Let's talk Tariffs...

[jj22]

What are they? Do you support? Is it worth the short term "pain" Americans may experience?

I'm not a trade expert. So I'm not sure how I feel about this.

Can anyone give some pro's and con's?

Trump aside, at least he is trying something different. Or is he? Has  this failed before?

[jj22]

Tom Cotton says it's worth the sacrifice.

https://www.cbsnews.com/news/tom-cotton-says-sacrifice-of-americans-paying-tariffs-is-minimal-compared-to-those-serving-overseas/

I'm willing to give Trump some time, but what is the end game? Where is the 200B that China is getting taxed going? To the deficit?

[Belsnickel]

(05-13-2019, 04:54 PM)jj22 Wrote: Tom Cotton says it's worth the sacrifice.

https://www.cbsnews.com/news/tom-cotton-says-sacrifice-of-americans-paying-tariffs-is-minimal-compared-to-those-serving-overseas/

I'm willing to give Trump some time, but what is the end game? Where is the 200B that China is getting taxed going? To the deficit?

The important thing to note, here, is that tariffs aren't paid by China; they are paid by US consumers. The way to not pay tariffs is to not purchase goods from China.

The main way this trade war hurts China is by companies looking to move manufacturing out of the country and into others to avoid tariffs. This is something that has already been going on for years because of rising labor costs and other costs of doing business in China. So there is some impact, but it is not as substantial as we'd like to think it is.

Edit to add: personally, I try to avoid Chinese goods in general. I like to support American companies with American made products. That being said, so many of the manufacturing these companies need is just more cost effective for it to be done in China. Even American made products often have materials that are imported because it's just plain cheaper and it helps them compete. I'm not against tariffs, though, I just think this trade war is an ill-advised one. But I'm also not a neo-liberal type of Democrat, either.

[Benton]

Tariffs aren't necessarily a bad thing, but it's unlikely the ones we're doing are going to have much of a positive impact.

The positive of tariffs is that when they get high enough, they encourage American companies selling products to Americans (or any company selling products here, really) to move production here instead of using cheap labor in other countries. That creates more jobs, which pays more taxes, which is part of how we got the booming economy we used to have.

The negative is the cost is passed on to the consumer. So if the companies creating stuff don't move the jobs back (or if they do, but want to keep profits high), then it just raises the cost on consumers who still have low paying jobs.

The reason these aren't going to have a positive impact is because it's all theater costing taxpayers money. Instead of imposing tariffs and forcing businesses to adjust wages or increase jobs, Trump (and I say Trump because he's about the only one in favor of it) is imposing tariffs and Congress/Trump is making up the losses to companies at the cost of taxpayers. So the end result is a higher cost for stuff, no real job creation and consumers/taxpayers having to make up the loss of income for businesses.

Seeing that, other countries know they don't have to negotiate trade deals more beneficial to the US because whoever comes in next is going to wipe them out.

[Yojimbo]

Based on Trumps tweet this morning, China pays tariffs to Dept. of Treasury, use that money to purchase crops from affected farmers, then give crops away for free to hungry people.

So tariffs = socialism? Uh-oh.

[Aquapod770]

Bad Trump. Free trade is the best trade.

From https://economics.bmocapitalmarkets.com/economics/focus/recent/190510doc.pdf

• Just when the clouds were parting for the U.S. economy in light of perkier productivity and equity markets, the threat of rising trade protectionism struck like a lightning bolt this week. After months of what seemed like constructive talks, the President said China “broke the deal”. Although talks continue, hopes of a quick settlement were dashed, and new 25% tariffs kicked in. So, after an eight-month ceasefire, it’s time to sharpen our pencils again and tally the economic casualties from the trade war.
• We focus on three channels: the loss of purchasing power from higherpriced imports (with companies running at full tilt, imports will need to come from other countries or still from China, in both cases at higher cost); China’s retaliatory actions to punish U.S. exporters; and, an assumed adverse effect on business confidence and supply chains that dampens investment.
• With that understood, the previous tariffs are estimated to reduce U.S. GDP by about 0.2% over roughly a year. Friday’s ratcheting of the latter duty to 25% and expected counter measures by China could hive off another 0.1%. And, if the President carries through with a repeated threat to impose a 25% duty on all other goods imports from China, then another 0.3% will be added to the roster
• So, the total cost to the U.S. economy of the current trade tiff and threatened escalation with China could amount to 0.6%. Adding earlier tariffs on global imports of metals, solar panels and washing machines slices another 0.1%, while the looming threat of a duty on automobiles (excluding Canada and Mexico) could reduce activity by an additional 0.3% (we’ll know next week as the President is expected to make an announcement by May 18).This implies around 1.0% of lost U.S. output (or 1½ million jobs) due to past and threatened protectionist actions. No small potatoes.
• Apart from some firms in protected industries, there are few winners when countries start unfurling the protectionist banner. While the U.S. may extract concessions from China that eventually support its trade balance and economy, the casualties on the ground are starting to mount. It’s a high-stakes game for both nations, which is at least one reason to believe that either side will fold and call a truce.
• China will suffer more than the U.S. While U.S. sales to China account for less than 1% of U.S. GDP, China’s shipments to the U.S. make up over 3% of its economy.
  
  

Proponents say because this hurts China more they'll fold first. That has yet to be seen. I hope that's true, but my hopes aren't high. I think the Trump admin has been a net good for the economy so far, but it's so frustrating that he is so in love with this trade war. My true hope is that the lefts new found love of free trade will remain once their guy is in office.

[Belsnickel]

(05-14-2019, 11:06 AM)Aquapod770 Wrote: Proponents say because this hurts China more they'll fold first. That has yet to be seen. I hope that's true, but my hopes aren't high. I think the Trump admin has been a net good for the economy so far, but it's so frustrating that he is so in love with this trade war. My true hope is that the lefts new found love of free trade will remain once their guy is in office.

New found? The Democratic party has been embracing neo-liberal ideals since the Clinton era. The actual left isn't railing against the tariffs, they just think Trump is stupid in his implementation of them.

[fredtoast]

(05-13-2019, 06:22 PM)Benton Wrote: So if the companies creating stuff don't move the jobs back (or if they do, but want to keep profits high), then it just raises the cost on consumers who still have low paying jobs.

The reason these aren't going to have a positive impact is because it's all theater costing taxpayers money. Instead of imposing tariffs and forcing businesses to adjust wages or increase jobs, Trump (and I say Trump because he's about the only one in favor of it) is imposing tariffs and Congress/Trump is making up the losses to companies at the cost of taxpayers. So the end result is a higher cost for stuff, no real job creation and consumers/taxpayers having to make up the loss of income for businesses.

This.

Like Benton said, tariffs are not necessarily bad, but in the end they will help corporate stockholders at the cost of all consumers.

Same thing happened with lower interest rates.  Lower interest rates can encourage companies to build and expand their businesses, but instead they mostly just initiated stock buy backs that created huge profits for stockholders without creating any new jobs.

If companies stop importing cheap good from China due to tariffs they will just jack up consumer prices and import cheap goods from some other emerging economy (there are a few in Africa) and keep the profits instead of bringing any production jobs back home.

[Au165]

(05-14-2019, 02:19 PM)fredtoast Wrote: This.

Like Benton said, tariffs are not necessarily bad, but in the end they will help corporate stockholders at the cost of all consumers.

Same thing happened with lower interest rates.  Lower interest rates can encourage companies to build and expand their businesses, but instead they mostly just initiated stock buy backs that created huge profits for stockholders without creating any new jobs.

If companies stop importing cheap good from China due to tariffs they will just jack up consumer prices and import cheap goods from some other emerging economy (there are a few in Africa) and keep the profits instead of bringing any production jobs back home.

This is really what it comes down to. You can chase the foreign manufacturing around the globe trying to tariff them into submission but it isn't coming back. We could be investing a lot more money in our own infrastructure such as roads, bridges, water systems, electrical grids, etc. instead of fighting silly trade wars for a manufacturing industry that is never going to buoy the economy again, at least like it did in the "Good Old Days". 

The path forward in the near future for the middle class is a new deal type of push to rebuild our infrastructure. This will provide good jobs for the next decade plus while setting us up to be more stable into the future. For some reason this always seems to be a campaign topic that gets no traction, probably because the lobbyist for public works projects are pretty limited compared to the others. 

[Dill]

(05-14-2019, 12:04 PM)Belsnickel Wrote: New found? The Democratic party has been embracing neo-liberal ideals since the Clinton era. The actual left isn't railing against the tariffs, they just think Trump is stupid in his implementation of them.

Yes.

Bush I may have started the NAFTA ball rolling,  but it was Clinton who finalized the deal and got it through Congress, and touted it as one of the main accomplishments of his presidency.

Obama supported the TPP (full disclosure: I did too) which would have been NAFTA Pacific. 

One of Fox's greatest accomplishments is folding centrist liberals and conservatives into one massive demographic--"the Left."  

[Benton]

(05-14-2019, 03:10 PM)Au165 Wrote: This is really what it comes down to. You can chase the foreign manufacturing around the globe trying to tariff them into submission but it isn't coming back. We could be investing a lot more money in our own infrastructure such as roads, bridges, water systems, electrical grids, etc. instead of fighting silly trade wars for a manufacturing industry that is never going to buoy the economy again, at least like it did in the "Good Old Days". 

The path forward in the near future for the middle class is a new deal type of push to rebuild our infrastructure. This will provide good jobs for the next decade plus while setting us up to be more stable into the future. For some reason this always seems to be a campaign topic that gets no traction, probably because the lobbyist for public works projects are pretty limited compared to the others. 

Oh you can have them back in less than a year.

All you've got to do is legislate shut all corporate loopholes for employers with more than 70 percent of it's nonexecutive workforce over seas. Bam.

[Au165]

(05-14-2019, 04:45 PM)Benton Wrote: Oh you can have them back in less than a year.

All you've got to do is legislate shut all corporate loopholes for employers with more than 70 percent of it's nonexecutive workforce over seas. Bam.

The majority of Apple's employees reside in the U.S. however most the of their "production" is done outside the U.S., the issue is much more complex than you want to believe. 

[Benton]

(05-14-2019, 04:45 PM)Benton Wrote: Oh you can have them back in less than a year.

All you've got to do is legislate shut all corporate loopholes for employers with more than 70 percent of it's nonexecutive workforce over seas. Bam.

(05-14-2019, 05:02 PM)Au165 Wrote: The majority of Apple's employees reside in the U.S. however most the of their "production" is done outside the U.S., the issue is much more complex than you want to believe. 

Nay, it's not that complex.

US companies make money selling products. Executives make up huge chunks of pay, and they justify their chunks by cutting cost, mostly by outsourcing work. Hell, even companies here outsource, with corps like Disney using federal tax loopholes to have employees train cheaper imported foreign labor.

Close that crap. And close loopholes to companies whose "production" is comprised of 70% outsourced labor.

Yes, the cost of your iPhone will increase, but it will bring back the bulk of those "production" jobs. And, yeah, many of those jobs will come back and be automated out. But at least they'll be automated here, requring skilled tech to operate and repair, along with transport.

Tariffs can work. Closing tax breaks to those taking advantage of cashing in on the economy while providing little real benefit to it can work. It's not that complex.

[Au165]

(05-14-2019, 05:56 PM)Benton Wrote: Nay, it's not that complex.

US companies make money selling products. Executives make up huge chunks of pay, and they justify their chunks by cutting cost, mostly by outsourcing work. Hell, even companies here outsource, with corps like Disney using federal tax loopholes to have employees train cheaper imported foreign labor.

Close that crap. And close loopholes to companies whose "production" is comprised of 70% outsourced labor.

Yes, the cost of your iPhone will increase, but it will bring back the bulk of those "production" jobs. And, yeah, many of those jobs will come back and be automated out. But at least they'll be automated here, requring skilled tech to operate and repair, along with transport.

Tariffs can work. Closing tax breaks to those taking advantage of cashing in on the economy while providing little real benefit to it can work. It's not that complex.

Your over simplification of this is a bit concerning. Those aren't Apple employees manufacturing those phones, those are Foxcon employees building those phones. Most companies don't actually produce their own sell-able goods, some assemble them however most still acquire a lot of the materials and assembly from contracted manufacturing. This isn't just a big company thing either, small private companies use contract manufacturing to get sell-able goods.

Either way, in your example the tax disadvantage is your deterrent not the tariff itself. As I continue to say, tariffs do not work. The only way they will work is when foreign market workers demand similar wages as those in America when you factor in the transportation of the finished goods and time. The reason this will never happen is because there will always be emerging countries looking to take over that manufacturing to try and improve their economy. 

[Belsnickel]

(05-15-2019, 08:13 AM)Au165 Wrote: Either way, in your example the tax disadvantage is your deterrent not the tariff itself. As I continue to say, tariffs do not work. The only way they will work is when foreign market workers demand similar wages as those in America when you factor in the transportation of the finished goods and time. The reason this will never happen is because there will always be emerging countries looking to take over that manufacturing to try and improve their economy. 

Yup. This goes back to what I mentioned earlier about the only real impact on China. The tariffs are expediting a process that has already been taking place in which the manufacturing is moving to neighboring countries.

[Au165]

(05-15-2019, 08:27 AM)Belsnickel Wrote: Yup. This goes back to what I mentioned earlier about the only real impact on China. The tariffs are expediting a process that has already been taking place in which the manufacturing is moving to neighboring countries.

China is actually trying to outsource some of their labor and manufacturing to Africa now interestingly enough.

[GMDino]

The tariffs are a result of big business finally realizing that instead of taking advantage of China for all those years to get cheap labor, move their factories, cut american workers wages and jobs, just to enrich themselves they should have been working to increase everyone.

Now that China has the upper hand the top guys are feeling the pinch.  No where else to cut the little guy so we better "fight back" agains an "unfair system".

Weird.

Decades of using China to hurt their own workers for their own gains...and when it hits THEIR pocketbook they cry to the government to get involved. 

[Benton]

(05-15-2019, 08:13 AM)Au165 Wrote: Your over simplification of this is a bit concerning. Those aren't Apple employees manufacturing those phones, those are Foxcon employees building those phones. Most companies don't actually produce their own sell-able goods, some assemble them however most still acquire a lot of the materials and assembly from contracted manufacturing. This isn't just a big company thing either, small private companies use contract manufacturing to get sell-able goods.

Either way, in your example the tax disadvantage is your deterrent not the tariff itself. As I continue to say, tariffs do not work. The only way they will work is when foreign market workers demand similar wages as those in America when you factor in the transportation of the finished goods and time. The reason this will never happen is because there will always be emerging countries looking to take over that manufacturing to try and improve their economy. 

Somewhere between my over simplification and your... concerning... under simplification (I mean really, it's not that dramatic) is the reality of it. Which, honestly, isn't the same reality for any one company or any one industry.

As to my example, no that wasn't in reference to the tariff, only your comment that manufacturing jobs aren't coming back. Tariffs can assist with it, if, like I said, there's an incentive for companies. The current method of giving them tax breaks to leave isn't working.

As far as foreign market workers, it's already happening. Chinese workers are demanding better conditions and wages and it's putting the government in a difficult spot, as they can't subsidize labor forever. So companies are already moving to other Asian and African countries. But the end of the day, they still need somewhere to sell their stuff. Right now, that's here. We buy stuff. We buy huge volumes of stuff. That stuff buying gives us some leverage to push companies into where they locate their workforce. It's time we started using that leverage instead of just saying "Oh no, it's all over!" 

[Au165]

(05-15-2019, 02:17 PM)Benton Wrote: Somewhere between my over simplification and your... concerning... under simplification (I mean really, it's not that dramatic) is the reality of it. Which, honestly, isn't the same reality for any one company or any one industry.

As to my example, no that wasn't in reference to the tariff, only your comment that manufacturing jobs aren't coming back. Tariffs can assist with it, if, like I said, there's an incentive for companies. The current method of giving them tax breaks to leave isn't working.

As far as foreign market workers, it's already happening. Chinese workers are demanding better conditions and wages and it's putting the government in a difficult spot, as they can't subsidize labor forever. So companies are already moving to other Asian and African countries. But the end of the day, they still need somewhere to sell their stuff. Right now, that's here. We buy stuff. We buy huge volumes of stuff. That stuff buying gives us some leverage to push companies into where they locate their workforce. It's time we started using that leverage instead of just saying "Oh no, it's all over!" 

You tried to claim that the "easy" fix was taxing companies who have more than 70% of their non executive workforce outside the U.S. differently. I then explained that the biggest culprits employ the majority of their employees in this country. You then amended your "easy" fix to 70% of  "production" to outsourced labor. I then explained what contracted manufacturing is which means that they aren't actually the ones producing it rather they are selling what is essentially a finished product. If you try to go after contracted manufacturing your splash damages to companies large and small who aren't the "enemy" here will be huge. What this kind of shows is that it isn't really an "easy" fix. 

After all of this you are now wanting to act as if I am over complicating it when the reality is that it is a VERY complex issue with the potential for detrimental splash damage created by legislation that doesn't understand supply chain and manufacturing. This also disregards that there is more to business than "tax breaks" and using the wide sweeping assumption that is how all businesses stay competitive without recognizing that the labor cost benefits of outsourcing at scale will most likely beat these tax loopholes companies are supposedly salivating over. The truth is there are a few offenders who play in manufacturing that see great benefits from tax advantages, but for majority taxing doesn't overcome the wage disparity especially when you look past wage to the hidden costs of employment in the U.S. 

[Benton]

(05-15-2019, 02:48 PM)Au165 Wrote: You tried to claim that the "easy" fix was taxing companies who have more than 70% of their non executive workforce outside the U.S. differently. 

They're already taxed differently. My suggestion is to end that benefit if they aren't paying taxes on profits.