Trump approves tariffs on Chinese goods including $1 billion in bike products

[TonyG]

Originally Posted by goonster

The merits of broad tariffs are subject to debate, but here's what isn't: "China" isn't paying them, American consumers are.

I may just make a post quoting this every few hours so the fact of the matter doesn't get lost in the theory.

[s4life]

Neither I think.. this trade war is about egos and posturing for re-election.

Actually the complains against China mostly come from the current setup they have to "legally" obtain IP from companies that want to do business there.. however, ultimately it's the companies choice not to agree.. but most do as they have a lot more to gain in terms of revenue.

Originally Posted by redir

I think this trade war is less about trade deficits then it is about Intellectual Property. People like Jack Ma have gotten rich by selling ripped of IP from around the world. IP isn't just computer chips it's also guitars and rubber duckies. There is a serious problem with it and from what I understand while it's gotten better it's been negotiated on before and isn't where it should be. So perhaps sometimes you just have to draw the line.

Of course the problem is history shows otherwise that there are any winners in a trade war.

Trump assumes the U.S. can act unilaterally without consequences. Economic history shows this doesn’t work. Arguably the last trade war led us into the Great Depression and the world’s economies are way more interdependent now than they were then.

So just as we are finally getting out of a recession, buckle up for whats to come.

[verticaldoug]

Originally Posted by rnhood

Well, France has tariffs, and they say that its been successful. Otherwise, they wouldn't have them. Germany, the same. In fact just about every industrialized nation has tariffs, most of which are higher than ours. Don't you think that they would remove them if they were not successful?

http://trade.ec.europa.eu/doclib/doc...%20tariffs.pdf

It is easy to pick examples, but singular examples don't always tell the whole story. It is true that EU has a 10% tariff on autos while US only has a 2.5% tariff. But in this instance, autos = passenger cars. In 1964, there was the chicken tax where the Johnson administration retaliated against the tariff on US Chicken into Europe by imposing a 25% tariff on light trucks (pickups and SUVs). This tariff is still in place and Germany has offered to scrap the 10% tariff on autos in exchange for scraping the 25% tariff on light trucks.

(Do you think the choice of BMW to build X models in Spartenburg and Mercedes to build GL cllass in Tuscaloosa was random?)

Just because the French say tariffs are successful, doesn't mean they are not without costs. The agricultural industry is heavily subsidized in the EU. It is essentially a social program for the countryside and a romanticized notion of european rural life. We now have the 12b assistance to American Farmers to offer support for the price collapse in ag from China imposing a tariff.

On a slight tangent:
Technically the EU is to have no import tariffs between member nations, but this is circumvented with gov support payments to select industries across EU countries. The British did not vote brexit just because of immigration. They are tired of all the support transfer payments at the gov level which are essentially subsidies. This stuff has now grown so complex, the member states can't even agree on what total net benefits and net payments individual countries receive. Its one of the sticking points of the Brexit negotiation.

[pcxmbfj]

Originally Posted by s4life

Neither I think.. this trade war is about egos and posturing for re-election.

and to distract from this administrations lack of fiscal disclosure.

[oldpotatoe]

Originally Posted by rnhood View Post
Well, France has tariffs, and they say that its been successful. Otherwise, they wouldn't have them. Germany, the same. In fact just about every industrialized nation has tariffs, most of which are higher than ours. Don't you think that they would remove them if they were not successful?

Tariffs are used successfully when a country wants to protect an industry where it cannot compete otherwise. Like steel, tariff on imported steel so the imported product is the same or a little bit more than domestically produced steel..but the result is higher prices..for the consumer.

Tariff on Chinese T-Shirts so they are the same $ as US made T-Shirts..BUT at an overall higher price. BUT tariffs shouldn't be a bludgeon, or a way to stroke an ego..'winning'..at the expense of the US consumer. But, that's what's happening..Not only with China but the EU, Japan, Canada, Mexico, South Korea.....so it was 'somebody'(not US consumer) winning..but no winning now..ask a US soy bean or almond or pig farmer..Then ask the ones in Brazil, who are selling all they can produce..

PLUS

Neither I think.. this trade war is about egos and posturing for re-election.

and to distract from this administrations lack of fiscal disclosure.

Fiscal irresponsibility...the 'fiscal hawks' in congress are either gone or in the bathroom sucking their thumb.

[BikeNY]

Originally Posted by HenryA

Or they could buy American aluminum. Nah that’d cost more which is why they use “import” material. And that’s not a knock against White or anyone in particular, but if you build your pricing on off shore materials or labor it might work out for you or it might not. Here, not so much.

And to address the Paragon price increase, I wonder what would happen if a Chinese manufacturer decided to knock off their catalog of parts and flood the market at 40% of Paragon’s current selling price? It’d be bad. Real bad.

Originally Posted by verticaldoug

I think many of you are missing the irony of this post and it does prove why tariffs do not work.

Steel tariffs are 25% and aluminum 15%. Other products are starting at 10% and will increase to 25% at year end.

So common sense says the blended rate is <25%. So if the price increase White is seeing is 28%, then the suppliers are using tariffs as an excuse to hike prices.

I always saw this historically in Japan when they first introduced then raised national sales tax. If sales tax went up 3%, then prices would rise >3% since some vendors used tax confusion to hike prices.

A tariff is a tax, nothing more nothing less

You are introducing bad artificial inflation and usually when you tax something, you get less of it.

Some reading comprehension issues here. White Industries specifically states they are using USA sourced raw material and are seeing greater than 28% price increases.

So that points to US companies taking advantage of the tariffs to hike their own prices and make more profits. Instead of keeping prices reasonable and trying to increase their market share. I'm sure it's MUCH more complicated than that, but that's what it looks like.

[Grant McLean]

Originally Posted by BikeNY

White Industries specifically states they are using USA sourced raw material and are seeing greater than 28% price increases.

So that points to US companies taking advantage of the tariffs to hike their own prices and make more profits. Instead of keeping prices reasonable and trying to increase their market share. I'm sure it's MUCH more complicated than that, but that's what it looks like.

I can be complicated if there isn't just excess product or capacity laying around.
Prices go up because there isn't more supply, but more demand.
Until supply can get sorted out, there are going to be price increases.

I read that DT Swiss (who draw spokes in the USA) can't find a supplier of their
raw material in the USA, they have a relationship with a mill in eastern Europe.
That steel is now subject to a tariff. But their competitor Sapim import
finished spokes into the USA pay no tariff from Europe, so in that example,
the current policy is a disincentive to DT to manufacture in the USA.

-g

[flydhest]

Originally Posted by rnhood

Well, France has tariffs, and they say that its been successful. Otherwise, they wouldn't have them. Germany, the same. In fact just about every industrialized nation has tariffs, most of which are higher than ours. Don't you think that they would remove them if they were not successful?

Are you sure you believe this statement? Centuries where women are not allowed to vote. That must be successful or else that would be removed? OK, so it happened over time, but in the late 1800s, before the suffrage movement, was the right conclusion that keeping women from voting was successful because it hadn’t been changed? The voting rights act was passed in 1964. In 1960, would we have made the argument that disenfranchising through the government the right of blacks to vote was successful because it hadn’t been changed? It had been like that for 100 years. Do we conclude that it was “successful”?

[rnhood]

We're talking about tariffs, not voting rights. Maybe you are on the wrong thread, or perhaps you have three sheets in the wind on this beautiful Friday night.

Success depends on how its defined. Tariffs are often implemented to prop up and/or protect local industry, and thus this being the objective, then the measuring stick will be the performance and health of the specific industry. In other words, we need to know the objective, and success will be defined on how well the objective was met.

Our definitions for "success" of tariffs might be quite a bit different than the government than implemented the tariff. We tend to view from the consumer viewpoint, which is often not the case with our government.

In a perfect world there would be no tariffs, and as mentioned earlier even if this was the case, subsidies complicate the matter. We don't live in a perfect world so we come up with alternatives to live and thrive in our global society. Seems to me reciprocal tariffs might be a good solution, but that's not likely to happen either. So we use tariffs as a tool to negotiate trade agreements. I don't have too much of a problem with it, as long as it doesn't get out of hand. And I seriously doubt our administration is going to allow it to get out of hand. Doesn't look like Wall Street is too concerned either.

[MikeD]

Originally Posted by Grant McLean

I can be complicated if there isn't just excess product or capacity laying around.

Prices go up because there isn't more supply, but more demand.

Until supply can get sorted out, there are going to be price increases.



I read that DT Swiss (who draw spokes in the USA) can't find a supplier of their

raw material in the USA, they have a relationship with a mill in eastern Europe.

That steel is now subject to a tariff. But their competitor Sapim import

finished spokes into the USA pay no tariff from Europe, so in that example,

the current policy is a disincentive to DT to manufacture in the USA.



-g

That is not entirely true, according to this article https://www.bicycleretailer.com/indu...f#.W6WrioplCf0

Wheelsmith seems to be in a worse position.

[Grant McLean]

Originally Posted by MikeD

That is not entirely true, according to this article https://www.bicycleretailer.com/indu...f#.W6WrioplCf0

sorry, it was western Europe, not eastern.

"The tariff doesn't apply to finished goods, but stainless steel wire is considered a raw material."

"On the straight gauge, we're going to take a hit," said Chip Barbieri, the CEO & General Manager of DT Swiss, Inc., the company's U.S. operation. "You try to absorb as much as you can and look at where you can be more efficient, where you can absorb things."

[MikeD]

Originally Posted by Grant McLean

sorry, it was western Europe, not eastern.



"The tariff doesn't apply to finished goods, but stainless steel wire is considered a raw material."



"On the straight gauge, we're going to take a hit," said Chip Barbieri, the CEO & General Manager of DT Swiss, Inc., the company's U.S. operation. "You try to absorb as much as you can and look at where you can be more efficient, where you can absorb things."

"DT Swiss brings in stainless wire from Europe to make straight-gauge spokes. For its double-butted spokes, the company brings in spoke "blanks" from Europe that are not subject to the tariff, because they are considered a finished good. DT cuts and threads the blanks and forms the spoke ends in the U.S."

Did you even read the article?


Sent from my iPhone using Tapatalk Pro

[Grant McLean]

Originally Posted by MikeD

Did you even read the article?

I'm mystified what point you're trying to parse.

[Villgaxx]

so, what, you are saying is that maybe some folks could discuss the efficacy of tariffs with regards to trade and trade policy as a whole, but screaming about tariffs and engaging in a trade war when you have no idea what in the holy heck is going on might be a bad idea? especially if you are nominally the chief executive of a wealthy and heavily armed nation state currently confined, along with the rest of your particular species, to a single planet?

Originally Posted by goonster

Yes, they have tariffs, intended to protect key industries and market sectors, at rates that have evolved over time into a complex web of negotiated trade relationships. As have we.

They have not rushed headlong into a trade war, imposing tariffs and threatening more in case of retaliation, until the furnaces at the Maxhuette, Hayange and Liege are firing again.

I have also lived in a developing country, under a regime sometimes described as "export-oriented industrialization," in which very high tariffs on consumer goods are used to protect government-aligned industries. This can have good outcomes if GDP growth is reinvested in infrastructure, but it only works for a limited time, depresses living standards and is essentially incompatible with democracy.

We have historically low unemployment, steady GDP growth, and low inflation. We also have income stagnation, growing wealth disparity, stagnant capital and irresponsible fiscal policy. The trade deficit on goods is in neither column.

[flydhest]

Just saying that “it must be successful because it hasn’t been changed” is an astounding logical fallacy.

If you are saying that laws/policies don’t get changed if there is a political process by which those benefitting from them can keep them from being changed ... well sure, but that statement is tautological.

Originally Posted by rnhood

We're talking about tariffs, not voting rights. Maybe you are on the wrong thread, or perhaps you have three sheets in the wind on this beautiful Friday night.



Success depends on how its defined. Tariffs are often implemented to prop up and/or protect local industry, and thus this being the objective, then the measuring stick will be the performance and health of the specific industry. In other words, we need to know the objective, and success will be defined on how well the objective was met.



Our definitions for "success" of tariffs might be quite a bit different than the government than implemented the tariff. We tend to view from the consumer viewpoint, which is often not the case with our government.



In a perfect world there would be no tariffs, and as mentioned earlier even if this was the case, subsidies complicate the matter. We don't live in a perfect world so we come up with alternatives to live and thrive in our global society. Seems to me reciprocal tariffs might be a good solution, but that's not likely to happen either. So we use tariffs as a tool to negotiate trade agreements. I don't have too much of a problem with it, as long as it doesn't get out of hand. And I seriously doubt our administration is going to allow it to get out of hand. Doesn't look like Wall Street is too concerned either.