Tariffs

[brymoore]

Ok. Another clarification please. I we sell another country a product, that government imposes a tariff on the end sale and gets the $$. Say %25. In return why is it bad that the US impose the same tariff

Why do we care what tariffs other countries charge on US products? It’s a tax on its citizens probably to protect a weak industry. Canada’s dairy is a good example. Canada has a $16B dairy industry, US dairy is $200B. Canada decided to protect its weaker dairy industry from being overwhelmed by the U.S. dairy industry. Whatever. Canadians are paying more for milk products.

I’m a free trade guy of the Milton Friedman school. Milton wanted to eliminate tariffs for the benefit of the US citizens. No tariffs mean the U.S. citizen is paying a lower price for its purchases. If Trump reduced all tariffs today, inflation would go down. The other aspect is the thought that the US is the best producer of every item imaginable which is simply not true. Why should I have to pay $10 for a tool I can buy from China for $5? One of the aspects of manufacturing is the cost of living for each country. The cost of living has rose significantly in the US meaning rising wages. Good for us but then we wonder why our tool costs $10. One of the ways to keep labor costs down was to use recent immigrants to the US who would work at a lower wage. The auto factories in the Midwest were full of European immigrants in the 60s-80s who were happy to have the chance to be Americans and work hard in a factory. US now hates the immigrants who might feel these roles. Cost of production goes up. With tariffs, our $10 tool now costs $12.

There is the fact too that the products we buy from foreign companies provides them with dollars that are spent in our country. The dollar is the world’s reserve currency particularly because of us buying foreign goods.

I could go on and on. The butterfly effect of the reciprocal tariffs is enormous. Global economy will be reduced. US has upset the entire world. US has $36T in debt that needs to be bought as bonds mature. If foreigners boycott the US, our national rates go up.

Etc etc. etc.

 

[Handlebar]

Like the Roman empire, we resort to extraction. Or, in our case, "buying cheap shit." It helps balance the books and keeps the population happy. Citizens are quite happy with affordable Walmart goods... that we outsourced making abroad. But is has been a two-edged sword

 

[Bonasababy]

I hear a lot of this rhetoric of needing a drastic change and wake up calls, etc. I don't really hear any details behind it though. Are we really getting that screwed by these other countries on tariffs? Is this wake up call worth an economic downturn, recession, etc.? The problem with these tariffs is there is no strategy or certainty.

I think my point was different than you figured. I see some hope if there is so much backlash--including from Republicans which seems to be starting--that tariffs are backed up and taken off or greatly minimized from their current impact.

Absent that I do not see a way out. Any benefits the administration believe--even if you trust them--will take many years to show effects. How do you start new plants and businesses to make all these things that the US has relied on imports for in a hurry? It just does not work that way. And its more than just us...like it or not we live in a world with a world economy that is linked at the hip. Can the world wait that long? I don't think so, and I don't think it will.

There was a movement that had major flaws that is now being exposed. People that bought into thought it would be better for them as individuals. I have faith that when they see they in fact were hurt badly that things can turn around.

Might be wishful thinking. I badly need to retire. Not being able to because of this is something I am trying to avoid thinking about.

 

[406dn]

What most concerns me, between the tariffs, and the obvious desire to get out of NATO, is that we will be seen as not trustworthy. Countries will rethink what their best interest is. Presently, in Canada, they are making plans to have closer ties with Europe and the Pacific rim. For generations, the bulk of their exports came to the USA. Some of their exports, they have no other real trading partner, but where they can, they are looking at their options.

I hope I'm wrong, but I see nuclear proliferation from the NATO chaos, and China presenting itself as a reliable, low cost supplier of many goods.

The GOP has been said that this will be similar to a home remodel. So far today, my remodeling cost is north of 25k. I hope Trump doesn't plan for me to just tear down the entire home and rebuild it, bigger and better.

 

[Bonasababy]

The tariffs yesterday - Trump got the world’s attention and now the negotiations start. Some countries have already announced a desired to remove their tariffs on US goods. Media reports that don’t clearly indicate that the tariffs are reciprocating at half of what the other country imposes on US products is junk reporting. How this turns out, who knows. Some bumps and volatility in the near term for sure. Longer term? Could be a big win for US or maybe a loss. Point is we run $1.2 Trillion trade imbalance that needs to be adjusted. US is spending 7.9% deficits to GDP and heading towards a fiscal disaster. Better now to address than later when it completely collapses.

I will accept your numbers without checking. But that 1.2 trillion trade imbalance--the US stock market lost 2 trillion today, and it appears the losses are mounting.

I will say that normally the markets price in coming events. I think their ability to determine what would actually occur was hamstrung but the incredibly chaotic roll out of all the administrations policies, where things are announced then changed sometimes the same day or shortly after. That probably means markets could not price things in--and maybe we'll see a bit more stability after today.

 

[SAJ-99]

Yes, protectionist policies exist on both sides of the fence. I don't dispute that. So the US can either provide direct subsidies (often a dirty word inside and outside of HT) to allow US producers to compete with foreign providers that have net-US negative policies in place or apply import tariffs to balance the books. Either approach can result in an effective "tax" on the consumer. Either approach could also result in additional negotiations to better level the trade playing field and reduce cost to the consumer. Again this applies to all of US trade, not just the Canada example I pointed to. Will the current tariff approach be the solution? Too early to tell. But it fits a broader theme with this administration that tries very different approaches to solving long-standing issues than what has been done over the last several admins (including his first term). That whole "definition of insanity" thingy ....

My main problem, one implied by your post, is the thought that the US has been getting "ripped off". Other countries have been bitching about how the US benefits from the system for the last 50 years, and the numbers show they are correct. We get to run huge deficits with zero impact on the value of the currency. You don't try to change the rules to the game you are winning. Mostly Americans these days just like to complain. Even the Billionaires have grievances.

But yeah, let's get this train moving. Maybe the quicker we do the quicker we realize the mistake. No US worker is begging to make socks and t-shirts again. We export technology. A lot of Americans don't seem to realize that. Whatever, all prices are going up. Enjoy your tax hike.

The tariffs yesterday - Trump got the world’s attention and now the negotiations start.

Yeah. Only problem is we have to negotiate with every country and there isn't more than a handful of people left in this Administration with enough knowledge of economics to come up with a reasonable agreement. However, I'm sure the grift will continue though.

 

[Bonasababy]

What most concerns me, between the tariffs, and the obvious desire to get out of NATO, is that we will be seen as not trustworthy. Countries will rethink what their best interest is. Presently, in Canada, they are making plans to have closer ties with Europe and the Pacific rim. For generations, the bulk of their exports came to the USA. Some of their exports, they have no other real trading partner, but where they can, they are looking at their options.

I hope I'm wrong, but I see nuclear proliferation from the NATO chaos, and China presenting itself as a reliable, low cost supplier of many goods.

The GOP has been said that this will be similar to a home remodel. So far today, my remodeling cost is north of 25k. I hope Trump doesn't plan for me to just tear down the entire home and rebuilt it, bigger and better.

Agree--this was pointed out in other threads a few times. The impact of Trumps tariffs during his FIRST administration--not the current one--led to loss of markets that we haven't gained back in agriculture and other things. They intent then was the same as the intent now--the reaction then wasn't what was expected.

The whole strategy relies on other countries wanting to remain partners with us. If they instead look to others to trade with other than the US--especially if the others are countries that are enemies to us or not someone we want them to pivot to--we are in real trouble that we can't expect to get out of quickly IMO.

 

[SAJ-99]

I will accept your numbers without checking. But that 1.2 trillion trade imbalance--the US stock market lost 2 trillion today, and it appears the losses are mounting.

I will say that normally the markets price in coming events. I think their ability to determine what would actually occur was hamstrung but the incredibly chaotic roll out of all the administrations policies, where things are announced then changed sometimes the same day or shortly after. That probably means markets could not price things in--and maybe we'll see a bit more stability after today.

All this data is from last month. The trend is as we would expect. We imported more stuff in anticipation of tariffs, inventories are high, prices were raised. The employment numbers should be troubling to everyone.

 

[Bonasababy]

The video talked about Canada's system. The US has plenty of programs that help the dairy industry, including price supports, that are similar to Canada's. Even players within the industry will complain about each other. Consumption of dairy milk has dropped for decades but things like cheese, yogurt, ice cream have increased. So Milk farm producers get squeezed by processors. Same thing happening in cattle and hogs. The big firms are squeezing the little guys out. The US is not handicapped at all. We should probably start by looking "inside the house" for potential changes.

Bold statement is the one I think some are not getting.

Canada's dairy tariffs don't hurt us much--we have a dairy industry in country that can provide our needs. Canada was protecting their own dairy industry more than hurting us.

I read just yesterday that most farmers in my part of the country barely made out even last year. Fertilizer and seed and production costs are really rising now, they have lost markets due to actions like gutting US AID--going to be really rough for middle americas farmers.

 

[TOGIE]

Yeah. Only problem is we have to negotiate with every country and there isn't more than a handful of people left in this Administration with enough knowledge of economics to come up with a reasonable agreement. However, I'm sure the grift will continue though.

I would think the negotiations over the tariffs placed on the Heard and McDonald Islands might be something the administration could handle. Might be a little optimistic on that though - the King Penguins are definitely known for their cutthroat business acumen.

 

[SAJ-99]

I read just yesterday that most farmers in my part of the country barely made out even last year. Fertilizer and seed and production costs are really rising now, they have lost markets due to actions like gutting US AID--going to be really rough for middle americas farmers.

The US has price floors on almost every Ag product, IF the producer can get the insurance. DOGE fired a bunch of people and closed a bunch of offices so getting the paperwork finalized might be harder. The US farmer might quickly learn what free capitalism really looks like and the new meaning of "elections have consequences".

 

[TOGIE]

Sentiment in congress sure seems to be shifting. Will be interesting to watch if it keeps mounting.

It will be interesting to see if individual perspectives change when the job losses start rolling in or if they'll continue to trust in the gland plan. Probably depends on the amount of bleach recently consumed. But when your employer flatly says to your face "yeah, revenue decline is nearly 100% attributable to tariffs and we no longer need x% of our sales folks/project managers/design engineers/production engineers so we're stuck with layoffs, sorry" I can't imagine public sentiment in believers won't shift fast.

But don't worry, give it time, we are Liberating America.

 

[NDGuy]

Or, in our case, "buying cheap shit." It helps balance the books and keeps the population happy. Citizens are quite happy with affordable Walmart goods... that we outsourced making abroad. But is has been a two-edged sword

Like what? Families only being able to pay for rent, food, and gas to work?

 

[Forkyfinder]

Why do we care what tariffs other countries charge on US products? It’s a tax on its citizens probably to protect a weak industry. Canada’s dairy is a good example. Canada has a $16B dairy industry, US dairy is $200B. Canada decided to protect its weaker dairy industry from being overwhelmed by the U.S. dairy industry. Whatever. Canadians are paying more for milk products.

I’m a free trade guy of the Milton Friedman school. Milton wanted to eliminate tariffs for the benefit of the US citizens. No tariffs mean the U.S. citizen is paying a lower price for its purchases. If Trump reduced all tariffs today, inflation would go down. The other aspect is the thought that the US is the best producer of every item imaginable which is simply not true. Why should I have to pay $10 for a tool I can buy from China for $5? One of the aspects of manufacturing is the cost of living for each country. The cost of living has rose significantly in the US meaning rising wages. Good for us but then we wonder why our tool costs $10. One of the ways to keep labor costs down was to use recent immigrants to the US who would work at a lower wage. The auto factories in the Midwest were full of European immigrants in the 60s-80s who were happy to have the chance to be Americans and work hard in a factory. US now hates the immigrants who might feel these roles. Cost of production goes up. With tariffs, our $10 tool now costs $12.

There is the fact too that the products we buy from foreign companies provides them with dollars that are spent in our country. The dollar is the world’s reserve currency particularly because of us buying foreign goods.

I could go on and on. The butterfly effect of the reciprocal tariffs is enormous. Global economy will be reduced. US has upset the entire world. US has $36T in debt that needs to be bought as bonds mature. If foreigners boycott the US, our national rates go up.

Etc etc. etc.

I too am a milton friendman fan.

One of the things i feel he was most right about was that free trade and more of it kept the world peaceful. Independently of that fact - it doesnt create jobs to lockout consumers to buy a wrench thats 5 dollars. All that it does is keep that US company making wrenches to keep making the same wrenches that are defintionally a poor value if they are double the price. Instead - they could be making other tools that chinese manufacturing cant. Higher cost of said wrench will lead to less wrenches turning because of inflated costs (its not just the wrench). Its the classic example of grow the pie (market) vs argue for a bigger piece.

Its strange to see a republican party embrace tariffs. Covid showed us that we need to have stockpiles and protect certain industries - this happens to be a major over reaction.

 

[Handlebar]

Like what? Families only being able to pay for rent, food, and gas to work?

I think that the free trade policy and pursuit of globalization has provide cheap consumer goods to most Americans to the detriment in the long run to the middle class. We hollowed out American manufacturing and pursued a foreign policy where we were the worlds cop and we did it using a credit card. It has been easy for us to borrow money but we will have to start paying it back. I do not know if this tariff policy will work, I am not an economist. But I don't think what we have received with previous policy is sustainable much longer.

 

[TheBenHoyle]

Just a follow up from my earlier post, looks like my company is expecting our cost of goods to go up this year by 23%, higher in some areas and lower in others. But our total spend on the goods we buy will go up 23% this year over last year. That's a big hill to climb.