Flatbrimmer
Well-known member
view….
Tariffs and Potential Inflation
- Thread starter SilentBirdHunter
- Start date
Buy American.
SAJ-99
Well-known member
Agree that I think he meant "view". And I think that is downplaying it. There is no economic model that say that tariffs on imports don't increases prices for buyers. Maybe there are one that gets a different result that involves taking psychedelics before running the model.
Sure, I would love to. I think everyone would. But at what price and do we want jobs making things like socks and underwear? Our manufacturing has turned to larger, more technical items - planes (Boeing), heavy equipment (Cat and Deere), Semiconductors, Defense (Lockheed), etc. Even in those cases the race for profit has caused problems. I struggle with what people want to see in the "Buy American" demand.
thebestusernamesaretaken
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- Feb 19, 2021
- Messages
- 361
Some things to think about:
Some tariffs can be a good thing. According to Wikipedia they allow for import substitution industrialization (industrialization of a nation by replacing imports with domestic production) by acting as a protective barrier around infant industries. They also aimed to reduce the trade deficit and the pressure of foreign competition.
For example: China subsidizes Chinese industries that import goods to the United States in order to create an artificial cost competitiveness. When a government would want to combat this to protect an industry they would introduce a tariff.
China could say the same thing about us for: oil and gas - $646 billion; agricultural industry about $150 billion and transportation at about $141 billion.
Trade wars however are bad for everyone. Unsteadiness and unpredictable government behaviors is bad for everyone.
Good businesses tend to develop plans for every outcome. However, the flip flop economic initiatives causes pause and chaos on Mainstreet. Mainstreet does best when we can plan for investment for future growth. People are really the same way even if they won't admit it. You will not have sustainable growth without some normalcy.
Well run business tend to be the folks who would say, just tell me the rules and we will figure out the rest. If there is a reasonable ROI in a reasonable time frame (think Present Value of Money and PV rate of return), we will get it done. If there is no ROI, there's no reason to sell the product and then competition would be reduced and whomever is left can sell for whatever price they want - consumer pays.
Don't get me wrong, they do all complain about tax burden but don't mind the hand outs when they happen and then they will ask for more.
Some folks on Wall Street thrive on volatility, that's why your investment planer talks about diversification to shield you from that. There will always be someone who would be willing to disrupt the system to make money at the expense of all others.
I work for a company who imports goods into the US for sale to US consumers. This is what will and is happening
1. increased tariffs will increase costs which will be passed onto consumers. 2. Introducing new manufacturing plants in the US will take time to build, find actual employees, train them and increase production costs until an ROI can be achieved; those costs will be passed on to consumers. 3. Offshoring and cross docking or selling to a country who isn't impacted by a US tariff who then will ship to the US without the additional expense, will increase the shipping costs of goods, which will be passed onto the consumer.
In the end, the consumer will pay the increased costs for their purchases no matter what. The consumer will generally pick the lowest price comparable alternative almost always.
Prior to the Donalds last term, the US sold something like 60% of our soybeans to China while providing farm aid to farmers. After his last trade war Chinese consumption dropped 10%. They are more prepared this time and have been taking steps to remove this threat to their system. Using tariffs will drive the European Union into the arms of China. Our grandfathers paid dearly for our economic and political influence around the world and we may be giving that gift away.
If your particular political boob wants' to create jobs, they will only get so far by using tariffs. It can't be the end game. It may be better to actually invest in industry.
Some tariffs can be a good thing. According to Wikipedia they allow for import substitution industrialization (industrialization of a nation by replacing imports with domestic production) by acting as a protective barrier around infant industries. They also aimed to reduce the trade deficit and the pressure of foreign competition.
For example: China subsidizes Chinese industries that import goods to the United States in order to create an artificial cost competitiveness. When a government would want to combat this to protect an industry they would introduce a tariff.
China could say the same thing about us for: oil and gas - $646 billion; agricultural industry about $150 billion and transportation at about $141 billion.
Trade wars however are bad for everyone. Unsteadiness and unpredictable government behaviors is bad for everyone.
Good businesses tend to develop plans for every outcome. However, the flip flop economic initiatives causes pause and chaos on Mainstreet. Mainstreet does best when we can plan for investment for future growth. People are really the same way even if they won't admit it. You will not have sustainable growth without some normalcy.
Well run business tend to be the folks who would say, just tell me the rules and we will figure out the rest. If there is a reasonable ROI in a reasonable time frame (think Present Value of Money and PV rate of return), we will get it done. If there is no ROI, there's no reason to sell the product and then competition would be reduced and whomever is left can sell for whatever price they want - consumer pays.
Don't get me wrong, they do all complain about tax burden but don't mind the hand outs when they happen and then they will ask for more.
Some folks on Wall Street thrive on volatility, that's why your investment planer talks about diversification to shield you from that. There will always be someone who would be willing to disrupt the system to make money at the expense of all others.
I work for a company who imports goods into the US for sale to US consumers. This is what will and is happening
1. increased tariffs will increase costs which will be passed onto consumers. 2. Introducing new manufacturing plants in the US will take time to build, find actual employees, train them and increase production costs until an ROI can be achieved; those costs will be passed on to consumers. 3. Offshoring and cross docking or selling to a country who isn't impacted by a US tariff who then will ship to the US without the additional expense, will increase the shipping costs of goods, which will be passed onto the consumer.
In the end, the consumer will pay the increased costs for their purchases no matter what. The consumer will generally pick the lowest price comparable alternative almost always.
Prior to the Donalds last term, the US sold something like 60% of our soybeans to China while providing farm aid to farmers. After his last trade war Chinese consumption dropped 10%. They are more prepared this time and have been taking steps to remove this threat to their system. Using tariffs will drive the European Union into the arms of China. Our grandfathers paid dearly for our economic and political influence around the world and we may be giving that gift away.
If your particular political boob wants' to create jobs, they will only get so far by using tariffs. It can't be the end game. It may be better to actually invest in industry.
Last edited:
SD_Prairie_Goat
Well-known member
Everyone loves buy American until they realize that prices will double or triple for most goods. And that's assuming they can even find labor in the US
Some things need to come back here even at a higher cost. If Covid wasn't a reality check I do not know what is. If China wants to screw us by saying go pound sand they could. Too many important staples were farmed out to overseas and now if there is a world war or deadlier pandemic (there wil be some day) we are not in a good situation. Too much cheap shit that most people really do not need is great until the shit hits the fan. As an older guy in this group maybe it is easier for me to say it because I lived in a world where we made far more and things were just fine paying a little more as we didn't need to have everything. Just one example is when I was a kid a pair of tennis shoes 40-50 years ago damn near cost what they do now, not adjusted for time and inflation just flat out price. We got by. The average house built was far smalled than today as well. It's great to have all this cheap Chinese shit but we really are setting ourselves up for failure. Chemicals used for everything including medications, metals, chips, auto parts, clothes, machines, appliances, all need to made here. We don't need Nu-wav ovens, ab rollers, air fryers, harbor freight crap, and a lot more. If you keep giving companies options to screw American workers out of jobs the companies will do it. There needs to be more balance and if tarif works I am fine with it.Agree that I think he meant "view". And I think that is downplaying it. There is no economic model that say that tariffs on imports don't increases prices for buyers. Maybe there are one that gets a different result that involves taking psychedelics before running the model.
Sure, I would love to. I think everyone would. But at what price and do we want jobs making things like socks and underwear? Our manufacturing has turned to larger, more technical items - planes (Boeing), heavy equipment (Cat and Deere), Semiconductors, Defense (Lockheed), etc. Even in those cases the race for profit has caused problems. I struggle with what people want to see in the "Buy American" demand.
Nick87
Well-known member
All of a sudden inflation is a concern. Laughable.
SAJ-99
Well-known member
"
Nick87
Well-known member
A lot of truth there. Unfortunately people seem to love lots of cheap shit.
I love the cheap shit. But I understand it will bite us in the ass at the same time. The proper approach is to target things that we really need to be self reliant on. Chemicals for meds is one for sure, Chips and semiconductors is another. The covid shortage should be a wake up call for everyone. It wasn't because we were shut down from covid, it was because we couldn't import it to build things. Auto manufactures had cars and trucks sitting partially assembled waiting for chips and CPU's. Paint was in short order, tires, and more. It made me think that if we went to war with China they would kick ass in the long game. The same reason why when we bombed Germany in WW2 we went for the bearing factories as a top target. If you eliminate certain items the rest of production is disabled. How many US bearing factories are there compared to 30 years ago? The proper approach is a tariff that is not all at once but gradual to give companies time to bring it back here. You hear news like Ford and Harley_Davidson saying this past 6 months they will have product built across the pond or border, it will be interesting to see if those plans get scrapped. Toyota has a truck factory in TX and Mexico. Maybe they will bring more to TX now?
Nick87
Well-known member
I totally agree.... With both posts btw.
SAJ-99
Well-known member
The whole problem is that Tariffs incentivize production in the country of sale. Your Toyota to US plant, for example. Ford's growth in EVs is in the middle east, so you can't blame them for moving production. HD is getting breaks on tariffs and tax incentives in other countries to do the same. For Ford or GM, you are competing with Chinese EVs in other countries. If these other countries don't put the same tariffs on Chinese EVs, it is a net loss for US producers in the long run because of wage differences. With a little imagination it is easy to see how confusing this gets. US is a mature, saturated market for more non-tech products. Growth is only the population + inflation + gains in efficiency. Tough spot for a company when you have shareholders that expect 10-15% earnings growth.
I am all about administrations trying new things, but Tariffs are an old thing. We know very well how they work and the responses they create. How about we start setting corporate tax rates based on employee numbers? That it what we want because it is really the employees that we tax anyway. If a company lays off workers in US and moves production to another country in an attempt to make more money, its tax rate would up. A country with 100% production in US, employing only US workers would get a very low tax rate.
Nick87
Well-known member
Dumb question but wouldn't there have to be a ratio of gross sales per employee. Otherwise I feel like that's not helping small business much. If that makes sense.
I hear very little about how to fix the current tariffs that are charged to US goods sold abroad. It’s almost like that is set in stone and not negotiable. Grin and bear it…Is negotiating of current tariffs now illegal??
SAJ-99
Well-known member
Yeah, that would be one way to do it. But you get the idea. No one talks about this because of the aversion to taxes. Policy makers like giving back to the companies and hoping they hire more employees. Maybe it is time to just start taxing based on how many people they employ for what they generate in the economy.
SAJ-99
Well-known member
No.
338win
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- Sep 19, 2015
- Messages
- 455
If tariffs can help incentivize industry in the US then I’m not going to complain.
You enjoy paying the tax for the incentive?
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