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Brad Setser
@Brad_Setser
, 4 tweets, 2 min read Read on Twitter
I didn't exactly hedge here.

China's (latest) stimulus won't kick in until later in the year, and all indicators suggest that the impact of the tariffs will be significant in q1.
Am also a fan of this indicator, in part because I think it got the 14-15 slowdown right.

Was reluctant to argue China had slowed significantly until it turned down, but, well, it has
know it is nominal (so yes, semiconductor prices have an impact on the y/y numbers) and includes imports for re-export as well as as imports more tied to Chinese domestic demand. Right now tho both imports for reexport and imports for internal use are down
quote is from this WSJ article

wsj.com/articles/how-b…
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More from @Brad_Setser see all

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Brad Setser
@Brad_Setser
The 2017 tax reform made it easier for U.S. firms to bring profits booked offshore home (no complex gymnastics required), but it did not - in my judgement - change the basic incentive to shift profits and in some cases jobs offshore.
The scale of the profit shifting that continues to take place speaks for itself.

What's the solution: Global tax with no deferral would (with credit for taxes actually paid abroad), as would apportioning the corporate tax base on the basic of sales (a Zucman proposal).
There are a number of options that would be substantially better than what we have now. Tis still too easy to move IP and the associated profits to a subsidiary in tax haven, and the low GILTI rate (& the way it is calculated) encourages tax gymnastics.

nytimes.com/2019/02/06/opi…
Read 3 tweets
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Brad Setser
@Brad_Setser
Me, in the @nytimes (a first), with a simple message:

The offshoring of U.S. corporate profits is a real problem, and Trump's tax reform if anything made the problem worse.

nytimes.com/2019/02/06/opi…
The Times did some great graphics to accompany my argument --

like this one, showing the location of U.S. corporate profits relative to the underlying size of the economies that in theory are generating the profits.
The distortions associated with tax have long been treated as secondary, compared to say the distortions associated with tariffs. I think that's now backwards, as the distortions associated with firms efforts to move profits to low tax jurisdictions tax are now huge.
Read 5 tweets
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Brad Setser
@Brad_Setser
So I didn't see the big fall in the November trade deficit coming.

Exports were weak, so it was all imports -- about half oil and half consumer goods

bea.gov/news/2019/us-i…
The net deficit in petrol was under $1b in November, v say an average of $5b in Q3.

and non-petrol imports fell back from $197-198b in Sept/ October to $193-194b
Imports from China were up 8% y/y in October, but then fell 3% y/y in November -- which fits a front running the tariffs and the threat of tariffs story.

But there may also be more too it
Read 10 tweets

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Dan Anthony
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In light of today US-China tariff escalation, worth highlighting some of the incredible details in @SenRonJohnson's letter to the Administration about harm from 232/301 #tariffs to #Wisconsin companies. #TariffsAreTaxes #TariffsareBAD bit.ly/2Lm4Nr6 1/X
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Trinh Nguyen
@Trinhnomics
Okay, I think I figured out what is Trump's ultimate game in this escalated US-China trade tensions and I think he will get it. Will share my thoughts in a thread soon! 😎
1) What is Trump's ultimate game? RECIPROCAL TRADE & INVESTMENT. Pissed off about higher tariffs vs the US & non-tariff barriers. Regarding #China 🇨🇳, doesn't like forced tech transfers, Chinese industrial overcapacity, gov subs. But how to get this? Investment+Trade policy
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@RealDavidJensen
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