Tariffs

[bradleygator]

A tariff is exactly that - it's an artificial method of increasing the cost to access a market. I'm not sure you understand how tariffs actually work.

The manufacturer, broker, distributor and retailer all take a hit because the tariff blocks (or increases the cost to access the market). The consumer does too, to a lesser extent. As the costs increase and the sell price can't keep up due to elasticity of demand, efficient supply chains look for better options. Moving manufacturing to a lower tariffed country, changing sourcing or supply chain strategies, etc, are all on the table. But it takes time for these changes to happen.

The only way the US can tax a foreign company is if they have significant interests or operations in the US. But taxes are almost always passed on because they only apply to the finished good that's already stateside (not the entire supply chain), so if you really want to hose the consumer, hit Apple with a 125% tax. That would have a terrible impact on the economy. AND - you have to do it by company or category.

To make it as simple as possible:
Taxes apply to finished goods, so there's only one person to pay that price, the consumer. Apple is not going to reduce their MSRP due to a tax.
Tariffs block the access to a market, and therefore hit all levels of the supply chain, reducing the impact to the consumer but increasing incentives for companies to find alternative strategies.

I have worked in Product Management for two companies over the last 23 years - one imported 95% of what they sold and one is a domestic manufacturer that imports 30% of product sold.

Tariffs are country specific. I’m talking about taxing American companies for manufacturing outside the US, regardless of location. Or for offshoring profits offshore to avoid taxes (the pharmaceutical industry pays almost a zero effective tax rate)..

Advantage being that American companies are largely the ones who offshored and the most likely to reshore. Also, the US govt has leverage over those companies. We just saw the limits of our leverage over China with Trump unilaterally reductions to tariffs and him rolling over and begging Xi to rub his belly in those Oval Office comments. Also by imposing a tax, you don’t have to negotiate trade deals with 85 different countries

I get that taxes require Congress and that’s probably why they went with tariffs.

We’ll see how the tariff negotiations shake out. My guess is we’ll be happy to return to the status quo.

 

[jsfgators]

I claim zero knowledge of world economics and thus have to accept and rely on those who know better. I can’t say The Trump approach will or won’t work. It just seems to me there would be a more subtle way to make changes.

I think we could have made subtle changes years ago to right the ship, but we didn’t. We have let this go to far down the road for subtle solutions. It’s like person who ignores signs of cancer until it’s spread. The treatment is different depending on how advanced it is. In fact, the treatment for advanced cancer is POISONOUS to the body. In regards to trump’s approach to trade, I think we are left with bad options and worse options. I think we have to go the full measure of chemo and radiation or we are going to leave a degraded vassal state subservient to the Chinese to our children. If we don’t have the leverage to right the ship now, then we aren’t going to magically get the leverage down the road.

 

[bradleygator]

I think we could have made subtle changes years ago to right the ship, but we didn’t. We have let this go to far down the road for subtle solutions. It’s like person who ignores signs of cancer until it’s spread. The treatment is different depending on how advanced it is. In fact, the treatment for advanced cancer is POISONOUS to the body. In regards to trump’s approach to trade, I think we are left with bad options and worse options. I think we have to go the full measure of chemo and radiation or we are going to leave a degraded vassal state subservient to the Chinese to our children. If we don’t have the leverage to right the ship now, then we aren’t going to magically get the leverage down the road.

This may be correct. But seems to me the leverage we do have, at least for the time being, is enormous paper wealth. So why not use some of that to create conditions to reshore manufacturing: update factories, improve infrastructure, train workers to do skilled manufacturing?

Initiating a standoff with China when we depend on them for manufacturing and we don’t currently have the capabilities to replace it, seems dumb.

 

[GhostOfMatchesMalone]

A tariff is exactly that - it's an artificial method of increasing the cost to access a market. I'm not sure you understand how tariffs actually work.

Yes.

This is going exactly as we knew it would: Trump starts off imposing massive tariffs because he always starts a negotiation with an insanely high number to hit at the real number he wants.

The Art of the Deal. Now the number will drop as China comes to the table and starts negotiating. With every drop, we will hear that 'Trump caved!'

Smoke will clear and Trump will get the deal he wanted, if not better. Media gets to say Trump blew it and caved cause he didn't know what he was doing.

Bradley gets to parrot what dog avatar Twitter dude told him and say that Trump was in over his head and Bessent had to talk him into dropping this silliness.

Everyone wins.

PS: Stocks up big again today. Spin will be 'Bessent calms markets, Trump backs down'.

 

[jsfgators]

This may be correct. But seems to me the leverage we do have, at least for the time being, is enormous paper wealth. So why not use some of that to create conditions to reshore manufacturing: update factories, improve infrastructure, train workers to do skilled manufacturing?

Initiating a standoff with China when we depend on them for manufacturing and we don’t currently have the capabilities to replace it, seems dumb.

I don’t think those manufacturing jobs are coming back without raw force. I agree with creating conditions that would make the transition back to the US less painful for these businesses like lower taxes, cut regulations and so forth. However, I think it has to be coupled with blunt force on the other end. I don’t think those jobs are coming back out of the kindness of corporate hearts. I don’t like it, and I think it will be painful for a period of time, but I think we have to make this move. If we had started tinkering with this 20 years ago, I think it would be different. I fully acknowledge that it MAY not work, and could actually increase the pace of our demise. I just don’t think we can sit bye while our future generations country is sold out from underneath them.

 

[fatman76]

Yes.

This is going exactly as we knew it would: Trump starts off imposing massive tariffs because he always starts a negotiation with an insanely high number to hit at the real number he wants.

The Art of the Deal. Now the number will drop as China comes to the table and starts negotiating. With every drop, we will hear that 'Trump caved!'

Smoke will clear and Trump will get the deal he wanted, if not better. Media gets to say Trump blew it and caved cause he didn't know what he was doing.

Bradley gets to parrot what dog avatar Twitter dude told him and say that Trump was in over his head and Bessent had to talk him into dropping this silliness.

Everyone wins.

PS: Stocks up big again today. Spin will be 'Bessent calms markets, Trump backs down'.

Trump also always over negotiates. IOW, if he wants 10% he asks for 30%.

Deal is struck at 15% and everyone calls him a loser for caving, when in fact he exceeded his goal by 5%.

 

[fatman76]

Tariffs are country specific. I’m talking about taxing American companies for manufacturing outside the US, regardless of location. Or for offshoring profits offshore to avoid taxes (the pharmaceutical industry pays almost a zero effective tax rate)..

Advantage being that American companies are largely the ones who offshored and the most likely to reshore. Also, the US govt has leverage over those companies. We just saw the limits of our leverage over China with Trump unilaterally reductions to tariffs and him rolling over and begging Xi to rub his belly in those Oval Office comments. Also by imposing a tax, you don’t have to negotiate trade deals with 85 different countries

I get that taxes require Congress and that’s probably why they went with tariffs.

We’ll see how the tariff negotiations shake out. My guess is we’ll be happy to return to the status quo.

That's exactly the point - Trump is trying to level the playing field with countries, not companies. You do that with tariffs. Why make our companies bear 100% of the burden when they're not 100% at fault. They're still being incentivized, but shouldn't the money come from the countries that created the unfair competitive situation?


And you still haven't told me how much Trump is "caving". What's the new tariff?

And this came out 35 mins ago:

Trump administration live updates: Trump lashes out at Zelenskyy; China says U.S. must stop 'threatening' Beijing on tariffs

Updates and latest news on the Trump administration, President Donald Trump and Russia-Ukraine peace talks.

www.nbcnews.com

"White House press secretary Karoline Leavitt said this afternoon that the Trump administration will not unilaterally reduce tariffs imposed on China.

"Let me be clear, there will be no unilateral reduction in tariffs against China," she said in an interview on Fox News. "The president has made it clear China needs to make a deal with the United States of America, and we are optimistic that will happen."

She rejected the idea that Trump's position on tariffs on China has been softening.

"He is not going to give up on ensuring that there are fair trade practices around the world," she said. "He is not giving up on the fact that China has been ripping off the United States of America for far too long.""
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Oh, and this just happened today too. Who's caving again?

China warns U.S. to stop threatening and blackmailing it​

Rebecca Shabad
Chinese Foreign Ministry spokesperson Guo Jiakun warned the U.S. today against continuing its current approach in trying to find a solution to the trade war.
"Our doors are open, if the U.S. wants to talk. If a negotiated solution is truly what the U.S. wants, it should stop threatening and blackmailing China and seek dialogue based on equality, respect and mutual benefit," Jiakun said, according to a video released by the Chinese Foreign Ministry on X.
"To keep asking for a deal while exerting extreme pressure is not the right way to deal with China and simply will not work," he added.

 

[Capt Ron 1]

Yes.

This is going exactly as we knew it would: Trump starts off imposing massive tariffs because he always starts a negotiation with an insanely high number to hit at the real number he wants.

The Art of the Deal. Now the number will drop as China comes to the table and starts negotiating. With every drop, we will hear that 'Trump caved!'

Smoke will clear and Trump will get the deal he wanted, if not better. Media gets to say Trump blew it and caved cause he didn't know what he was doing.

Bradley gets to parrot what dog avatar Twitter dude told him and say that Trump was in over his head and Bessent had to talk him into dropping this silliness.

Everyone wins.

PS: Stocks up big again today. Spin will be 'Bessent calms markets, Trump backs down'.

Bradly calls this "caving in" LOLOL Has NO CLUE what is really happening. Does not understand anything about negotiations. Since I have taught negotiating for almost 4 decades.. I DO understand.

 

[fatman76]

This may be correct. But seems to me the leverage we do have, at least for the time being, is enormous paper wealth. So why not use some of that to create conditions to reshore manufacturing: update factories, improve infrastructure, train workers to do skilled manufacturing?

Initiating a standoff with China when we depend on them for manufacturing and we don’t currently have the capabilities to replace it, seems dumb.

Who knows what China's angles are, but perhaps a mutually beneficial arrangement can be made where factories that are jointly owned are located here, employing US workers?

I'm just spitballing, but there are creative solutions to creating situations where both parties benefit.

Then we can steal their manufacturing expertise like they steal our R&D.

 

[Capt Ron 1]

What many do not understand in this negotiation is China is an EXPORTER economy... This weakens their position BIG TIME. Let me tell you what MAY be coming. Trump putting the whammy on China goods, and start making people pay attention to where our overseas goods come from. BUY AMERICAN. Something to this effect is coming.

 

[Capt Ron 1]

Who knows what China's angles are, but perhaps a mutually beneficial arrangement can be made where factories that are jointly owned are located here, employing US workers?

I'm just spitballing, but there are creative solutions to creating situations where both parties benefit.

Then we can steal their manufacturing expertise like they steal our R&D.

EXACTLY how negotiations are won...and if you read his book CLEARLY spelled out. No...it is NOT caving in

 

[fatman76]

I don’t think those manufacturing jobs are coming back without raw force. I agree with creating conditions that would make the transition back to the US less painful for these businesses like lower taxes, cut regulations and so forth. However, I think it has to be coupled with blunt force on the other end. I don’t think those jobs are coming back out of the kindness of corporate hearts. I don’t like it, and I think it will be painful for a period of time, but I think we have to make this move. If we had started tinkering with this 20 years ago, I think it would be different. I fully acknowledge that it MAY not work, and could actually increase the pace of our demise. I just don’t think we can sit bye while our future generations country is sold out from underneath them.

It takes a long time to get industry back.

It'd take 10 years for US steel to become meaningful again.

But that doesn't mean you don't move more nimble industries back here.

 

[Capt Ron 1]

I don’t think those manufacturing jobs are coming back without raw force. I agree with creating conditions that would make the transition back to the US less painful for these businesses like lower taxes, cut regulations and so forth. However, I think it has to be coupled with blunt force on the other end. I don’t think those jobs are coming back out of the kindness of corporate hearts. I don’t like it, and I think it will be painful for a period of time, but I think we have to make this move. If we had started tinkering with this 20 years ago, I think it would be different. I fully acknowledge that it MAY not work, and could actually increase the pace of our demise. I just don’t think we can sit bye while our future generations country is sold out from underneath them.

Tariffs ARE the raw force. I am in the Auto industry, and for now Ford and GM are going to ship vehicles and EAT the tariffs. Remember, the tariffs only apply to non American parts. (does not matter where the vehicle is shipped from, just the parts content) We fully expect the big 3 to agree to closing many of their overseas production facilities and announce it with Trump, and he will remove the tariffs. Hell, he even has union support on this, and EXACTLY why I predicted Michigan for Trump before the election( I was THE ONLY one to do that). Union bosses were NOT for Trump, but union WORKERS were, and there are WAY more workers than bosses.

 

[bradleygator]

Bradly calls this "caving in" LOLOL Has NO CLUE what is really happening. Does not understand anything about negotiations. Since I have taught negotiating for almost 4 decades.. I DO understand.

So it’s good negotiating to take an impossibly hard line and then immediately announce publicly that you’re willing to accept far less without any concessions from the other side? Interesting. In my business we call this negotiating against yourself.

I’ve heard a lot that this is trademark Trump negotiating. Where else have we seen it? Anyone got an example of a big negotiating win as President?

He ripped up the Iran nuclear deal and now is trying to negotiate the same terms back in place. He didn’t do it with Russia and Ukraine. He didn’t come out and say: Russia has to leave Ukraine completely or I’ll start WW3! And then say, ok he can keep the Donbass and Crimea. He couldn’t get rid of Obamacare notwithstanding the fact he had both houses of congress. He did get a big tax cut on a party line vote. He hasn’t budged Israel on a ceasefire (I guess he got a weekend).

What are the big Trump negotiations he’s won? Do I have to go back to when he was hosting the apprentice?