…..but never worked the streets……he is a white collar thug.

The bombing of Syria……..gave them many days to move the chemicals…..Hey smart Trump…..what happened to your making fun of Obama….remember your words…” What ever happened to the element of surprise ”

A waist of more tax dollars…..helping the bomb making businesses.

Ryan don’t take anything Trump says that seriously…..he is just a mouth pieces….not caring about ordinary people making money….it is all about his family and friends wealth…..the truth will come out.

#29 Andrew Woburn on 04.14.18 at 6:20 pm

I have heard from people who have done business in China that the western notion of respecting other people’s intellectual property is not well entrenched there and is probably still mainly of concern to Chinese businesses seeking global business. Please correct me if you have more direct knowledge, but I have been told that most Chinese people don’t see any moral issue in copying ideas even from their compatriots.

It was only thirty years ago that Canadians were going to China to teach them double-entry bookkeeping. Do we honestly expect that they have internalized complex Western property concepts in the same time frame.

I’m not suggesting we shouldn’t protect ourselves. However we could be a little more clear eyed about how fast a 4,000 year old culture can change. We could stop pretending that an Imperial China will ever do more than pay lip service to Western ideas of level playing fields, democracy and human rights.

#30 Andrew Woburn on 04.14.18 at 6:24 pm

Basically the BC NDP can have oil crossing BC in pipelines or they can have it cross in railcars. Actually stopping it is pure political fantasy.

http://www.timescolonist.com/opinion/columnists/les-leyne-rail-cars-roll-through-pipeline-fight-1.23267080

#31 TnT on 04.14.18 at 6:25 pm

#16 Ace Goodheart on 04.14.18 at 5:45 pm

I hate tile ~shakes fist in air~

Wood floors everywhere for me.

Front entrance in not an issue with a proper rug and boot tray.

Kitchen is not an issue either.

A wood floor with years of patina cannot be duplicated.

Tile is cold and lifeless.

Wood is warm and inviting.

#32 Jungle on 04.14.18 at 6:26 pm

It’s really too bad most stuff now comes from China, and it’s worse or poor quality too.

Remember what “made in the USA ” actually meant? Quality and trust. Not junk.

At least trump is fighting for his countries prosparity.

#33 Penny Henny on 04.14.18 at 6:28 pm

#8 Mark on 04.14.18 at 5:05 pm
“More falsehoods from Mark. Rents in Vancouver and Toronto have skyrocketed.
“Average Toronto condo rents up 11% over last year: report”

Sure, because there’s been an onslaught of new luxury supply added to the rental pool as construction is completed and the speculators are unable to resell them to owner-occupiers at desirable prices due to the stagnation/declines in Toronto RE prices. But on individual identical units, rents have not meaningfully increased in Toronto/Vancouver, and in some cities, particularly Edmonton, they appear to be deflating.

Don’t believe everything you read, at least the headlines. If you’ve been following the Toronto RE scene, or seen the cranes building new RE over the past number of years, the reasons for such alleged ‘rise’ in rents should be obvious, and they’re not due to rent rising on individual units, but rather, the composition of the rental stock itself changing quite dramatically.
////////////////////////

It seems that Mark is off the mark again.
New condos in Toronto are getting smaller year by year. Two bedroom units that once were 800 sq ft are now 675 sq ft.
Yet rent prices are going through the roof.
But I guess it is hard to realize this if you are watching from a Calgary basement suite.

#Markoffhismeds
#delusional

#34 Investing Canadian Millenial on 04.14.18 at 6:31 pm

Cut to the chase…What is the impact of a trade war on our Loonies? How will it benefit oil exports from Alberta if America imposes trade wars on the Far East? Should we save our loonies for their metallic value once or not?

#35 Penny Henny on 04.14.18 at 6:33 pm

#12 Ace Goodheart on 04.14.18 at 5:27 pm
The real reason why Trump is trade warring China:

No Trump tower or hotel in China.

Just let him build a Trump casino in Bejing and the Chinese will solve their problem.
//////////////////////

Have you been hitting the bottle early today?
Your theory sounds like something Mark might come up with.

#36 Andrew Woburn on 04.14.18 at 6:34 pm

#17 Trump is right on 04.14.18 at 5:45 pm

One small example I can offer as a guitar collector, is how Ali Express is riddled with literally hundreds and hundreds of manufacturers in China that try to pass off Gibson, Fender, Gretsch and Rickenbacker guitars,
==================

You are right of course but it is not unique to China. I have a Les Paul clone made in Japan in the 1980’s that might be better than the real thing. Eventually US manufacturers were able to use US courts to shut down the trade.

If Trump wanted to use the legal system to punish IP theft it might be more effective and less disruptive than tarriffs. It won’t stop the little guys but if you thought you could get arrested on your next trip to Vegas it might give you pause.

#37 Smoking Man on 04.14.18 at 6:35 pm

My kids are telling me a bad storm I’m GTA. Nastiest one of the year

Haha. Talking to them while drinking beer in my pool.
It’s 28c here. Getting an amazing tan loaded up with Hawaiin Tropic deal tanning lotion. Nefew is marrying and indan chich. Going to blend right in come June 1st.

Going to the general store last Sunday in may bloddogapolusa 2

Who’s in?

#38 Penny Henny on 04.14.18 at 6:37 pm

#16 Ace Goodheart on 04.14.18 at 5:45 pm
Just as a pet peeve to people who are building high end houses: hardwood is for living rooms, dining rooms, bedrooms, hallways, rec rooms.

It is NOT for entrance ways and kitchens. Please stop putting delicate hardwood floors in kitchens and entrance ways.

It takes so little extra effort to put good strong tile in the entrance to the house and the kitchen. Why can no o e get this right ?
//////////////////

Yep. Just like I thought, he is loaded already. And it’s only 5:45pm

#39 For those about to flop... on 04.14.18 at 6:37 pm

Hey Inflewenza,after thinking about your post ,I wondered if I had anything to augment it and I came up with this article from March 2016.

So it has a crust on it ,but considering it is analyzing 30 years of trade between the two countries I handed myself a pass.

The main reason of posting this article is to get the full effect and click on the GIF.

It only takes a jif…

M43BC

This GIF Shows How China Trumps the U.S. on Trade.

Perhaps this time next year it will be illegal to disagree with Donald J. Trump. But that doesn’t mean everything he says now is wrong. This GIF seems to illustrate his point about U.S. – China trade: “They’re killing us”.

The GIF below shows 30 years’ worth of trade between both countries. Each square represents one billion dollars. The green ones are U.S. exports to China. The red ones, U.S. imports from China.

The start couldn’t be more balanced: in 1985, the U.S. exported $3.9 billion to China, and imported goods and services for the exact same amount. But by 2015, there was a staggering imbalance, to China’s advantage, of $365.7 billion – an all-time record, not just for U.S.-China trade, but for any bilateral trade, ever.

It’s not that U.S. exports to China haven’t increased. They have, and by a lot. America exported an impressive $116.2 billion into China last year, 30 times more than in 1985. That makes China the U.S.’s third-biggest export market, nearly twice as important as Japan ($62.5 billion), in fourth place. But that’s still a lot less than U.S. exports to Canada ($280.3 billion) or Mexico ($236.4 billion). Meanwhile, Chinese exports to the U.S. have exploded. In 2015, China exported $481.9 billion to the U.S. – an amazing 123 times more than in 1985.

But it’s transforming these raw data into moving images that really brings home the runaway nature of America’s trade deficit with China.

Watch America’s exports to China progress in fits and starts – even reverting to ‘negative growth’ on five occasions: in 1986, 1990, 1999, 2009 and 2015. Last year was the most serious drop, by $7.5 billion from the previous year.

In contrast, see how China’s exports to the U.S. show a strong, consistent rise. With just one exception: in 2009, at the height of the financial crisis, Chinese exports to the U.S. dropped by a whopping $41.4 billion. But the general upward thrust is so strong that they increased by $68.3 billion the next year, not only compensating previous year’s losses, but also bettering the 2008 result by almost $30 billion.

And, as the GIF clearly demonstrates, China’s exports increase almost exponentially. It took China six years to add the first extra $15 billion to its exports to the U.S. By 2000, after the first 15 years shown here, the total had increased to exactly $100 million. Over the next 15 years, to 2015, that figure would almost quintuple. The last $15 billion was added just in the last year shown here, adding up to the record total of $481.9 billion.

Thirty years after perfect equilibrium, China exports almost four times as much to the U.S. as the other way around. Are there any glimmers of hope for the American side? Well, yes: at least China’s exports aren’t increasing as fast as they were a few years back.

Chinese exports grew by double digits in only three of the first 15 years. They grew by double digits in all but one of the next 15 years. But the peak does seem to have passed: after three years of plus-40% growth (2004-’06) and one year of plus-50% growth (2009), the increase hit its high water mark in 2010, with +68.6%.

But the year after, the increase virtually halved, and kept falling for every year since, except 2014. And there are other reasons to presume Mr. Trump’s simple truth might not be the whole one. For one thing, a lot of those Chinese exports to the U.S. are products assembled in China for American companies, so while they count as Chinese products, they benefit those American companies. And the fact that China is able to produce stuff so cheaply may have cost a lot of American jobs, it has also benefited American consumers, who get to buy stuff cheaper than if they made it themselves.

Even the outsourcing of American manufacturing to China is a bit more complex than the likes of Trump seem to think. Fact is, U.S. industrial output now is higher than it was during the post-war boom years – it’s just that manufacturing is more efficient, requiring a smaller workforce than before. The same has happened in agriculture, and those jobs haven’t gone to China.

The reason why U.S. exports to China haven’t kept pace with the flow of goods in the other direction is simple: China’s economy may be huge, but on a per-capita basis, the Chinese themselves are still relatively poor. Consequently, few are yet able to afford all those nice expensive things made in America, by workers who make a lot more than they do.

Trump proposes punitive tariffs to protect American jobs, but they would lead to trade wars that would ultimately end up hurting U.S. workers and consumers.

Paradoxically, it’s China’s manufacturing advantage over the U.S. itself that will lead to a rebalancing of bilateral trade. For if they keep beating the U.S. in the trade game, the Chinese eventually will get rich enough to afford more stuff. And then the trade gap will start to close – but only if America makes the things China wants.”

https://howmuch.net/articles/this-gif-shows-how-china-trumps-us-on-trade

#40 Eco Capitalist on 04.14.18 at 6:47 pm

Uncle Ken!?! Good heavens, one of you clearly fell far from the tree! Garth, have you put Ryan through Yakuza level loyalty tests? He could be a spy!

#41 Reality is stark on 04.14.18 at 6:49 pm

Taxes, taxes, taxes and more taxes.
Our governments knew they had a big problem coming after 2008. They knew manufacturing would get hollowed out by China and they would suffer a decline in income tax revenue eventually. We were lucky and high oil prices bought us five years. However the underlying structural issues never went away.
Obviously lighting a fire under the housing market from 2014-2017 fortifies Canadian GDP with the wealth effect.
However the real genius lies in the next stage. All items related to housing are about to see substantial tax increases. You can make up any excuse you want to steal the money from a homeowner (carbon tax, environmental surtax, property tax surtax etc.). Since homeowners have seen large increases in their home values they will eagerly pay the taxes. Remember there is no other group to suck the money from.
Eventually the government sucks you dry. Your retirement is about to get severely impacted.
I give the government credit for devising an excellent system for defrauding the average Canadian for as much money as possible. I can still hear the politicians laughing as they carry out one of the largest relative transfers of wealth to the public sector in the history of this country.

#42 Lost...but not leased on 04.14.18 at 6:58 pm

US versus China…

boils down to :
Trotsky Communists VERSUS Lenin/Stalin Communists

Democracy??? bwhahahahahaha !!!!

N/C

#43 Ustabe on 04.14.18 at 7:00 pm

Ace Goodheart on 04.14.18 at 5:45 pm

Just as a pet peeve to people who are building high end houses: hardwood is for living rooms, dining rooms, bedrooms, hallways, rec rooms.

It is NOT for entrance ways and kitchens. Please stop putting delicate hardwood floors in kitchens and entrance ways.

It takes so little extra effort to put good strong tile in the entrance to the house and the kitchen. Why can no o e get this right ?

хороший вопрос товарищ!

oops, sorry, forgot to change keyboards.

What a funny thing to post, no? New finishing techniques coupled with appliance install best practices make almost any flooring viable.

Here is a tip anyone can use…go buy a new computer. My new one tells me there are ladies who want to date me! It even tells me how far away they are!

#44 New West on 04.14.18 at 7:15 pm

#16 Ace Goodheart

“Please stop putting delicate hardwood floors in kitchens and entrance ways.

It takes so little extra effort to put good strong tile in the entrance to the house and the kitchen. Why can no one get this right ?”

+1000 for no hardwood in kitchens and entryways. I actually prefer something without grout lines (Marmoleum is superb) but tile is a close second.

I would also add that the flooring in entrances and kitchens should never, ever be white, no matter how “modern” it looks in the showroom.

#45 Freebird on 04.14.18 at 7:20 pm

The China Hustle on Netflix gives an eye opening overview of China’s investment history (to present) with the US and corruption. Im sure it’s not the whole story but worth the watch. Apparently POTUS is/has excl his daughter’s company from tariffs. Much of his own Signature Collection is made in China (others in Bangladesh). Will he/they be sourcing items elsewhere incl steel for his buildings? What about the deal he had with Jack Ma’s Alibaba? Just curious.

#46 TnT on 04.14.18 at 7:26 pm

#29 Andrew Woburn on 04.14.18 at 6:20 pm

I have heard from people who have done business in China that the western notion of respecting other people’s intellectual property is not well entrenched there and is probably still mainly of concern to Chinese businesses seeking global business.

*********

A form of IP theft happens at the street level within China.

A foreign company wants to produce a “widget” in China for cheap labor costs. China allows the foreign company to come in and open up for business.

Foreign company sets up shop, hires the locals and one of his new employees gets a hold of the blueprints and all the trade secrets i.e. machine design, widget design etc. and then crosses the street and duplicate the whole operation with a local inside track to better Government / Society relations that’s give them an edge.

Now foreign company goes bust and his new competitor doubles their operations taking over the original shop and sells the “widgets” back where the foreign company came from.

Smarter than the foreigners, that’s for sure!

#47 Deplorable Movie Premiere on 04.14.18 at 7:26 pm

#37 Smoking Man on 04.14.18 at 6:35 pm

My kids are telling me a bad storm I’m GTA. Nastiest one of the year

Haha. Talking to them while drinking beer in my pool.
It’s 28c here. Getting an amazing tan loaded up with Hawaiin Tropic deal tanning lotion. Nefew is marrying and indan chich. Going to blend right in come June 1st.

Going to the general store last Sunday in may bloddogapolusa 2

Who’s in?
..

Is there going to be a screening of your movie at the ice cream palace? Garth can put a sheet up… deck chairs and some beer… outdoor premiere for the 16 deplorable fans

#48 AK on 04.14.18 at 7:28 pm

China should have never been allowed to join the WTO…

#49 Another Deckchair on 04.14.18 at 7:45 pm

@32 Jungle:
“It’s really too bad most stuff now comes from China, and it’s worse or poor quality too. ”

I thinks this is a reflection on “us” not “them”.

China can produce things to any standard; they do make some *really* good stuff.

The west wants the cheapest prices, so we get what we pay for.

Yes, we are idiots.

#50 Dr. Talc on 04.14.18 at 7:49 pm

‘A war is two sides fighting each other.’

– Bill Hicks

#51 Banking Cartel on 04.14.18 at 7:54 pm

It may be diabolical, but you have to admit it is brilliant. First, lower taxes so the rich benefit. Then, raise tariffs so the poor pay more. It may be evil but it was do darn easy to convince everyone it was a good idea! Even the unions!

It really solves a problem we have been facing for years. The poor are hard to tax because they don’t have any money. With a progressive tax system, the less you make the less as a percentage you pay until you a paying close to nothing at all! This won’t do. So how to correct? A tax on all the cheap trinkets at Walmart of course! Putting a tariff on Chinese goods won’t affect the rich much because who with any self respect buys Chinese made products now? Well other than Apple products. But the tariff would only apply to the Chinese content so it won’t be so much that a man of status would notice it.

It’s almost as brilliant as a carbon tax. The poor have to pay it too.

#52 espressobob on 04.14.18 at 8:09 pm

Individuals shop price. Quality slowly lost it’s place long ago.

Today it’s a throw away scenario most of us created.

Why bitch?

#53 Gravy Train on 04.14.18 at 8:16 pm

#26 Stan Brooks on 04.14.18 at 6:11 pm
“To have trade you [n]eed to have an economy. Period.”

So—I just want to understand your position correctly. Intellectually, you disagree with free trade, free access to markets, free flow of capital, internationalism, democracy, and a healthy respect for international law and trade agreements. Rather, you prefer protectionism, nativism, jingoism, hyper-nationalism, authoritarianism, unilateralism, and economic warfare.

Have I got that right? :)

#54 Lost...but not leased on 04.14.18 at 8:20 pm

Free Trade has been a disaster…versus what might have been.

Sovereign nations were once able to collect tariffs to protect local industries, and the revenue collected was enough to support the Gov’t sans additional taxation.

Nothing communist about that…the oligarchs are the ones the favour “free trade” as a race to the bottom on way to One World Gov’t.

#55 akashic record on 04.14.18 at 8:20 pm

A different kind of war: European Parliament on Right-Wingers Banned From UK

https://www.youtube.com/watch?v=odGiYJdFtE0

#56 conan on 04.14.18 at 8:24 pm

#134 MF on 04.14.18 at 10:18 am

My history books, and news feeds, do not come with crayons.

#57 Gravy Train on 04.14.18 at 8:29 pm

#25 Smoking Man on 04.14.18 at 6:11 pm
“… internet has every bit of knollage [sic] for free…. You got to be a teacher. Am I right?”

I promised another blogdog that I’d go easy on you. But don’t test me, Smokey! You’re an unarmed man in a battle of wits! :)

#58 BillyBob on 04.14.18 at 8:31 pm

Hmmm. A lot of posts moaning about how China has been able to prosper due to things like their low wages and lax environmental controls.

Yet we seem to forget that places like Great Britain and the US also built their fortunes by abusing the environment, exploiting labour, the use of slaves, and the like. No, I’m not going all SJW, it’s just history. Eventually the economic standard rose to the point where they could “afford” things like the EPA and labour protections and then it started to improve. (Or one could say they simply couldn’t ignore how bad things were anymore.)

Los Angeles air quality looked just like Beijing not that long ago.

China could very well get to that same point in their economic evolution, and let’s hope so. But getting all self-righteous about a country that until 30 years ago was desperately poor thanks to Mao is completely hypocritical. No one seemed to mind much when they could head into their local Wallymart and buy crap cheaper. But hey we in the West are all trendy-Green now, so we can look down our noses at those horrid Chinese polluters. Give me a break. Some very short memories. The issue of course, is the sheer scale of China.

IP theft is wrong, but if you’re going to be foolish enough to allow access to your competitors and accept their terms due to your own short-term greed, one can hardly be surprised it occurs so rampantly.

#59 FOUR FINGERS WATSON on 04.14.18 at 8:36 pm

#49 Another Deckchair on 04.14.18 at 7:45 pm
@32 Jungle:
“It’s really too bad most stuff now comes from China, and it’s worse or poor quality too. ”

I thinks this is a reflection on “us” not “them”.

China can produce things to any standard; they do make some *really* good stuff.

The west wants the cheapest prices, so we get what we pay for.

Yes, we are idiots.
………………………………..

I was in the Philippines in January for Sinulog Festival. I was not satisfied with the tv in my hotel so I bought a Chinese made 32” flat screen with remote. Cost was $60 bucks Canadian, 2 triple aaa batteries for remote was 25 cents. It all worked just fine , i gave it to a friend when i returned home.

#60 BillyBob on 04.14.18 at 8:37 pm

Oh yeah, the whole “stuff made in China is all crap” meme. Also nonsense. Yes, there is a tsunami of poor quality, tacky plastic schtick that pours in (wonder if it would if there were no demand for it?) But there are also incredibly high-quality goods produced in China. Where do you think iPhones are mainly made? (Many in Taiwan, which IS different, but also in Mainland.) All kinds of very high-precision consumer electronics and other goods are made in China.

Again, short memories. “Made in Japan” also once stood for cheap, poorly-made garbage. Now it’s considered a badge of honour, on a par with German engineering. Hmmm.

Lest it be thought I am overly defensive of China, I am not. But I do get at annoyed at bigoted cliches getting passed off as truisms.

#61 For those about to flop... on 04.14.18 at 8:38 pm

[G]ravy [T]rain,I will try to watch what I write so you don’t have to spend any time on my posts.

[I] can’t promise anything as my schooling was (sic)…

M43BC

#62 Entrepreneur on 04.14.18 at 8:39 pm

I remember buying a cheaper transistor radio made in China in the seventies, the jeans made in China but from North America companies and then the cheaper trucks and cars. And when people heard China products were made in sweat farms we were careful not to buy those products.

And now those products are not cheap anymore but cheaper than Canadian made as we have income wage inequality and standards. And rare to see Canadian made, rare to see the spirit of making and selling.

Watched the news and cannot believe how some mayors want out of the speculation tax as it would hurt their area, crying the blues. Really!!! The thing that bothers me is that where were these majors for the renters/workers/buyers with extremes on the taxpayers in their area.

Where is the proper leadership? Listen to the people in your riding.

#63 OttawaMike on 04.14.18 at 8:41 pm

A good example of intellectual property theft is the Nortel main campus on Moody Dr. Here in west Ottawa.

Nortel faced sudden show stopping competition for its PBX switching hardware from Chinese telecoms in the mid 90’s.
When DID took over the building listening devices were found throughout. So much that the govt of Canada had to literally rebuild the massive campus and still can never hold highly classified defense meetings there.
It made news here but then was quietly removed from media coverage.
https://www.ctvnews.ca/mobile/canada/dnd-may-abandon-1b-move-to-former-nortel-site-because-of-surveillance-bugs-1.1477766

Then this:
http://ottawacitizen.com/news/national/defence-watch/the-mystery-of-the-listening-devices-at-dnds-nortel-campus

A DND spook I know assured me that bugs were found. Contrary to the latest spin.

#64 akashic record on 04.14.18 at 8:53 pm

#52 espressobob

Today it’s a throw away scenario most of us created.

Why bitch?

—-

Because it is stupid? Because it is unsustainable? Because it doesn’t the the world a better?

Pick whichever you want and bitch about it as you wish.

#65 FOUR FINGERS WATSON on 04.14.18 at 8:56 pm

#23 Penny Henny / A tribute to Whatcha Minnie on 04.14.18 at 6:03 pm
Today while I was walking my dog I came across a beautiful chestnut brown border collie mix. I’ve seen this dog a few times in the neighbourhood but we never actually met. I love the look of this dog because it looked so much like my dog Penny which we had to have put down last summer (except Penny was black).
Anyway as I was petting the dog he sat down and leaned right against me. I can’t describe how happy I felt!
……………………………………..

When i travel i only have the clothes on my back and a small carry on backpack. It contains 3 wallets with different currencies and my atm cards, a shaving / med kit, my ipad, and a dual sim samsung phone. I get a monthly hotel rate and move around a bit it if i get restless. I never cook, i like restaurants. I buy whatever i need while i am abroad and i give it all away when i want to come home and visit the grandkids or my cardiologist. I will be 69 this year. Been in Kelowna since March 4th, did my visiting, got my checkup, and i am bored shitless again. Outta here first week of May i think if i can stay sane that long. Wine, women, and song dude….Pretty boy she’s waiting there for youuuuu……..

#66 Trump is right on 04.14.18 at 8:57 pm

36 Andrew Woburn on 04.14.18 at 6:34 pm

——————————-

The big difference is, according to my recollection, what came out of Japan were not identical copies with a Gibson logo and reused Factory serial numbers that also read “made-in-usa” on the back of them. These were usually makes like Yamano and Yamaha with their take on the Gibson Les Paul with at the very least a different-looking headstock and always stated that they were made in Japan.

Not to mention Japan stopped doing this a long time ago in general. I stand by my belief that this level of audacity and fraud is strictly something that currently comes out of China.

#67 Damifino on 04.14.18 at 8:58 pm

#9 Mark

One thing you need to keep in mind about China is that its run by a whole bunch of incredibly intelligent people.
———————————————

who, by the way, seem unable to create their own IP.

#68 Ryan Lewenza on 04.14.18 at 9:06 pm

Investing Canadian Millenial “Cut to the chase…What is the impact of a trade war on our Loonies?”

A full-out trade war would be negative for our economy and dollar given that we’re a heavy export nation. Also we would see higher inflation and then tighter monetary policy. Overall bad for Canada and our dollar. – Ryan L

#69 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 04.14.18 at 9:18 pm

LEAFS CHOKING AGAIN!

Bwahaahaaahhaaaahahahahahahahaa!!!!!!

4-0 Bruins after only one period!

Toronto, your city, the GTA, like your team, is toast.

You are filled with dupesters, morons who don’t know good from bad, up from down.

This is why you support the most inept, incompetent, stupid sports franchise in the world.

50 years of….NOTHING :(

This is EXACTLY the same reason why your real estate delusion is about to crash.

You are not world class.

You are not even third class; Toronto and the GTA suck.

You are a cesspool of losers and fakers, trying to persuade each other that you are winners, that your region is liveable and worth all the headaches.

How’s that workin’ for your team !?

50 YEARS OF MAPLE LEAF INCOMPETENCE!

…..soon to be 51 ;)

#70 Inflation on 04.14.18 at 9:20 pm

I would welcome high inflation in Canada.

It would wither away those inflated house prices a bit, as well as wither away those debt principles.

But you would need a long fixed term on your mortgage, otherwise the interest will counter that.

#71 april on 04.14.18 at 9:32 pm

#33 – I believe rent increases in Vancouver is capped at 4% for 2018

#72 For those about to flop... on 04.14.18 at 9:46 pm

Pink Snow falling in North Vancouver.

This attempted flip on the North Shore is not going to plan.

They picked it up for 3.63 in May 2017 and not long after it was put back on the market for 3.98.

8 months later they just took another 100k off and are asking 3.54.

Have all the buyers sailed off into the sunset…

M43BC

3885 Sunset Boulevard, North Vancouver paid 3.63 may 2017 now asking 3.54

440k less than original ask.

Aug 22:$3,980,000
Jan 29: $3,648,000
Change: – 332000.00 8%

https://www.zolo.ca/north-vancouver-real-estate/3885-sunset-boulevard

https://www.bcassessment.ca/Property/Info/QTAwMDAyODRMRA==

#73 Tony on 04.14.18 at 9:49 pm

A global trade war can only benefit America because everything made in China is junk whereas mostly everything made in America is of high quality under the slogan “quality it matters”.

#74 Smoking Man on 04.14.18 at 10:00 pm

Gravy Train on 04.14.18 at 8:29 pm
#25 Smoking Man on 04.14.18 at 6:11 pm
“… internet has every bit of knollage [sic] for free…. You got to be a teacher. Am I right?”

I promised another blogdog that I’d go easy on you. But don’t test me, Smokey! You’re an unarmed man in a battle of wits! :)
……

Looking forward to the battle. Boardom is the killer of all good men.

#75 re., 69 hey dude on 04.14.18 at 10:03 pm

it’s a hockey game

take it easy on the booze

#76 bdwy sktn on 04.14.18 at 10:05 pm

 april on 04.14.18 at 9:32 pm

#33 – I believe rent increases in Vancouver is capped at 4%

……….
A small suite I manage was..

1100 3yrs ago
1500 today with better Tennant
Same place.

East van.

#77 -=jwk=- on 04.14.18 at 10:05 pm

op·pres·sion
əˈpreSHən

noun

prolonged cruel or unjust treatment or control.
synonyms: persecution, abuse, maltreatment, ill-treatment, tyranny, despotism, repression, suppression, subjection, subjugation;

Trump firing his chief of staff, Dep Attorney general, national security advisor, fbi director, fbi deputy director, Communications director, press secretary, chief of staff, communications director (again), secretary of health and human services, communications director (again, again), staff secretary, director of national economic council, national security adviser, secretary of state, and homeland security adviser ….is oppression. These were people HE HIRED and then fired when they didn’t agree with everything he said or was doing.

Harper removing ONE person from a cabinet position, is not oppression.

Hope I cleared that up for anyone who was confused.

#78 Lorne on 04.14.18 at 10:07 pm

#13 crowdedelevatorfartz
@#148 Lorne
“Horgan is the most popular premier in the country…”
++++
When low double digits beat low single digits thats nothing to brag about.
….
What are you talking about 52% approval rating in an Angus Read poll, slow double digits?
……………..

As for Horgan’s “lead” in the polls ….
Means absolutely nothing when you’re the “leader” in a minority govt hanging on by its finger nails.
Dont be too smug with your hand picked “stats” there Lorne
…………
At least I have credible stats…..you, not so much
…………………….
Less than half of the voters that even bothered in the last provincial election voted for Horgie Porgie.
Lets give rising interest rates, a slowing economy and the Green Party’s “on again off again” Bro-mance with the NDP to play out to its inevitable conclusion…..another election in less than a year.
………….
Another wonderful “opinion” that is very likely not to occur….no matter how much you wish it to!

#79 Stan Brooks on 04.14.18 at 10:18 pm

#53 Gravy Train on 04.14.18 at 8:16 pm
#26 Stan Brooks on 04.14.18 at 6:11 pm
“To have trade you [n]eed to have an economy. Period.”

So—I just want to understand your position correctly. Intellectually, you disagree with free trade, free access to markets, free flow of capital, internationalism, democracy, and a healthy respect for international law and trade agreements. Rather, you prefer protectionism, nativism, jingoism, hyper-nationalism, authoritarianism, unilateralism, and economic warfare.

Have I got that right? :)

=========================

You are very naive individual, reading you helps me understand why we went that deep into this credit trouble and why we are facing the inevitable economic collapse.

I am absolutely for free trade, democracy, free markets, etc. all these wonderful words.

The problem is that they do not exist in the current reality. Maybe in some parallel virtual reality that you live in.

In the real world you compete with unregulated slave labour from countries with no environmental laws that make their production and services cheaper than ours with all the regulation that we face here.

The more we accept this as a ‘free trade’, the deeper into the hole we sink.

Look at our housing and credit market. Is that ‘free’ market? Why do we need CHMC then? Nobody else has ‘mortgage insurance’. How about the oligopolies in retail, telecom, banking? Is that free market too?

Oh, I will absolutely invest in our ‘free trade’ partners as they prove to be smart enough to explore our weaknesses while we are busy bragging how smart and rich we are while alienating and killing our smartest and brightest with stupid taxes while promoting mediocrity and conformance.

If you believe that you can compete honestly with 20 times cheaper labour in countries with no rules, and be superior in productivity, you are simply arrogant and ignorant.

You are just being played. Be very worried when the music stops. There will be no chair left for you.

———————————–

There is positive news though that the stupid will decline and will not be able to reproduce, which is the natural law of evolution.

Hint – the stupid is us, not our ‘free trade’ partners.

#80 Gravy Train on 04.14.18 at 10:21 pm

#61 For those about to flop… on 04.14.18 at 8:38 pm
“… I will try to watch what I write so you don’t have to spend any time on my posts.”

Hey, Floppy. Smokey picked a fight with me tonight (not the other way around). In case you haven’t been following the back-and-forth between me and Smokey for a few days now, my criticism of him is not so much his ignorance as it is his fascist leanings.

I have grave concerns that democracy is being undermined, not only in the U.S., but around the world. In the U.S., Trump is giving a voice to white nationalists, neo-Nazis, and the Klan.

“You … had some very fine people on both sides.”
— Donald Trump, commenting on Charlottesville

Garth, I’ve learned a great deal from you, and thanks for your insights. (You’re on your own with this bunch!) Best regards. :)

#81 conan on 04.14.18 at 10:26 pm

Anyone know of good bars in New Orleans. I am looking for all of the culture,but less to none , of the “Octoberfest Hockey arena event” experience.

https://youtu.be/bsYp9q3QNaQ?t=99

#82 FOUR FINGERS WATSON on 04.14.18 at 10:42 pm

There is a hotel in Cebu city that I like in Barangay Kamputhaw. Monthly rent is about $1100 bucks Cad. Small gym, pool, rooftop restaurant, nice view, nice staff, free valet service etc. My favourite restaurant these days is Casa Verde. Steak a la John Paul, well done with mashed potatos and gravy , a nice big green salad and bottomless ice tea is about 6.50 cad. I love the Burger King too. Whopper Jr with fries and a coke is about 1.25 cad. I like to hang out at Gilligans at the Terraces. A local San Mig light beer is about the equivalent of a Mexican Corona and costs a buck and i don’t get hang overs. Marlboros and Winstons are about 1.75 cad. I like to sit there and watch the girls go by.Sometimes they sit and chat :) Sometimes i go to the beach, sometimes i walk in the triple canopy jungle, sometimes I fly to Manila or Hong Kong or Kota Kinabalu. I have been doing this for nine years now and sometimes i get bored but mostly i don’t cuz sometimes i am naughty.

#83 MF on 04.14.18 at 10:48 pm

#56 Conan


#134 MF on 04.14.18 at 10:18 am

My history books, and news feeds, do not come with crayons.”

-Maybe. But they seem to come with a heaping pile of poop instead.

MF

#84 Reynolds531 on 04.14.18 at 10:57 pm

Just watched “the China hustle” as recommended above.

Jeez, there were 50 Sino forests, not one. And now China wants to trade oil contracts. I’m off to calculate any exposure.

#85 Lawnboy on 04.14.18 at 10:57 pm

Ryan;

Way back in 2003, I was drawn a picture (with crayons) that detailed how China was FORD and N America was the guy that wanted the car!

The whole debt deal is the “mondo” vendor finance for all that land fill (ie, bingo dobbers) we buy.

Your thoughts?

#86 Arctic Gringo: Qalunaaq on 04.14.18 at 11:02 pm

Attempts to “develop” a small section of Canada’s north has taken another punch the gut. Recently, the Feds rejected a public-private application under the National Transportation Corridor Fund to build an all-weather road from the defunct Jericho Diamond Mine (NWT-NU border) to a new marine port at Grays Bay in the Coronation Gulf (near Cambridge Bay, for those geography experts here). The main road, something around 230 km long, would act as the highway for many spur roads providing access to valuable mineral properties in the western Kitikmeot, especially the rich zinc, lead, copper and silver properties.

A jurisdictional pissing match over a pipeline of apparent national significance, and here an entire region adjacent to Bathurst Inlet is littered with billions of dollars in mineral resources, and people WANT it built, people WANT gainful employment, people WANT accessibility , but the federals blinders are on. But hey, at least Montreal can look forward to a refurbished port from the NTCF giveaway. Maybe to tourist road to Inuvik is good enough for the Feds allowing them to use the mantra: coast to coast to coast.

Says you.

#87 Smudgekin on 04.14.18 at 11:05 pm

No I don’t buy ‘President-for-Life’ either. But I don’t sense a radical mountain troll like Hitler. More a Franco who will have to be endured for decades.

If you ask me America’s afraid of a rising star in the east. Anything that isn’t American is terrible and needs to be liberated American.

#88 For those about to flop... on 04.14.18 at 11:10 pm

#80 Gravy Train on 04.14.18 at 10:21 pm

Hey, Floppy. Smokey picked a fight with me tonight (not the other way around). In case you haven’t been following the back-and-forth between me and Smokey for a few days…

//////////////////////

Calm down,calm down.

I was trying to make you laugh.

I am not the Headmaster of this blog.

I am the janitor…

M43BC

#89 stage1dave on 04.14.18 at 11:16 pm

I’m old enuff to remember when every second household item said “made in Japan” and was viewed as second-rate…that has sure changed.

(Probably about the same time Deep Purple did that live album haha)

The Matsumoku factory-produced guitars of the late 60’s, 70’s and 80’s are pretty collectable lately. I’ve owned several since the early 80’s, and they all are well built and play quite nicely.

Building under license for many brands (Vox, Yamaha, Epiphone, etc) obviously enabled them to acquire some serious skills (I’m partial to the ‘neck thru body designs of AriaPro and BC Rich especially) but there’s a reason why their early LP’s are referred to as ‘lawsuit’ guitars!

Now we deal with ‘made in China’ on every second thing in the house, and I can’t help but think we did this to ourselves. I’m also wondering if a serious ‘trade war’ might wind up making a trip to WalMart seem like shopping at Saks 5th Avenue…

If history is repeating itself again, not sure who’s gonna make a decent live RnR record in China either.

#90 anti social, social club on 04.15.18 at 12:42 am

#16 Ace -Please stop putting delicate hardwood floors in kitchens and entrance ways.
Nobody uses hardwood any more. That was 20 plus years ago. All plastic now. Cheaper, easier to install, not delicate, looks great.

#91 Frank on 04.15.18 at 12:43 am

If you plan to buy ETFs with China stocks, China Hustle the movie was the primer.

The advanced version is at deep-throat-ipo.blogspot.com with a discussion of the RMB currency manipulation using two versions of the currency.

Nobody outside China owns a Chinese public company. And you can’t get money out of a Chinese business in China to pay a dividend. The internal RMB can’t be exported.

#92 AGuyInVancouver on 04.15.18 at 3:34 am

#8 Mark on 04.14.18 at 5:05 pm

Sure, because there’s been an onslaught of new luxury supply added to the rental pool as construction is completed and the speculators are unable to resell them to owner-occupiers at desirable prices due to the stagnation/declines in Toronto RE prices. But on individual identical units, rents have not meaningfully increased in Toronto/Vancouver, and in some cities, particularly Edmonton, they appear to be deflating.
_ _ _
Did you even read the Vancouver article? The tenant was being threatened with a 64% “renoviction” rent increase. This is all too common in Vancouver. There was also the One Year Lease scam where landlords could jack up the rent by whatever they wanted after a year, 4% rent increase cap be damned! Thankfully the NDP closed that loophole, but renoviction is till on the table.

Add to that the huge number of older rental buildings being demolished to make room for new condos with a paltry, token rental component, with “affordable” one bedrooms starting around $1,900/month!

#93 Mark on 04.15.18 at 3:37 am

“It seems that Mark is off the mark again.
New condos in Toronto are getting smaller year by year. Two bedroom units that once were 800 sq ft are now 675 sq ft.
Yet rent prices are going through the roof.”

Square footage is not an indication of the quality of a unit. Granite countertops, a gym and concierge for tenants, and various other interior and exterior furnishings, as well as the physical quality of the building are far more significant as determining factors.

When you dump so many such units into the marketplace and demand higher rents, of course average rents will rise. But that’s not because the same sort of units are on offer. Brand new units, being brand new, will inherently rent for more than older units, and when you have such a huge supply onslaught as we’ve seen over the past few years, what’s happened is perfectly logical and explainable in the context of changes to the mix of and type of units in the rental marketplace.

#94 Shawn Allen on 04.15.18 at 6:29 am

Woe is us?

FOUR FINGERS WATSON on 04.14.18 at 4:49 pm said:

Whoever has the lowest labor costs and fewest environmental regulations will always win.

*************************************
Really? I think you are describing the poorest countries on earth or at least their people are poor.

A lot of people in Canada are doing very well. But there are always many who whine how tough things are.

#95 Shawn Allen on 04.15.18 at 6:32 am

Trade Wars?

People seem to think they are part of “Team Canada” or Team USA” competing against “Team China”.

In reality there is little room for “we” in economics. You’re on your own basically.

#96 Shawn Allen on 04.15.18 at 6:35 am

Trade Deficit?

I am currently running a big trade deficit with Royal Caribbean this month. Strangely, it is not a problem for me.

#97 X on 04.15.18 at 8:03 am

Ryan, do you think Trump is intentionally trying to ramp up inflation, or is inflation more of a result of his policy directives?

#98 Honey Dripper on 04.15.18 at 8:04 am

Trumpster has already yielded on the trade war. Let’s hope we have the right investments when the next one starts. This rhetoric is tiring.

#99 Cto on 04.15.18 at 8:15 am

China, Mexico, India, ….Globalization!
Right now the NHL playoffs are on! Many different cities and teams all have a chance. All home rinks are same size, refs call by same rule book. Anything that can affect the game is standardized.
Globalization??? Na! Who needs a same playing field!?
Well the Western countries do! We spent time and years and many many labor issues and troubles building an infrastructure with rules and fair work policies safety standards Etc. Human rights!
What does it take to make a toaster in China? Build a factory hire a bunch of employees pay them nothing no labor rules no Ministry of Labor, no human rights.
The owners? They were the people who already had the power and connections under the communist government or whatever governments in place. They make the Millions then come to Canada and push up the price of hoses and push our middle class out of the housing market.
Yay! globalization! Will help the world!

#100 Cto on 04.15.18 at 8:28 am

Rayn
You said Canada is an export Nation?
What does Canada export other than some raw materials and oil?
What are Canada’s five biggest exports?

#101 Renter's Revenge! on 04.15.18 at 9:07 am

If you add up all the trade deficits in the world, shouldn’t they add up to zero? Or am I missing something here?

I think the bigger question is, what are the countries with positive trade balances buying with all the extra money coming in?

https://www.youtube.com/watch?v=5DvuyvuHmJI

#102 Bezengy on 04.15.18 at 9:22 am

The last time Mr. Dressup and John Horgan met they didn’t even talk about the pipeline. Very pro-active approach.
http://www.cbc.ca/news/politics/horgan-trudeau-meeting-pipeline-1.4220164 Pipeline development is a fail.

This week we let the US, France, and England do the heavy lifting in NAFTA’s response to Syria’s use of chemical weapons. Canada is irrelevant. Our foreign policy is a fail.

Our deficit will be 20 b this year, and we have no plan to balance the budget. Infrastructure spending is non-existent. Managing our economy is a fail.

We’ll be lucky to even have a country when this guy is finished. I think he should get down on his knees and beg Harper to come back to Ottawa and try to repair the damage he’s done.

#103 akashic record on 04.15.18 at 9:29 am

#96 Shawn Allen on 04.15.18 at 6:35 am

Trade Deficit?

I am currently running a big trade deficit with Royal Caribbean this month. Strangely, it is not a problem for me.

Your bragging surplus compensates for it. Enjoy the trip.

#104 Ryan Lewenza on 04.15.18 at 9:42 am

conan “Anyone know of good bars in New Orleans. I am looking for all of the culture,but less to none , of the “Octoberfest Hockey arena event” experience.”

If your into music then you got hit up the Spotted Cat Music Club on Frenchman Street. Incredible live jazz and great staff. We aim to help here on greaterfool providing investment strategies and bar recommendations. – Ryan L

#105 MF on 04.15.18 at 9:47 am

#87 Smudgekin on 04.14.18 at 11:05 pm

“If you ask me America’s afraid of a rising star in the east. Anything that isn’t American is terrible and needs to be liberated American.”

-A world with a China as number one would be very different (and not in the good way). This would be not only for us in Canada, but for the whole world.

Be thankful (serious).

MF

#106 Ryan Lewenza on 04.15.18 at 9:49 am

Renter’s Revenge! “If you add up all the trade deficits in the world, shouldn’t they add up to zero? I think the bigger question is, what are the countries with positive trade balances buying with all the extra money coming in?”

Yes if you add up all the trade deficits and surpluses it would add to zero. Some country’s deficit is another country’s surplus. The country’s with surplus balances largely invest those funds in US Treasury bonds. This shows how interconnected the world is and how any changes around global trade can have major ramifications. – Ryan L

#107 NoName on 04.15.18 at 9:53 am

Selfies rendered lipstick useless, me thinks its time to ditch lipstick index in favour of something more accurate… I recommend, pet theft index, sales of men underware, and nationality of model on front page of sports page illustrated.

http://torontosun.com/life/fashion-beauty/selfie-obsessed-millennials-fuel-makeup-sales-boom

#108 NoName on 04.15.18 at 9:54 am

Selfies rendered lipstick index useless, me thinks its time to ditch lipstick index in favour of something more accurate… I recommend, pet theft index, sales of men underware, and nationality of model on front page of sports page illustrated.

http://torontosun.com/life/fashion-beauty/selfie-obsessed-millennials-fuel-makeup-sales-boom

#109 Ryan Lewenza on 04.15.18 at 9:55 am

Cto “You said Canada is an export Nation?
What does Canada export other than some raw materials and oil? What are Canada’s five biggest exports?”

Fuel (20%), motor vehicles and parts (15%), industrial machinery (8%), precious metals (5%) and wood products (3.5%). It’s not just resources we ship. – Ryan L

#110 MF on 04.15.18 at 9:56 am

82 FOUR FINGERS WATSON on 04.14.18 at 10:42 pm

Serious question: what’s your age? Are you retired?

MF

#111 Ryan Lewenza on 04.15.18 at 10:00 am

X “Ryan, do you think Trump is intentionally trying to ramp up inflation, or is inflation more of a result of his policy directives?”

No I don’t think he’s intentionally trying to drive up inflation. But I do believe he does’t fully understand all the moving parts here and the potential for his actions to create these unintended consequences. This was what I was trying to convey in the post is that this is really important stuff and these decisions can’t be made in haste and through a twitter account. – Ryan L

#112 CV5 on 04.15.18 at 10:09 am

“Specifically he said China will look to significantly lower tariffs on automobiles, ease restrictions on foreign financial firms operating in China and step up enforcement of intellectual property rights protection.”

Somebody is smoking the hopium if you think that’s going to happen.

I say go for full frontal traded war with China. They are so leveraged beyond the 5:1 trade imbalance that the reality is probably more like 500:1.

Chickens coming home to roost in China and its about time. They have been riding the coattails of the honest and fair Western markets long enough.

#113 Brian1 on 04.15.18 at 10:32 am

Mission Accomplished

#114 Shawn Allen on 04.15.18 at 10:56 am

Sincerely?

103 akashic record on 04.15.18 at 9:29 am said to me (and the blog):
#96 Shawn Allen on 04.15.18 at 6:35 am

Your bragging surplus compensates for it. Enjoy the trip.

***********************************
Thank you, but I am not entirely sure that was a sincere good wish. Oh well, on Friday I will be in Amsterdam where I will tour the oldest stock exchange in the world. Back in the 1600’s shares in the Dutch East India Company were, along with tulips, the hot game in town. More than a few people went broke trading on margin and naked short selling and then complained the market was manipulated. The more things change…

#115 akashic record on 04.15.18 at 11:06 am

#100 Cto on 04.15.18 at 8:28 am

Rayn
You said Canada is an export Nation?
What does Canada export other than some raw materials and oil?
What are Canada’s five biggest exports?

Yes, it may sound like the export of a third world country, but these are “value added” or “conscious” resources, because they come from a wake country, where the leader telegraphs messages for the betterment of humanity with his socks, not from some savage dictatorship.

#116 Catmandeux on 04.15.18 at 11:06 am

#100 Cto on 04.15.18 at 8:28 am

https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/can/all/show/2016/

#117 Elcheapo on 04.15.18 at 11:16 am

Smoking Man, god bless you, I’m 95% sure your posts would be entertaining if I could actually understand a word of what you’re trying to say.

#118 Leo Trollstoy on 04.15.18 at 11:27 am

Chris getting schooled on rising Vancouver and Toronto rents

Things never change

Lol

#119 Smoking Man on 04.15.18 at 11:37 am

Hey Ontario how is global warming working out for you.

Local stations in SoCal are covering the weather up there.
Going for a walk soon can’t decide on what color flip flops to wear. Ahhhhh problems.

#120 Big Kahuna on 04.15.18 at 11:40 am

Trump is making deals-sending in those missiles (exactly what Trump would prefer not to do) is just another deal-he isn’t saying what he got in return but a guess would be political support for military funding of the border wall and/or canning of Rosenstein, Mueller and maybe Sessions. You are a smart guy Ryan-I am surprised you would fall for Trump’s “emotional wild guy” facade-Trump is by a mile the smartest POTUS ever-but not nearly as idealistic as his supporters hoped-Trump is focused on re-election in 2020 and will do ANYTHING to make that happen.

#121 FOUR FINGERS WATSON on 04.15.18 at 12:02 pm

#110 MF on 04.15.18 at 9:56 am
82 FOUR FINGERS WATSON on 04.14.18 at 10:42 pm

Serious question: what’s your age? Are you retired?

MF
………………………….

I will be 69 this year. Retired for 9 years now. I bounce around between Kelowna and SE Asia. Bucket list was done a few years back.

#122 Brian1 on 04.15.18 at 12:06 pm

The reason the FBI raided Cohen’s law office instead of submitting him with a subpoena was that they were afraid that he would do the same thing Hillary did with her evidence which is destroy it.

#123 S.Bby on 04.15.18 at 12:20 pm

#76 bdwy sktn on 04.14.18 at 10:05 pm

Rents are dropping as are house prices. Stop your incessant pumping.

http://www.vancourier.com/real-estate/rents-fall-in-canada-s-priciest-cities-even-vancouver-1.23214423

https://www.zolo.ca/vancouver-real-estate/trends

#124 Oft deleted much maligned stock picker on 04.15.18 at 12:20 pm

Ryan, Expanding the Democratic Party rhetoric that Trump is ‘crazy’…is simply….’crazy’. Maybe you don’t spend a lot of time in the US…. but we just had a president who said “those jobs are gone and they’ll never come back”. But they did come back…by the millions. Trump made that happen. The reason you might think Trump ‘crazy’ is because you watch the wrong television programs…the rest of the country loves him. He’s up against a well funded and bitter ‘resistance’….but he’s effective and definatley a ‘doer’. Puke up the Liberal bathwater and let America rebuild itself….and BTW….screw China…they’re guilty of everything Trump has accused them of.

#125 thesecondcomingofjohngalt on 04.15.18 at 12:25 pm

Just an opinion after sifting through the comments on this particular subject, anyone with reasonable intelligence can deduce by observation that there is no such thing as “free” trade. The poster that used the hockey playoff analogy said it best, there is no such thing as a “level” playing field. Where that leaves us as a society moving forward I’m not so sure about other than a slow decline in our overall standard of living, there’s a lot more to discuss/debate about life in Canada other than what profit can be made by selling a piece of real estate.

#126 The Totally Unbiased, Highly Intelligent, Rational Observer on 04.15.18 at 12:46 pm

“President Trump’s twitter feed can be breathtaking in its volume and level of craziness, but the tweet above really stood out for me as it goes against almost everything I’ve learned about economics and history.” — RL

Congratulations, Ryan, on your humility and teachability. It takes a big man to admit that he was wrong about almost everything he had ever learned about economics and history. The first step in recovery is to admit that you were all wrong and have a serious problem. So, again, congratulations!

The next phase of your recovery and re-education program will involve diligently reading and studying the Great American President Donald J. Trump’s absolutely brilliant Twitter tweets. They skip all the boring details and get straight to the essence of a matter. Watch and learn as The Donald schools everyone on how to get things done in the real world.

Remember to live long and prosper, like The Donald.

#127 NoName on 04.15.18 at 12:48 pm

What is this world coming to?…

http://bramlambrecht.com/tmp/jamieberard-brickstress-bf06.pdf

#et_tu_lego

#128 crowdedelevatorfartz on 04.15.18 at 2:18 pm

@#78 Lorne
Yawn.
Oh…..i guess you wanted me to go to the link you provided?
Angus Reid who’s polling over the past few elections has been seriously flawed.
Something to do with who’s paying for the poll and how they want the numbers to affect public opinion I suspect.
Personally I like telling pollsters the exact opposite of what I intend to do when they call me.

Horgan’s massive popularity. From 48% last Fall to 52% this Spring….quite a rise in “popularity”.
Woo Woo. Quick! Call an election while he’s “ahead”.
Oh right. He didnt get the majority of the popular vote in the last election. The Liberals did.
Anywho.
The most “popular” Premier in Canada…..until the Greens decide to end this minority govt and stab him in the back.
12 months…tops.
As for Wynne….as much as people hate her…….lets watch her numbers climb as people realize the Doug Ford may actually become Premier.

#129 Balmuto on 04.15.18 at 2:29 pm

Square footage is not an indication of the quality of a unit. Granite countertops, a gym and concierge for tenants, and various other interior and exterior furnishings, as well as the physical quality of the building are far more significant as determining factors.

Square footage and location are the biggest determining factors in the price of real estate. And all the other features you mentioned have been standard in new condo builds for well over a decade, so they do nothing to explain the price and rent surge over the last three years. You’re grasping at straws.

#130 paulo on 04.15.18 at 4:04 pm

Trade war Not.
both the Chinese and Americans realize they need each other.
The trump show is the first administration in decades to bring up the issue of inequities in the relationship.
the Chinese for there part have made it clear they are willing to negotiate and address some of the issues.
time will tell but i think they will work it out,as they really have no other suitable alternative.

#131 Ace Goodheart on 04.15.18 at 4:14 pm

RE: #38 Penny Henny on 04.14.18 at 6:37 pm

“Yep. Just like I thought, he is loaded already. And it’s only 5:45pm”

Umm, nope. Maybe you have me confused with someone from one of your meetings. Keep working on those chips…..

#132 Ace Goodheart on 04.15.18 at 4:23 pm

RE: #35 Penny Henny on 04.14.18 at 6:33 pm

“Have you been hitting the bottle early today?
Your theory sounds like something Mark might come up with.”

The Trumpster actually has properties in both Turkey and the Philippines, and there is quite a bit of information out there that supports the argument that he has been intentionally friendly with the governments of both of these places, in the hope that he will get favorable treatment for his real estate holdings. There is also quite a bit of credible evidence to suggest that his corporation just attempted to convince the Panamanian government to intervene on his behalf in favor of one of his real estate ventures in that Country, without success.

You have to dig into Trump’s life if you want to understand him. When you look at him closely, what you see is a confidence man, a pump and dump artist, who is in it for the quick reward and whose enterprises always end up collapsing behind him, as he beats a hasty retreat. Look at the “Trump University”, his dealings in Atlantic City, the Trump Taj Mahal, the list goes on….

It would not surprise me at all if he laid off the Chinese once they start letting his corporations put hotels in their cities. That is Trump.

#133 conan on 04.15.18 at 5:55 pm

#104 Ryan Lewenza on 04.15.18 at 9:42 am

Thanks Ryan…… It looks exactly like what I am looking for. Even the chairs are beatnik.

https://youtu.be/su96BAu47Ls?t=187

#134 akashic record on 04.15.18 at 6:16 pm

#114 Shawn Allen on 04.15.18 at 10:56 am

Sincerely?

103 akashic record on 04.15.18 at 9:29 am said to me (and the blog):
#96 Shawn Allen on 04.15.18 at 6:35 am

Your bragging surplus compensates for it. Enjoy the trip.

===

Absolutely sincerely.

It is one of the best feelings to see when someone has the opportunity to do something beneficial or enjoyable. Even if you don’t know the person.

Amsterdam is a beautiful place, the Dutch people are very kind. Our family has only the best memories from there.

#135 Protea on 04.16.18 at 11:26 pm

Ryan my compliments to you on this outstanding synopsis about the spate between the USA and China. I wholeheartedly agree with you.