Who Eat's The Tariff?

[Au165]

This was an interesting read regarding the cost of tariffs being passed on to us the consumer. It's not an indictment on Trump because Biden is continuing it, the real issue is that they both are doing/did them not for economic purposes but because of political optics. Essentially the tariffs aren't working and the retaliatory tariffs are which is a net loss to us the consumers, however, no one can backtrack off them, or else you are labeled "weak" on China. This would be the time where both parties would look at the actual data and essentially disarm the use of China to better the country but instead, it's a loaded gun people are waiting to use for political gain at the detriment of U.S. consumers.

Essentially we got our asses handed to us in a trade war and now we are stuck in it because of politics.

https://reason.com/2021/05/24/china-is-paying-about-7-percent-of-tariff-costs-americans-are-paying-the-rest/

[BigPapaKain]

(05-25-2021, 09:11 AM)Au165 Wrote: This was an interesting read regarding the cost of tariffs being passed on to us the consumer. It's not an indictment on Trump because Biden is continuing it, the real issue is that they both are doing/did them not for economic purposes but because of political optics. Essentially the tariffs aren't working and the retaliatory tariffs are which is a net loss to us the consumers, however, no one can backtrack off them, or else you are labeled "weak" on China. This would be the time where both parties would look at the actual data and essentially disarm the use of China to better the country but instead, it's a loaded gun people are waiting to use for political gain at the detriment of U.S. consumers.

Essentially we got our asses handed to us in a trade war and now we are stuck in it because of politics.

https://reason.com/2021/05/24/china-is-paying-about-7-percent-of-tariff-costs-americans-are-paying-the-rest/

So much winning.

[Goalpost]

Estimated home building costs are up 25,000 per home because of lumber prices. Seems like a no brainer to remove tariffs in this sector of the economy.

[Wes Mantooth]

Can someone educate me on the long term effects of this?

Hand up, I have not done an ounce of research on this.  I've heard bits and pieces through the news over the years, and only understand it at the service level.

If the end-goal is to move production away from China then I'll glady pay more for goods in the short term.  Is this is a feasible approach (using tariffs to drive production either back home or elsewhere)?

Also, I see the numbers cited are that we're paying 93% of the cost while they're (China) paying 7%.  Can this be explained by the amount we import from them vs. the amount we export to them?  Because then that would make perfect sense then. (We're putting pressure on US companies to move production)

Fwiw, I understand moving any and all production back to the US is a pipe dream.  But I'd really love to see a lot of American companies explore other manufacturing options in southeast Asia.  Korea, Vietnam, India, ect.

There's so, so much bad that comes with doing business with China.  I don't think I really need to point out all of the examples.

[Au165]

(05-25-2021, 10:52 AM)Goalpost Wrote: Estimated home building costs are up 25,000 per home because of lumber prices.  Seems like a no brainer to remove tariffs in this sector of the economy.

The supply chain as a whole is really screwed up right now. Not that it's directly related, but there are a lot of cases where domestically we can't get the materials we need to get back to normal, and looking for foreign imports to supplement the demand would help us control some of the out-of-control prices in various sectors. 

[Au165]

(05-25-2021, 10:55 AM)Wes Mantooth Wrote: Can someone educate me on the long term effects of this?

Hand up, I have not done an ounce of research on this.  I've heard bits and pieces through the news over the years, and only understand it at the service level.

If the end-goal is to move production away from China then I'll glady pay more for goods in the short term.  Is this is a feasible approach (using tariffs to drive production either back home or elsewhere)?

Also, I see the numbers cited are that we're paying 93% of the cost while they're (China) paying 7%.  Can this be explained by the amount we import from them vs. the amount we export to them?  Because then that would make perfect sense then. (We're putting pressure on US companies to move production)

Fwiw, I understand moving any and all production back to the US is a pipe dream.  But I'd really love to see a lot of American companies explore other manufacting options in southeast Asia.  Korea, Vietnam, India, ect.

There's so, so much bad that comes with doing business with China.  I don't think I really need to point out all of the examples.

The short answer is no, tariffs do not really work in bringing back jobs it is more of a political move than an effective tool for job creation. They can be used to fight predatory pricing by other countries looking to destabilize economies but the end result isn't really more jobs. Even beyond just the global nature of today's economy, moving it away from China sounds good but the reality is so many of the rare earth metals and raw materials in a wide variety of the goods we consume come from China as they are simply the world leaders in a lot of those items. Even if you moved the manufacturing of the final products away from them to other countries or even here, in the end, you'd still almost have to play with China to get raw materials at the scale we need. 

No, that is a straight pass-through back to consumers. Essentially the tariff cost is getting passed back to consumers by raising the price of the good. The general idea of tariffs is that they raise the price of the foreign product enough that the consumer buys the cheaper, and normally local, alternative. The issue often is that there aren't local options to choose from instead, or the foreign option even after the tariff price increase is still lower than the local option. In both cases, the foreign manufacture simply passes the cost back to the consumer while not "eating" it so they actually take little to no penalty from it but the consumer does. 

I agree China is abhorrent in terms of its human rights violations and other issues. The reality though is China's dominant role in a global economy will not be unseated through tariffs. China is about the only thing that can derail China as their geographical advantage in terms of raw materials, along with their state forced slave wages to make them a "necessary evil" to most of the world hence why there has been little actually done about their human rights issues. There is a belief that Africa could potentially provide an alternative but because of the fractured nature of the content with a lot of destabilized governments, it is hard to put too much of your eggs in that basket. Interestingly enough, China recognizing that potential has actually invested a lot in "owning" Africa in an attempt to preemptively cut off future competition.

[*Nately120*]

My wife's cousin was going on about how tariffs are good (well, the Trump tariffs, at least) and his argument seemed to be filed under yet another of those vague plans republicans have to get people off welfare and force them to work for a living. So raise taxes to make lazy people work? I guess that's the line they're feeding some folks, and it's an effective one so why stop using it?

[Wes Mantooth]

(05-25-2021, 11:13 AM)Au165 Wrote: The short answer is no, tariffs do not really work in bringing back jobs it is more of a political move than an effective tool for job creation. They can be used to fight predatory pricing by other countries looking to destabilize economies but the end result isn't really more jobs. Even beyond just the global nature of today's economy, moving it away from China sounds good but the reality is so many of the rare earth metals and raw materials in a wide variety of the goods we consume come from China as they are simply the world leaders in a lot of those items. Even if you moved the manufacturing of the final products away from them to other countries or even here, in the end, you'd still almost have to play with China to get raw materials at the scale we need. 

No, that is a straight pass-through back to consumers. Essentially the tariff cost is getting passed back to consumers by raising the price of the good. The general idea of tariffs is that they raise the price of the foreign product enough that the consumer buys the cheaper, and normally local, alternative. The issue often is that there aren't local options to choose from instead, or the foreign option even after the tariff price increase is still lower than the local option. In both cases, the foreign manufacture simply passes the cost back to the consumer while not "eating" it so they actually take little to no penalty from it but the consumer does. 

I agree China is abhorrent in terms of its human rights violations and other issues. The reality though is China's dominant role in a global economy will not be unseated through tariffs. China is about the only thing that can derail China as their geographical advantage in terms of raw materials, along with their state forced slave wages to make them a "necessary evil" to most of the world hence why there has been little actually done about their human rights issues. There is a belief that Africa could potentially provide an alternative but because of the fractured nature of the content with a lot of destabilized governments, it is hard to put too much of your eggs in that basket. Interestingly enough, China recognizing that potential has actually invested a lot in "owning" Africa in an attempt to preemptively cut off future competition.

Fwiw, I just skimmed this and will read the rest after posting this...

I just want to be clear, my question didn't really relove around the idea of bringing jobs home or creating jobs in the US.  It's more of a simply moving production (to anywhere else) from China.

I understand this idea that we should bring all of our manufacturing back home is fool's gold.  While I do applaud companies that are able to do this, it's not feasible on a larger scale.

Fwiw, I used to work for a company (guitar company) years ago that did a ton of importing.  We actually built our own factory in China, and also used Vietnam and Korea for other production runs.  I'm a little versed on the subject.  I understand moving production is easier said then done because companies have invested in infrastructure in China.  I also know there's a cost to using more expensive labor (Korea was much more expensive than China, but it was also higher quality)

Even if this takes some time I think it's worth it.  Perhaps we could even maybe even roll back some current tarrifs, and then scale them higher as time goes on to allow companies the time they need to explore alternatives. 

[Au165]

(05-25-2021, 11:29 AM)Wes Mantooth Wrote: Fwiw, I just skimmed this and will read the rest after posting this...

I just want to be clear, my question didn't really relove around the idea of bringing jobs home or creating jobs in the US.  It's more of a simply moving production (to anywhere else) from China.

I understand this idea that we should bring all of our manufacturing back home is fool's gold.  While I do applaud companies that are able to do this, it's not feasible on a larger scale.

Fwiw, I used to work for a company (guitar company) years ago that did a ton of importing.  We actually built our own factory in China, and also used Vietnam and Korea for other production runs.  I'm a little versed on the subject.  I understand moving production is easier said then done because companies have invested in infrastructure in China.  I also know there's a cost to using more expensive labor (Korea was much more expensive than China, but it was also higher quality)

Even if this takes some time I think it's worth it.  Perhaps we could even maybe even roll back some current tarrifs, and then scale them higher as time goes on to allow companies the time they need to explore alternatives. 

Those companies then still have to get the materials from somewhere...that is usually China. The reason China makes so much sense is that they have the materials and the labor force. Simply moving to a new place with the labor force doesn't solve the materials issue. China is the perfect storm, which is why their dominance isn't a coincidence. If you move you'll still be importing materials from China and they will simply up the cost on those materials until they make you uncompetitive to their own knock-off brands. 

[Belsnickel]

(05-25-2021, 11:13 AM)Au165 Wrote: I agree China is abhorrent in terms of its human rights violations and other issues. The reality though is China's dominant role in a global economy will not be unseated through tariffs. China is about the only thing that can derail China as their geographical advantage in terms of raw materials, along with their state forced slave wages to make them a "necessary evil" to most of the world hence why there has been little actually done about their human rights issues. There is a belief that Africa could potentially provide an alternative but because of the fractured nature of the content with a lot of destabilized governments, it is hard to put too much of your eggs in that basket. Interestingly enough, China recognizing that potential has actually invested a lot in "owning" Africa in an attempt to preemptively cut off future competition.

Yep. China moved in once the days of European colonialism in Africa came to a close. They went in during that power vacuum and offered an alternative. It also needs to be said that even looking towards other Asian countries will have similar results. China will establish factories in Vietnam, Laos, Thailand, etc., and use them to get around our tariffs. So looking to other nations in the region to house production facilities may still result in a boon to China.

[Au165]

(05-25-2021, 11:42 AM)Belsnickel Wrote: Yep. China moved in once the days of European colonialism in Africa came to a close. They went in during that power vacuum and offered an alternative. It also needs to be said that even looking towards other Asian countries will have similar results. China will establish factories in Vietnam, Laos, Thailand, etc., and use them to get around our tariffs. So looking to other nations in the region to house production facilities may still result in a boon to China.

They were the smartest real estate company in the world in reality and no one really said or did anything because they were happy to take their money. They have been buying up assets in countries all over the globe for 20 years and it has solidified their position. This is why I always come back to, the "China problem" is a much bigger deal than people realize and not something that can be undone. 

[Wes Mantooth]

(05-25-2021, 11:13 AM)Au165 Wrote: The short answer is no, tariffs do not really work in bringing back jobs it is more of a political move than an effective tool for job creation. They can be used to fight predatory pricing by other countries looking to destabilize economies but the end result isn't really more jobs. Even beyond just the global nature of today's economy, moving it away from China sounds good but the reality is so many of the rare earth metals and raw materials in a wide variety of the goods we consume come from China as they are simply the world leaders in a lot of those items. Even if you moved the manufacturing of the final products away from them to other countries or even here, in the end, you'd still almost have to play with China to get raw materials at the scale we need. 

No, that is a straight pass-through back to consumers. Essentially the tariff cost is getting passed back to consumers by raising the price of the good. The general idea of tariffs is that they raise the price of the foreign product enough that the consumer buys the cheaper, and normally local, alternative. The issue often is that there aren't local options to choose from instead, or the foreign option even after the tariff price increase is still lower than the local option. In both cases, the foreign manufacture simply passes the cost back to the consumer while not "eating" it so they actually take little to no penalty from it but the consumer does. 

I agree China is abhorrent in terms of its human rights violations and other issues. The reality though is China's dominant role in a global economy will not be unseated through tariffs. China is about the only thing that can derail China as their geographical advantage in terms of raw materials, along with their state forced slave wages to make them a "necessary evil" to most of the world hence why there has been little actually done about their human rights issues. There is a belief that Africa could potentially provide an alternative but because of the fractured nature of the content with a lot of destabilized governments, it is hard to put too much of your eggs in that basket. Interestingly enough, China recognizing that potential has actually invested a lot in "owning" Africa in an attempt to preemptively cut off future competition.

Well written post.

Do you feel a two pronged approach with both tarrifs and public pressure could help slowly move production?

The public pressure I'm speaking of would be the result of increased discussion leading ultimately to education, and a spotlight being placed on ills of buying "Chinese"?

As I'm writing this I releazing that shifting the mindset of the average consumer is perhaps too much to ask.  But there are enough talking points that exist in the debate that I think it would be helpful if we spent more time educating people on them.  Namely the treatment of workers, human rights violations, and pollution.

We spend so much time already discussing issues that go hand in hand with these.  Ironic isnt even the word to describe the people that are wearing Nikes talking about social issues and the environment. 

I'm sure what I'm suggesting is a pipe dream.  People want products the cheapest they can get them, and unforunately we have a materialistic society that consumes entirely way too much bs.  But it sure would be great if people took a little bit of time thinking about what it is exactly they need, and where their dollars are going.

Just speaking for myself, I'd gladly pay a little more to buy more from Korea, or India, or Vietnam, or Thailand, or Myramar, or Africa, or wherever.  It doesn't have to be American.  I just don't want it coming from there.

PS I am aware that I'm probably writing this post on a laptop that is largely sources from China.  The irony isn't lost on me. 

[Au165]

(05-25-2021, 11:47 AM)Wes Mantooth Wrote: Well written post.

Do you feel a two pronged approach with both tarrifs and public pressure could help slowly move production?

The public pressure I'm speaking of would be the result of increased discussion leading ultimately to education, and a spotlight being placed on ills of buying "Chinese"?

As I'm writing this I releazing that shifting the mindset of the average consumer is perhaps too much to ask.  But there are enough talking points that exist in the debate that I think it would be helpful if we spent more time educating people on them.  Namely the treatment of workers, human rights violations, and pollution.

We spend so much time already discussing issues that go hand in hand with these.  Ironic isnt even the word to describe the people that are wearing Nikes talking about social issues and the environment. 

I'm sure what I'm suggesting is a pipe dream.  People want products the cheapest they can get them, and unforunately we have a materialistic society that consumes entirely way too much bs.  But it sure would be great if people took a little bit of time thinking about what it is exactly they need, and where their dollars are going.

Just speaking for myself, I'd gladly pay a little more to buy more from Korea, or India, or Vietnam, or Thailand, or Myramar, or Africa, or wherever.  It doesn't have to be American.  I just don't want it coming from there.

PS I am aware that I'm probably writing this post on a laptop that is largely sources from China.  The irony isn't lost on me. 

Public pressure is honestly not something that I believe will work here because you are essentially taxing the consumer by asking them to bypass the cheaper product simply because it is Chinese. With people already struggling with our own country's wage inequalities, asking them to sacrifice cheaper options while corporations will not sacrifice profits at the same time, and instead continue to pass on the increases to the customer, you would be fighting a losing battle. It is all interconnected, if the country addressed better some of the issues at home in terms of wages, I think you could really go this route but I am not sure that is something we will get done in the near future as steam has seemed to fall off there.

Also, as Bels mentions, because of China's reach simply moving production won't stop you from enriching the country via proxy companies but also as I mentioned the unavoidable need for their raw materials. To put that in scope, China produces 80% of the silicon required to make solar panels. Without China, the entire solar panel industry collapses because there is just not enough of the raw material needed to actually make it a viable option. All roads, in the end, lead back to China for a lot of the technology we use and it will always be that way until another source can be found, which is why I brought up Africa and China's proactive move to cut off its resources from the western world.

Some of it was China being ahead of everyone else in their long-term vision, part of it was winning the resource lottery similar to the gulf countries and oil. In both examples, it is hard for us to really break our reliance on either global supplier for now.