So the question is why do we need this tradewar? It only introduce instability and fear in our market and we have never really recover from 2008 recession yet. The quality of job suck by the way.
It's protectionism and it does not make our country competitive at all.
So why not free trade? I hate the idea of tariffs, but when your "allies" have had non reciprocal tariffs something needs to be done. I think all of this would go away if all tariffs against US products were removed
So you believe that the US is a victim of protectionism in these countries without having protectionism of it's own? That's a pretty hard position to back with evidence.
For example US farm subsidies are significant and supply management is common in many areas, but the rhetoric around Canadian dairy supply management recently has been amplified far beyond even it's wildest possible impact. And this with a country with extraordinarily balanced trade, if anything probably a deficit. The history of trade between the two countries is littered with spats about US protecting this, Canada protecting that, but on the whole very balanced. Pretending otherwise may make for good politics (i guess that remains to be seen) but it isn't based on evidence or good policy work.
I think farm/dairy is the example where almost all countries have weird tariffs. Which is of course why they are such popular examples. But they are exceptions.
I'm glad that you believe it, but it's not a reasonable position. The primary reason for some U.S. tariffs is the legitimate reason of national security. We provide tariffs on certain foods, mineral resources, and military products because we want to guarantee that we do not loose production ability. Should we suddenly find ourselves in a world war, we would not be creating these production lines from scratch. Therefore, tariffs are always a balancing act between being nice to our friends and ensuring we keep some level of production available.
Well, frankly I don't think it's a disadvantage. It's difficult to move out from the equilibrium of countries mistrusting each other, but I think what you describe is actually an utopia. If we manage to destroy all tariffs and make countries lose parts of their production abilities, we'd make war unthinkable, which is a net good. The US would never start an all-out war because it would starve, and whomever specialized in the agricultural products supplanting the US productive capability would never start a war because they cannot build weapons.
Of course there are huge problems with this -- what happens if whomever makes your food goes tits up, involuntarily (natural disasters, coups, ...) or voluntarily (maliciously attacking)? Who guarantees the system? How? Etc... --, if there weren't I wouldn't call it utopia. But I think raising the costs of war beyond the unreasonable is a net gain.
Note: I'm fully aware that this is an extremist and probably next to impossible position, no one has to remind me that. I just contest the fact that the objection "but then we could not go around and kill people" isn't a particularly good counter-argument for no trade barriers.
You did not mention that since the founding of the EU, there has not been a single war between member states. Compare that to european history and you see the most important thing about the EU. I can live with all the things there are rightfully to be criticized about the EU, in exchange for peace in continental europe.
Wait, so your first step is for other countries to remove their subsidies/tariffs but the US doesn't do the same? How well do you think that will fly in those countries?
If you mean you'd like to see the US and those countries both drop tariffs and protections, I can see you argument - but that's the opposite of the direction things are going today so I don't see the relevance. Even if it were not, it's hard to argue against a countries legitimate security concerns in some areas, although clearly that argument can be abused (again, cf current rhetoric).
That will work as soon as we have a single currency.
The EU is a really good example here of how a single currency puts everyone on the same economic accounting basis and so eliminates the ability of a country to 'fudge' the numbers through either internal subsidies or currency manipulation.
The reason you need a single currency is that if you're going to sell barrels of wheat from country X to country Y, and country Y buys televisions from country X. How many units of currency is a television worth relative to a barrel of wheat? If those values are tied to the same currency, then the economic incentive to grow wheat or build televisions will be on the same footing.
This is incorrect understanding of how currencies work. Same currency works only when the area satisfies optimum currency area criteria well enough. Euroarea is in constant trouble because it is not good currency region as it is now. You need at least common fiscal policy to fix it.
In general, freely floating currencies fix all problems you mention.
FWIW, I'm not a big fan of OCA theory. Or perhaps a better way to say it is that I think the case for making the entire planet with its next day transport of goods and immediate delivery of services would nominally qualify as a single OCA. Note that Mundells criteria are focused primarily on sovereignty and not economics per se (see the Greek comment in peer comment).
Tariffs and currency manipulation are a sovereign response to prevent efficient markets that would render local labor noncompetitive.
And as I mentioned earlier, a single currency makes such manipulations ineffective and you get Greece. They can't bring their productivity up to the level of Germany or France and their economy suffers for it because all of the capital goes elsewhere.
Greece can't recover because its exports are too expensive. Devaluing the currency in which those exports are sold in order to spur exports doesn't solve the underlying problem, which is Greek productivity. Imagine that the German economy is a Prius and the Greek economy is a truck hauling a ton in a trailer behind it, and the Greek truck is complaining that it costs more in fuel than the German Prius to get from the same point A to the same point B. Devaluing the Greek currency is like making fuel cost less especially for the Greek truck with no change in cost for the German Prius; sure, if the fuel is cheap enough for the Greek truck then maybe the Greek truck will be price-competitive in getting you from A to B, but the real solution is "how do we get the Greek truck to first dump the ton it's hauling behind it and then how do we make it more fuel efficient".
In a single-currency market, it is the responsibility of strong players to shore up the economies of weak players, or risk popular discontent in the weaker economy and the democratic dissolution of the common currency. German politicians have paid lip service to this but have not really put German resources to use in building up the PIGS economies because such a policy is unpopular with the German voting public, which wants to see those resources stay in Germany and to the nearsighted benefit of German taxpayers. This is the real root of the Euro crisis. There were always going to be weaker players in the EU, and it doesn't matter if it's Greece, it could very easily have been some other country. The question is what do stronger players do.
The US doesn't suffer from this issue because, to use an oversimplified example, California voters aren't discontent with FEMA funds used in hurricane disaster recovery areas. Californians are Americans before they're Californians, by and large.
> There were always going to be weaker players in the EU
This is true, however there were quite strict criteria (the Maastricht criteria) put in place to try and prevent this from being too bigger problem. In hindsight, those criteria weren't sufficient, in one way or another.
I believe it's correct to say those weaker economies benefited from adopting the Euro the short term, and that they wanted to join the Euro.
As a twist, the Euro was somewhat unpopular in Germany when it was introduced, because it made things more expensive. So there is a feeling that Germany "paid" the price of adopting the Euro - whether this is true or not is irrelevant for the sake of policy-making.
Even worse: Germany, an already very strong nation, gets to free ride the Euro for its export machine at the cost of its Eurozone rivals (and other competitors in Europe broadly). If Germany had its own currency, it would be considerably more expensive than the Euro is today, which would make German exports more expensive. As you note, countries like Greece, Spain, Italy, Portugal would do better because their exports would be cheaper under less expensive national currencies (unique to their individual economic circumstances), enabling them to compete better against Germany's exports. This artificial prop can be seen in the fact that Germany has the world's largest trade surplus as a percentage of its economic output.
But that is exactly the point right? If you devalue the common currency then the amount you pay Greek farmers goes "up" effectively, and the price you pay German farmers also goes "up" so the relative costs of things stay the same and nothing changes. Whereas with a translation layer (currency exchange) you can "adjust" what it costs Greece and what it costs Germany to the advantage of one or the other.
A tariff is a way to adjust this economic cost externally which takes it out of the market's hands and put it into a political realm and one step removed from the actual economy that should be adjusting.
Thera are existing mechanisms and professes to deal with trade disputes. US has successfully used them before. Trump is lashing out from ignorance an incompetence. His apologist's from ignorance.
> So you believe that the US is a victim of protectionism in these countries without having protectionism of it's own? That's a pretty hard position to back with evidence.
You need look no further than the USA's gaping trade deficits.
> You need look no further than the USA's gaping trade deficits.
A “trade deficit” is just another name for a capital inflow surplus.
If you want a smaller trade deficit, reduce the degree to which you systematically favor capital.
Of course, what policymakers usually justify based on a trade deficit is increased support for domestically headquartered firms and other supports for capital invested in the country, which results in more net foreign investment and higher trade deficit, which is used to support more capital-serving policy, which results in more capital inflows, etc.
You've said nothing wrong, and at the same time I'm not sure how that contradicts my point. A large trade deficit does indicate that one country's protectionism outweighs the other (i.e. larger tariffs result in a deficit).
I believe you're referring to the USA's "aggregate sales surplus," which measures both direct trade and sales of multinational companies--a headline making rounds on the news this past week.
These numbers include items made in China, by Chinese jobs, using Chinese components, under a US company name. It uses total sales, and not net revenue, which would change the picture by a great deal.
There is no trade deficit with Canada. At all. Claiming there is one, in the face of all facts to the contrary, is not having a discussion in good faith.
So instead of enlightening me with these facts, you accuse me of acting in bad faith? I was under the impression that there was a trade deficit with Canada given the evidence I have found: https://www.census.gov/foreign-trade/balance/c1220.html .
jeromegv said there was no trade deficit with Canada, so I assumed good faith and responded to him/her under the pretense that they were referring to the "aggregate sales surplus" figure that has been in the news recently.
Can you please help me understand how I have ignored facts and acted in bad faith? I would like to fix this problem, but I do not understand where to begin.
There was a cumulative $370 billion trade deficit going back to 2007, and a nearly $800 billion trade deficit back to year 2000. There has been a trade deficit with Canada every year the past 30+ years, including so far in 2018. [1]
How would Canada like to run a $800 billion trade deficit with the US over the next 17 years? You know, just to make things fair over time. Didn't think so.
On the upside, the trade deficit has narrowed from a common $30 billion five years ago, to more like $10 to $15 billion. That's a pretty happy result if you're the US, given it's a consumption engine (lower domestic savings at the median, higher consumption rate, which pushes up demand for imports in most cases).
Funnily enough, the US numbers show a trade deficit with Canada, and the Canadian numbers show a trade deficit with the US. Who knew - it turns out that how you compute these things gives you the ability to wiggle a bit.
What is generally accepted though, is that internationally speaking the US and Canada are one of the most balanced know of, over long periods, and for major trading partners.
Pretending otherwise is just serving partisan politics at this point.
It's happening because the US is very competitive as a place to invest capital. Trade deficit can be visualized as people in the US selling capital and using the proceeds to buy goods; the reality is more complex and has more intermediate steps, but that's the net effect.
Every country involved has industries which won't allow this. For example, all the countries in the G8 have agricultural sectors which will not allow elimination of trade barriers.
So, even if you want "free trade," you start with each country's list of stuff where there is not going to be free trade, and move forward from there.
It's not really my idea, it's what the larger countries basically did starting in the eighties and early nineties when free trade ideology was quite strong, leading up to the creation of the WTO and EU and so on and so forth. What you see today is the evolution of that starting point that you like...
I don't understand this position. Free trade would be nice, so let's make the furthest thing from free trade by adding tariffs?
The only time the president mentioned lower tariffs was an offhand comment at the G7. All of his other positions imply he disagrees with you and thinks trade is bad.
Oh, that's the game? Trump wants an argument to later push again for those horrible secret «free trade deals» which would have undermined European politics, consumer-safety, ecological standards and democracy itself? (TTIP and co)
Intellectual property rights/copyright laws, both linchpins of US policy, are the very definition of government intervention.
The US aerospace and manufacturing industry is overwhelmingly subsidized by the military complex, a lot of it done under the auspices of "national security". For the US to complain about Airbus or Bombardier is simply incredible.
US agriculture is outrageously subsidized. I'll go into a specific example in a moment, but the notion that that the US is trying to play fair is simply incredible.
The US loses at the US-created WTO time and time again (see: Canadian softwood) and simply ignores the rulings.
"but when your "allies" have had non reciprocal tariffs"
I don't know what example you're thinking of, but let's consider the case of Canada (a country that the US has a trade surplus with). Canada has supply management for dairy to ensure a supply that matches demand to ensure food security. To protect this, Canada applies a high tariff for imports above the quota.
"So unfair to US farmers!" yells Trump.
Only here's the problem with his ignorant, easily swayed vision.
Canada exports less dairy to the US than vice versa. Like, 1/2 as much. The whole point of supply management is that it doesn't generate an excess, and for that small industry the exports and imports are generally only for very specialized things.
US dairy, in contrast, is hugely subsidized. To the tune of 74% of US dairy income comes, directly and indirectly, from the US government (0% in Canada comes from the government). Hence US farmers grossly overproduce and then look to dump it elsewhere, destroying production elsewhere. Just as US corn production is essentially a government enterprise, flooding the world with corn by-products and HFCSs.
Who is the villain here? Trump can rattle off some scary number to his clueless fans (I'd steer clear of the pejoratives, but given that Trump is a lifetime grifter and con man, whose virtually every statement is an outrageous lie, it is incredible that someone can be called his fan), but Canada has nothing at all, whatsoever, to do with those poor American farmers. It certainly isn't Canadian milk on American shelves causing their ills, because Canadian milk isn't on their shelves.
Nor did China cause the US poor to live in such dire straights. This is just the latest example of the US becoming more and more polarized, while convincing the poorest that it's always some external reason why they live in destitution in the richest nation on Earth.
I don't think the US plays fair either. I think everyone should play fair. Domestic subsidies I don't personally care about as it should be up to each country to deal with internally.
They tariffed our "allies" because our "allies" allow China to setup shell corporations in their countries so China can abuse trade agreements to get around direct tariffs. In return they make billions for being willing to stab the US in the back.
We need to do this because China steals 300 billion dollars in IP from American corporations every year, in addition to illegally subsidizing their companies to steal global market share
China also gives us goods far below what we could produce them for which lowers our cost of living. Complaining about China stealing $300b (I'll use your number because it doesn't really matter) in IP is like complaining about high school kids stealing Adobe CC - it's a theoretical loss, they weren't going to be a customer regardless. Tariffs don't even do anything to prevent IP theft
That's the dumbest way to enforce IP law. Just take the companies to court in the US if they sell in the US or international court if selling to other countries where Chinese companies compete with American manuf. - tariffs just aren't a good way to do this as it royally fucks American consumers
"North American content required to qualify for NAFTA is set at between 50-60 percent under Chapter 4. With this low bar, many PRC goods and services can be regarded as Canadian products"
It's not just steel, it's basically any product due to NAFTA.
I'm not sure I follow you, but it doesn't sound related to the issue of needing to follow the site guidelines when posting here, regardless of what someone else is 'spouting'. We're all spouting something.
You posted three articles, two of which don't have China in them even once (I crtl+F'd China, nothing), and the third which is titled "China may use Canada as 'Trojan horse' into US market", an op-ed written by Danny Lam, who if you google may as well not exist. I cannot find him anywhere.
muh russia! You should be proud to be paid for this idiocy, because otherwise you'd be that gullible and that would be tragic.
This is the kind of thing we ban accounts for. Please don't do it again, regardless of how wrong you think someone else is.
Edit: I'm dismayed to see that you've been crossing repeatedly into incivility and name-calling in other threads as well. Please (re-)read https://news.ycombinator.com/newsguidelines.html and stop doing this if you want to keep posting here. Hacker News is for thoughtful conversation, not belittling enemies.
I cited a direct NAFTA bylaw, that a product can be considered Mexican or Canadian if 50-60% of it is sourced from those countries, hence China doesn't need to be mentioned directly in the article. Take a trip to Vancouver sometime and tell me there isn't a large Chinese presence.
The fact you assume anyone you don't agree with or who provides information contrary to mainstream opinion a bot is the sign of a stunted mind.
This is not a substantive comment. The "large Chinese presence" in Vancouver is obviously not evidence of an obscure point about trade policy. It is, though, a step into dark insinuation. That's not ok here.
Worse, you went into personal attack. Since you've already been violating the site guidelines by using HN primarily for political battle (see https://news.ycombinator.com/newsguidelines.html), I've banned this account.
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll use the site as intended in the future.
> Some of the most compelling jobs to bring back to the US are the so-called “last screw” system integration operations.
Somewhat. The system integration operations are tedious and human-labor intensive. Those operations could still move to other cheaper labored countries such as Vietnam, India, etc. And if the operations can be automated, these operations will be reshored. The point of the tariffs exercise is to encourage manufacturing to move out of China and into other countries or reshored, to punish China for stealing IP and unfair business practices.
> I’ve examined the tariff lists (List 1 and List 2), and it taxes the import of basic components, tools and sub-assemblies, while giving fully assembled goods a free pass.
Trump just announced he is starting an additional $200 billion tariff on Chinese goods. That will definitely cover some fully assembled goods since the trade deficit is only around $330 billion, and there is already tariffs on $50 billion https://www.washingtonpost.com/business/economy/trump-escala...
> While stiff tariffs on the import of microchips drove investment in local chip companies, trade barriers meant the local companies didn’t have to be as competitive.
True in some ways. However, there will always be competition pressures and anti-monopoly pressures. It really depends on the shape of the market. And in technology, there are always the threat of obsolete/disruptive innovations to keep companies on their toes.
> New Tariffs Hurt Educators and Makers
If educators and makers really wanted cheap standalone components to play with, and there is a market, there will be a market sooner or later born in US for them. the $250 billion tariffs (and any subsequent ones) will make sure of that. If manufacturing can be reshored to China in 15 years, it can be reshored back to US in less time than that, with US economy booming 4% this quarter, massive capital inflow, and robotics technology growing.
I don't see how there is going to be a market built (we are talking about a five or ten year timespan here to build a semiconductor factory) around a trade barrier created by a tariff where nobody knows how long it will be in effect. Would you bet dozens of millions of dollars to create a production of already existing, cheaper produced products to supply a market created by tariffs? How easy would it for the next administration (or the current) to drop these tariffs? What about your investment then?
> There is no need to be going into a trade war against not only traditionally our rivals but also our allies now too.
And yet other countries never seem to entertain the idea of both sides getting rid of all their tariffs, which is something Trump suggested at that G7 summit.
Everyone goes nuts when the US suggests implementing tariffs against countries that already have tariffs against us. You gotta admit, the message seems to be that other countries are allowed to protect their domestic industry via tariffs and the US is just supposed to deal with it, don’t wanna start a trade war!
Interesting how despite a few other countries imposing tariffs on the US has still led to the US being the largest economy in the world.
It's not a question of 'fairness', it's a question of what will actually improve our economy. Nothing out there suggests tariffs will do that; in fact, all data points to just the opposite.
But you've basically ignored the OP in any case; do you have a response to the rather realistic and obvious projection that, given the nature of these, assembly jobs will move out of the US, since the fully assembled goods are not subject to tariffs, but the parts are?
"The fact is that there is a strong feeling in the developing world that trade rules do not apply equally. Indeed, Washington lost the moral high ground earlier this year when it slapped steep tariffs on steel imports and locked in subsidies for its farmers. As well, the US has in place a sophisticated regime of non-tariff barriers such as anti-dumping laws that exporters from developing countries have found difficult, if not downright impossible, to circumvent. "
(The "non-tariff barriers" are important - all kinds of environmental and safety standards could be considered as these, and they can be far more difficult to deal with than simply paying an import duty. This is another thing a lot of Brexiteers haven't realised)
> The "non-tariff barriers" are important - all kinds of environmental and safety standards could be considered as these, and they can be far more difficult to deal with than simply paying an import duty.
I'm glad the US has environmental and safety standards and enforces those (to some degree) on imports. Those actually accomplish some good and have positive externalities.
It's also worth noting that other countries have significant non tariff barriers as well, perhaps more significant than the US, and ones with less positive effects. Some Chinese examples are the Great Firewall (https://www.nytimes.com/2016/04/08/business/international/ch...) and fact that a large part of the Chinese economy is still state-owned (and could be politically directed to avoid importing American products without any need for a tariff).
> Everyone goes nuts when the US suggests implementing tariffs against countries that already have tariffs against us. You gotta admit, the message seems to be that other countries are allowed to protect their domestic industry via tariffs and the US is just supposed to deal with it, don’t wanna start a trade war!
You do know the US is already heavily protectionist and many tariffs are protections against the US's price dumping due to its heavy subsidies, right?
And that the US already has plenty of tariffs to boot?
Yup. Heavily protectionist. Thats exactly how an unbiased economist would characterize US trade policy. Stop watching msnbc dude.
The USA became the world's largest evonomy with massive tariffs on basically all imports. Smoot Hawley Act anyone? Those were removed gradualy starting in the 1970's and lo and behold the trade deficit sky rocketted while the manufacturing economy plummeted.
what they argue for: sure, looking at goods, there's a deficit for the US. But once you take services and primary and secondary income into account, then the US actually cuts the better deal with the EU.
imv, trump/the current US gov are twisting the numbers to get a better deal.
A trade deficit means that, on net, your trade partners end up with your currency and no goods to buy with it. So they start buying up assets in your country. Factories, companies, land, housing, bonds, etc. so by maintaining a trade deficit for so long, we have legally sold a large fraction of the assets in our country to foreign investors. (Foreign direct investment) How do you think Trump made his billions?
Having Saudi Oil Sheiks own all the Soccer teams in England is the result of the UK trade deficit.
Having chineese bussinessmen buy up all the valuable real estate in our biggest cities is a result of the trade deficit.
Massive underemployment (more baristas fewer mechanics) is a result of the trade deficit.
A trade deficit means that, on net, you've sent a bunch of pieces of paper to a country and they have given you actual stuff in return. So then they give that money back to you by investing in your country.
>Having Saudi Oil Sheiks own all the Soccer teams in England is the result of the UK trade deficit.
More English soccer teams are owned by Americans than all the russians oligarchs and arab sheiks combined.
That's because you still haven't answered the original question:
>>> Is a trade deficit important to not have?
E.g., consider your examples:
>sheiks owning the sports teams and chineese businessman owning all the prime housing
Given that I'm not the type of person who buys sports teams and prime housing (of the sort purchased by Chinese businessmen), why should I care about that style of FDI? I mean, I guess it must suck for the American ultra-rich that they now have to compete with the Chinese ultra-rich for access to ultra-veblen goods like owning sports teams, but... why the hell should the rest of us care which mega-rich person owns the local sports team!? What possible material impact could that ever have on us?
The only type of FDI that effects my life is FDI in productive assets, like factories, and those are strictly good for me (more and better-paying jobs).
"So we lost the Toyota factory but on the plus side the sports team isn't owned by a Sheik" seems like a really dumb trade-off. What am I missing here...?
The original point is that you are factually wrong. We already had tariffs on g7 countries.
The country we have the least trade barriers in the world is Canada. He started a trade war with them.
He ran on a platform of ending free trade agreements & protectionist policies. He’s enacting them. So it’s hard to take him serious when he suggests a free trade agreement with the g7 as a throwaway talking point.
Really, cause they described Trudeau as stabbing them in the back and said there is a special place in hell for people like him. He said Canada would respond with tariffs after Trump put in tariffs.
Can other countries trusy Trump administration at all at this point? It seems obvious, to deal with Trump, you have to prepare for the worst, since he is not predictable and tends to whatever he wants and whenever he desires.
Several European leaders have said publically (though in nicer words) that they don't trust America under this administration anymore.
e.g. Sebastian Kurz, a few days ago (1): "The American President is unconventional and American politics has become unpredictable. [...] This is a challenging geopolitical situation."
Why would that trust be necessary? It very clearly isn't. Which is not the same as arguing that trust can't be valuable or critical in international relationships depending on the context.
China has gone from a $1 trillion to a $13 trillion economy in 20 years, with vast barriers to trade (into their country) and extreme domestic protectionist policies (eg barring majority domestic business ownership, and most foreign acquisitions).
China is the greatest one-way mercantilist economic result in recorded history. There's very little trust in any relationship with China, they do literally whatever they decide fits their nationalist aims, whether that's annexing territory, stealing corporations (Ant Financial), forcing technology transfers, blockading foreign ownership, whatever it takes to buy time until China is impossible to resist. China is already buying up Eastern Europe, and buying votes within the EU (eg bribing Greece for favorable voting). Is that a premise of trust? Of course not, they're using their increasing might strategically wherever they can, and it's going to get a lot worse.
The fact is, all nations should pursue their self interest. When the US decides to act as everyone else does and pursue its economic self interest, it's denounced. And there's China parroting that they're in favor of free trade, while being aggressively against free trade in practice, and hardly being called out for the hypocrisy internationally.
The reason the US is denounced, is because the export gravy train is coming to an end, the easy exports into the US that many other large economies have enjoyed are going to get more expensive going forward. If that wasn't the case, all of these other nations wouldn't be upset about the US change in behavior: they all know the US is an immense global consumption engine that powers their domestic production.
Responding to psergeant's comment below:
> I wonder if you could help me understand Trump trying to rescue ZTE in terms of what you’ve just said?
The US got China to immediately sign off on the Qualcomm acquisition of NXP in exchange for the ZTE deal. That's an extremely valuable acquisition for the US tech industry.
Simultaneously the US has received $2.2 billion in fines from ZTE over time for their violations of US sanctions. Further on top of that, the US is getting even more compliance pledges from ZTE.
It's a substantial self interest win for the US. The US gets to eat one of Europe's valuable tech companies (of which they have relatively few), which then reduces Europe as a tech competitor over time. I'd call the ZTE deal a win, win, win, win arrangement.
>>> If that wasn't the case, all of these other nations wouldn't be upset about the US change in behavior... The fact is, all nations should pursue their self interest.
>> This leads to hugely destructive wars.
> Nonsense. Self-interest != hostility.
Right. Just because someone is looking out for their own self interest doesn't mean that they are constantly "winning" a zero-sum game with someone else. In fact, sometimes cooperating is the most self-interested move you can make...
Which is exactly why all of these other nations might be "upset about the US change in behavior" without necessarily prescribing any course of action that isn't also in the US's best interest.
Maybe get back to the original question and the reason Trump is interested in starting a trade war? Why is it OK for other countries to levy tariffs against us but not the other way around?
We levy plenty of tariffs on goods from other countries to protect local industries - on average ours are very slightly lower than places like the EU, but it’s like ~2.5% vs 3%, not 0% vs 30%, which seems to be your claim.
... when you nonsensically pretend that VAT is an import tax.
"Once value-added taxes and sales taxes are included in an international comparison, America’s taxes on imports are much lower than those of almost every other country."[1]
The point still stands when not considering VAT, but the difference is far less pronounced. Though I am hesitant to trust the authors' research given the above.
In 2016, according to the World Bank, the average applied U.S. tariff across all products was 1.61%; that was about the same as the average rate of 1.6% for the 28-nation EU
US to EU average import tariffs differ only by ~1.4%, sure the US tariff is (slightly) lower but it's hardly a huge imbalance.
Edit: just picking up from morsch's comment, these are international trade tariff figures which is what Trump is imposing. What countries do internally when it comes to sales or Value Added Tax is a whole different thing; these types of taxes apply to all goods and services sold within that country, regardless of origin (i.e. regardless of whether a pencil is manufactured in the UK or the US, it will still attract a domestic sales/VAT of 17.5% if sold in the UK).
US doesn't have the lowest overall tariff in the world, it is Japan who does among major countries.
Talking about fairness, it is fair for US to print their own currency and buy goods around the world, while other countries can't do the same? The reserve status of dollar doesn't come by itself, there is a price to pay, you can't have the cake and eat it.
>Japan has nearly 200% higher agriculture tariffs than the US.
Which have a lot of holes in them. The US sends thousands of tons of un-tariffed rice to Japan every year, which they then lock into a shed and let rot. Which is their prerogative, I guess.
> Why is it OK for other countries to levy tariffs against us but not the other way around?
I see this comment a lot, I think Trump also said this, but I wonder what specific tariffs is this talking about?
My country (Netherlands) has a negative trade balance with the US, we buy a lot of software, entertainment and (heavily subsidized) Tesla's from the US. Even the "German" car I drive (a BMW) is manufactured in the US because of US trade demands. Also many international trade laws are heavily influenced by US policies that mostly benefit the US (i.e. IP, drugs).
It seems pretty clear that Trump started this trade war because he didn't like the existing equilibrium. And because he is who he is, other countries must be to blame.
I think US people will have to get used to the idea that maybe the US economy is not competitive and US people have been living above their means for a long time now. There are a lot of things the US can do to improve their competitiveness: education, health, corruption, equality, finance all have real impact on the economic competitiveness of a country and you can't make a mess out of it without it having real consequences.
US companies also will have to learn to deal with the fact that the US no longer is the single biggest economy in the world, and the US can't set the rules unilaterally. Trump is helping a lot weeding out the diplomatic goodwill that the US historically enjoyed.
US business is spoiled with their huge home market and seems to find it very hard to adapt to smaller country's rules. In order to export successfully in a more level world, you have to play it by their rules. If my country want to export flowers to Japan, and they allow them only when sterile and without a grain of sand, and they only like bright colors, then we will make them so.
>My country (Netherlands) has a negative trade balance with the US, we buy a lot of software, entertainment and (heavily subsidized) Tesla's from the US. Even the "German" car I drive (a BMW) is manufactured in the US because of US trade demands.
Your car was built in the US because the labor is cheaper and 40 percent of their cars are sold in the US and China (shipping to China from the US is basically free, better off being here).
> Maybe get back to the original question and the reason Trump is interested in starting a trade war?
The reason for starting it was explained in completely different ways. Therefore it's not clear. It's both for security reasons as well as being easy to win as well as a supposed unfair imbalance. There's no consistency.
Out of all possible trade barriers, I think tariffs are generally the better option.
The alternative is subsidies, quotas or "unofficial" barriers like product safety rules or other burry-you-in-bureaucracy setups. Tariffs bring in taxes (as opposed to costing the public) They're easier to understand. This one makes Chinese microwaves x% more expensive. It's clearer who is paying for it (consumers) and who benefits, as opposed to pretending a policy is intended to protect consumers. Importantly, they are easier to change. Politicians can make a decision and do it. With other options, it's harder to implement patches or predict the results of any change.
Basically, they're simpler, more explicit and more honest than any other approach. ..if you've already decided to have trade barriers.
> This one makes Chinese microwaves x% more expensive.
Except that's not what the article says. The tariffs in question don't apply to finished products. So it wouldn't make a Chinese microwave more expensive.
However, if you want to import components to build a microwave and hire US workers to put it together, that is what these tariffs make much more expensive. So instead of hiring US workers to assemble it in the US, you do the whole thing in China and import it with no tariffs.
I meant "this one" in abstract, not the one in the article. Ie you can easily link an item in a shop to a clause in your policy and an amount that has been paid. There is no way to understand that implications so simply with (eg) quotas.
I'd say this view comes from massively underestimating the complexity of the effects on the economy that result from the externalities of instituting tariffs.
One function of tariffs is to put political pressure on other countries. That's exactly what China is doing here. By only putting tariffs on uncompleted goods, it now makes even less sense to assemble in the US. This is in direct opposition to what a lot of Trump's voters were voting for: more manufacturing in the US.
The first part of your statement is generally accurate. However, the article is discussing tariffs the US has chosen. This is not something China is doing.
There is massive cognitive dissonance in trying to explain a lot of current events because they are so beyond what you expect to make sense.
Yesterday I was trying to explain to a friend about the children separated at the border and how the parents are then being deported alone and have to apply afterwards to try and find their children, and it took about seven attempts. She didn't understand what I was saying at first because she assumed I must have misspoke, as doing that doesn't compute.
The US courts have ruled that children are not to be incarcerated with their parents. It seems reasonable and moral that children are not punished for the crimes their parents commit. If the parents break the law and go to jail, the children go somewhere else, like foster care. When the parents get out of jail, they have to find their children to bring the family back together. This situation is not really hard to understand if you think that the government should enforce the current immigration laws.
The US immigration system has been so screwed up for so long that everyone just keeps kicking the problems down the road. Probably needs a complete deletion and start from scratch re-write, but that almost never works out like one hopes.
I don't know anything about economy, so this is a question not.. a counter, but:
> In a functioning market, local suppliers are likely to raise prices in response to the tariffs, as they face less competition.
Is that entirely bad? The whole "US Made!" tagline of old stopped becoming possible because we couldn't charge wages low enough to compete with foreign dollars or foreign slave wages. Raising the cost of X item so that it is actually able to be produced locally would seem to, conceptually, bring that type of job "back".
With that said, there's the obvious opposite of now every item US made is meaningfully more expensive. Seeing as so much of what we buy is made offshore, this seems to effectively raise the cost of living.
So, I don't really have any answers.. but hey, I don't work in economics :)
>The whole "US Made!" tagline of old stopped becoming possible because we couldn't charge wages low enough to compete with foreign dollars or foreign slave wages.
Not exactly. For starters being able to buy products for cheap is generally good for consumers. They have more money left over to buy other things...
Secondly, the U.S. have actively fought to keep wages low in developing nations. For example: https://www.thenation.com/article/wikileaks-haiti-let-them-l... It's easy to cry about low wages though and how that "hurts" American manufacturers. So here's the thought experiment, all workers on the planet now make at least U.S. federal minimum wage. We can now compete with Haitians for underwear manufacturing. Underwear now costs a lot more than it used to. That's not a win for consumers. And all those minimum wage underwear manufacturing jobs aren't exactly a boon to the U.S. economy, go figure.
Thirdly, no nation is going to be able to produce every sort of product itself efficiently and cheaply. Trade is and always has been important. Other nations can do some things better and cheaper and it's not always labor costs that are the linchpin of being out-competed.
Fourth, people imagine peak manufacturing as some sort of ideal that we should be tripping over ourselves to get back to. It's a fools errand. No matter what a lot of manufacturing jobs are never coming back, ever. It's never going to be like it used to be, automation will have seen to that.
A lot of people don't understand the economy, but they have an idea how the economy should be. It's more terrifying than my mom offering to fix my computer, because moms know best.
You are right the economy is very complicated, but it seems that the only factor anyone discusses is what's good for the "consumer".
I think the "consumer" is a really bad success criteria. I don't really care about what's good for the "consumer", I care about what's good for "the employee", highly skilled jobs, higher wages, and more jobs. These things can't be driven by lowering the cost to consumers, we'll get what we have now, more money flowing to the 1%, and the middle class being eliminated.
(This isn't directed at you, just thought I'd put it here....)
I care about what is good for everyone - employers, employees, the overall country, and the overall world (all these same people in other countries), on a long term sustainable basis.
Whenever one reads these threads, rarely does one encounter someone who's doing anything other than talking their book, or supporting their personal ideology of "how it should be", usually based on reading articles written by others that support their ideology.
I think all of us would be better off if after finishing writing a narrative or explanation that supports our personal ideology, we then turned around and tried to poke holes in it. It's child's play to rationalize why it's a win-win situation to outsource menial labor to 3rd world countries, but what happens when one of those third world countries happens to be a giant, populated by incredibly hard working and historically accomplished people, and a very smart government who remembers mistakes that were made in the past? What happens when this country isn't content being a dumb, low-margin manufacturer, and decides it wants to take over the entirety of the process including the design? Sure, the West currently still holds a lead in much of technology, but where does this bizarre idea come from that it will last forever? Because we're more "creative"? Is there strong evidence for this? And do you also happen to simultaneously hold the belief that the peoples of all nations and cultures are essentially the same (a paradox one commonly sees in liberal leaning technical communities)?
Part B of this rant would be the folly of optimizing for GDP, which is another complicated and potentially very dangerous mistake for what should be fairly obvious reasons. Or the recently popular notion that humanity's highest priority and morally imperative goal should be to normalize GDP and standard of living across all members of humanity on the planet. Different cultures optimize for different things, some things require more work to achieve, but that often means less time for family and leisure. That said, I'm also strongly opposed to certain countries messing things up for entire regions of the world for decades on end with no end in sight.
Life is a hell of a lot more complicated than you'd think it is, if all you had to go on was most people's personal perception of it.
i'm not sure i agree with everything you wrote, but i do share this sense that US policy has tried to optimize for some over-simplified, short-term, dollar-maximizing measurement.
it's not clear that we've been optimizing for something that's actually connected to what makes people happy and satisfied with life.
some people absolutely need to be able to say "We're number one! We're number one!"
but other people would be happier to live in country number 17 if it meant they had a steady job with decent working conditions, reasonable health care, more predictability and a lower crime neighborhood.
> but other people would be happier to live in country number 17 if it meant they had a steady job with decent working conditions, reasonable health care, more predictability and a lower crime neighborhood.
This is pretty much the essence of what I'm getting at, and to me is what post-secondary educated people on both the left and right seem to be very strongly opposed to on an ideological basis (but for completely different reasons I suspect), as seen in comments like: https://news.ycombinator.com/item?id=17346684
It worries me that almost no one seems to be thinking about the range of possibilities that might lie at the end of this outsource & optimize for GDP/efficiency/profit, rinse and repeat ad infinitum approach to the economy, and that some of the possible outcomes might actually be negative. It's almost like there's this religious belief in the West that negative consequences aren't even possible. Are people's memories really this short?
Or maybe I'm the one that's wrong. I'm more than willing to listen to anyone explain to me at length how success for everyone is inevitable as long as we have unrestricted free trade, but all anyone seems to have to offer is their own personal take on what "a" path to success would look like, which is typically not much more than a vague theory resting on the assumption that recent history is all that's worth paying attention to.
> It worries me that almost no one seems to be thinking about the range of possibilities that might lie at the end of this outsource & optimize for GDP/efficiency/profit, rinse and repeat ad infinitum approach
good point. and even when they do think about lost jobs the best solutions they come up with are feeble.
too often it's poorly funded government worker training wherein middle-aged washing machine plant workers who live in upstate Michigan are supposed to learn to code (or something equally likely to fail for the majority of retrained workers.)
another dubious aspect of this policy is that government officials are somehow supposed to both accurately predict the industries where the economic growth will be and what sort of training these industries will actually require from job hunters. that's really really hard. wall street investment firms are constantly trying to that sort of thing, and it's very difficult to get right.
this is where the globalization story unravels. the replacement careers don't materialize for the displaced workers. so the defense of the policy becomes a loud repetition of "it's great for consumers!"
but, somehow, it's "absurd and irrational" to ask if Walmart/Target/Amazon's massive quantities of cheap imported throw-away garbage (aka "consumer goods") are actually useful at all.
It will bring jobs back if there are enough people who can afford the local made product. And I wouldn't be sure about it, since in the last few years we have witnessed a thinning of the middle class, and the lower parts of the population might not afford to pay a premium because it's locally made.
> if there are enough people who can afford the local made product
Eventually, it will keep more money in the country, meaning people will also be able to afford more (after all, they'll be being paid the higher, local wages now).
Compare with e.g. Switzerland, where most people have really high salary (by EU standards), and pretty much everything is really expensive, but because of the high salaries people can afford it.
This works only as long as people having these high salaries do work with high added value and you are not relying much on international trade. Otherwise they can be effectively undercut by people who can do the same thing cheaper.
The argument that Switzerland provides a model for high tariffs creating wealth is... especially ironic. Switzerland is one of the least tariff-encumbered economies in the world, reguarly topping out various free trade indicies [1]. And in Switzerland's case, that's almost certainly causual. Average salaries in Switzerland are so high because of the disproprtionate role Switzerland plays in EU and global banking -- a role that wouldn't be possible if Switzerland didn't embrace free trade.
So, if we're going to follow Switzerland's lead, we would roll back tariffs.
Switzerland is more akin to the EU's version of Massachusetts or New York, and Zurich is the EU's version of Manhattan or SF. It's the sort of economic zone that will always exist in a large economy like the US or the EU. The population is disproportionately made up of citizens from one or two cities/metro areas, and those cities have a high concentration of highly educated and highly paid individuals typically focused on one of a few industries. Consequently, even those employed outside of these high-paying industries make more than average compared to the rest of the country/bloc.
Situating ourselves similarly to Switzerland requires placing the US very high in the global value chain while maintaining a global order of very low trade barriers. Which has always been the neoliberal agenda, at least ostisibly.
In other words, if we want to emulate Switzerland, we have to do exactly the opposite of the Trump plan -- continue offshoring anything lower in the value chain, continue insisting on low trade barriers, continue dominating everything higher in the value chain. Obviously, even if this strategy works for the country in aggregate, it's going ot have definite losers in a country as large as the US.
On a (very!) related note, the US and Switzerland currently have basically the same PPP.
It depends on what you mean by "EU" - I do understand that EU member state has a specific definition that Switzerland does not meet. What most people think of as "EU" is actually an overlapping patchwork of agreements many of which Switzerland does participate in.
True, they're not part of the Euro zone. They're part of the Schengen area (common immigration zone), the EFTA (free trade area), signed the EEA, and adopted by themselves most EU regulations. [1] While not an ECJ member, they are softening their stance on that also [2].
Does it mean you can move freely from country to country? (You can, it's Schengen)
How about goods? (They can, they're in the single market)
How about animals? Pets? (Switzerland accepts EU pet passports)
How about laws? Switzerland has many of the same EU laws.
How about judiciary? They're moving to accept the ECJ.
At what point does it matter if they're EU or not if all the other rules apply? If you didn't know, you'd probably wander around Switzerland thinking it was EU. That's my point. I'm not claiming they're a member state. I specifically said that, in the first line. What I am saying is that they're hardly independent of the EU, and that makes a big difference.
(OP) Switzerland is not a member of the EU. Do you see any claim in my post that Switzerland is a member of the EU?
Nonetheless, Switzerland has a relationship with the rest of the EU that is analogous to the relationship between a small, dense US state and the rest of the USA.
Nonetheless, Zurich has a relationship with the rest of the EU that is analogous to the relationship between NYC and the rest of the USA.
This issue of whether Switzerland is properly considered "part of" the EU regardless of its membership status seems like quite the diversion from my actual point and is not at all relevant to the parallel I was drawing.
It doesn't make a lot of sense that Switzerland is the EU's version of MA or NY or that Zurich is the EU version of NYC or SF given that Switzerland is not in the EU and quite happy that way, too.
Switzerland has a big complex web of treaties and agreements with the EU that make it almost, but not quite, a member. Neither the EU nor Switzerland are entirely happy with the situation; the EU doesn't like all the tradeoffs that need to be balanced just for Switzerland rather than in the standard EU bundle, while Switzerland doesn't like things like freedom of moment being made a condition of market access.
They're both instances of a relatively small area with very tight historical ties to a much larger region. The relationship between the local economies and the regional economies bears enlightening similarities.
US states are not sovereign nations. but the analogy b/w EU member states and US states still makes perfect sense in some economic discussions.
The analogy is useful. A more apt criticism of the analogy might be "Switzerland's economy is not tightly integrated and dependent on the EU's economy" or "Switzerland has lots of tariffs", but neither of those things is true.
Hence relying much on international trade part. Tariffs can influence only internal prices. Your exports, more costly because of wages, will still need to prove their value.
In practice your tariffs will also reduce your exports since you can generally expect reciprocal tariffs from your trading partners amply demonstrated right now.
That only works out if those higher salaries get paid to the people who need them, and that the majority of those profits don't get sucked up by those at the top. Given the last 30 years or so, I really do not believe that those at the bottom will have any benefit. They'll still get the same crappy wages, and now everything is more expensive for them.
This can also hurt US production. This makes US goods more expensive, not only for Americans but for everyone. Now US goods look even worse to any would be importer.
Maybe this policy forces Americans to buy American but unless we make up every lost export with a domestic purchase it only hurts.
And this is before we even consider retaliatory tariffs.
They will raise prices regardless of their cost structure.
The millions of unfilled manufacturing "jobs" are ~$14 an hour jobs that have significant upfront training requirements, so I doubt that onshoring lower skilled manufacturing is going to lead to much of a renaissance.
Even better, they will re-open the factory but because of better tech, instead of the 5000 employees from 20-30 years ago, they'll have just 100, many of which will be either remote or specialists who move in for this exact position. Not the 5000 local blue collar workers :)
Well, in the case of these specific tariffs that the US is imposing, they're on components of things, not on finished goods. So it's actually going to be cheaper to manufacture the entire thing in China, rather than import the components and assemble in the US.
I'm not arguing against this. There are winners: local producers, at least in the short term. There are losers: to importers and consumers.
What I'm arguing is that there are always winners and losers to trade barriers. Tariffs make it easy to understand and quantify this, because they are explicit and straightforward. They're flexible and leave less legacy or mess. It's always clear what they are trying to achieve, and how.
This is not an argument for trade barriers, it's an argument for how trade barriers should be implemented if they are implemented.
2.) tariffs encourage reshoring and new robotics/automation factories, which is still net jobs for US. which also makes prices back to where it was before tariffs (maybe even less)
1) The point of tariffs is to force people to buy local production, by making alternatives more expensive. If people are willing to pay more to buy Made in US, you don't need them.
2) The source for that number shows that reshoring has been steadily increasing for years [1]. So why the need for tariffs now? Hell, seems like you'd just want to keep up the previous administration's polices - clearly they're working.
Something that bothers me about the whole free trade versus protectionism debate is that in any other context it's generally accepted that taxes harm the economy but that harm is offset by the services that government provides, and the argument is mostly over whether those government services are important enough to be worth the economic harm and whether there is a less harmful way to raise that revenue.
However, we don't seem to talk about tariffs the same way we talk about other taxes. Trade policies are considered good if they're good for the economy and bad if they're bad for the economy. The revenue aspects tend to get swept under the rug.
I wonder if this is just an example of successful marketing by large corporations (who are the ones who bear most of the cost of tariffs and trade barriers); that they've managed to get people who are otherwise fine with taxing corporations to be opposed to taxes when trade is involved.
That said, I agree with Bunnie that imposing tariffs on components but not finished goods is dumb, and will hurt hobbyists and companies that assemble electronics in the United States.
> Trade policies are considered good if they're good for the economy and bad if they're bad for the economy.
are you talking about increasing GDP or some other meaning of "good for the economy"?
what i see is people talking about tariffs as good for a certain sector's workers or bad for consumers or safeguarding US military capabilities or something like that.
I don't mean anything specific by "good for the economy", I just mean good for general prosperity, on average. (I realize that trade policies are often have winners and losers, and reasonable people will disagree on what's "good for the economy" depending on what part of the economy they care most about.)
Over time tariffs will spur increased domestic replacement manufacturing vs Chinese imports.
If the US were primarily harming itself with tariffs, other nations wouldn't be reacting the way they are. They all know the game is up and they're all desperately looking to hold onto their advantages.
US manufacturing costs are nearly on par with China at this point because of the vast inflation in costs that have occurred in China over the last 20 years, including in wages. That's particularly the case when you account for the cost of foreign transport/distribution.
Chinese manufacturing will only get more expensive over the coming decade, increasing US price competitiveness (whereas there was previously a vast gap between the two, eg just as recently as 2005).
It's ideal to begin competing with China using the same tactics they've been using to compete with everyone else for decades. China is no longer a tiny developing economy, they're an economic superpower and still rapidly expanding.
The US should spur domestic manufacturing, by increasing the cost of Chinese products. Over time, the net benefit will be to increase domestic manufacturing and reduce Chinese imports.
Worst case scenario, the US redirects trade to other developing nations, such as Vietnam, and away from China. That's also a dramatic benefit to the US, as Vietnam can never be a superpower rival.
i think we're going through a process of reexamining the relevance of that notion. we've quite possibly optimized for the wrong variable.
people in the middle class feel a weaker grip on their long-term stability. the inequality between the richest and poorest in the US is extreme. the social safety net is full of holes. a huge fraction of the US population has less than $1000 set aside for an emergency. health care expenses are simply unmanageable for many many people. and educating the next generation is also so expensive that many students can't pay back their loans.
Wavepool, Maytag, etc.. Americans washer and dryer cloth machines pushed for Tariff from the Obama administration to fight against Samsung and other. The tariff target machine coming out from specific countries so Samsung and other moved to other South Eastern companies such as Vietnam.
So the American companies pushed for tariff for all incoming washing machine that aren't American. Trump administration gave that to them. The result is Samsung and other moved to America for manufacturing. But these companies got HUGE tax breaks incentive to move their company to their states while the American companies aren't getting anything.
This is on top of the prices of metal going up. There is a $100 extra on top of washing/drying machines now.
I'm not a libertarian but The Wealth of Nations by Adam Smith states that all country will have certain expertise they are just good at. Wether it is because the geography that enable them to be better than other or other things, because they're good at certain thing, countries should play to their strength and trade for what they need.
Samsung and other non USA companies are just better than US manufacturer in building washing/drying machine. That's just a fact and this tariff thing is only costing the consumer. The consumers are the losers.
These are the sources before the effect of the tariffs:
I don't have strong opinions about trade barriers, but I generally fall on the "no barriers" side.
That said, implementation matters. Badly implemented barrier reduction policies will be worse than well implemented barrier raising policies. Policies are like everything else, in this respect. We just get more list in the high falutin debate more often, when it comes to politics.
I'm arguing that if trade barriers are going up, tariffs are the better implementation.
This is completely off topic, but I will never buy another Samsung appliance or anything anymore. Great hardware but shit software...my refrigerator should not need to reboot.
My Samsung TV will start showing bad artifacts like there are compression dropouts on the HDMI. The first time it happened I tried swapping cables and Blu-ray players but it didn't work. Finally I unplugged the TV and plugged it back in, and it's all good. I've had to do it twice more since then.
I actually just replaced a 3 year old Samsung Electric Dryer. The heat was no longer working, and I suspect it was the heating element. To access the heating element required me to:
- Take off the control board
- Take off the entire top of the dryer
- Take out the door
- Take out the Front panel
- Take out the drum
I only figured this out after finding a service manual, as I did not want to risk destroying a dryer to figure out how to fix it. A new heating element was $80 off the grey market. I wanted to see how much it would be to get it fixed by a service place, and any service place I went to wanted to charge $100 just to look at it!
When I saw a new dryer was $400, I just decided I did not want to deal with it anymore and bought a new dryer.
That the way all new washer / dryers are now. It's cheaper to replace than to fix them... the cost/benefit of having someone come out to see what the problem is just isn't worth it anymore. This isn't a Samsung thing... I had the same thing happen with a Whirlpool washing machine just a few years ago.
And I did take the thing apart to see what needed fixing -- it would have been much more expensive to fix it rather than replace it.
I agree, at $100 to bring someone out just to look at it (and not even fix!)...it really isn't worth it. Some dryers seemed to be a bit more friendly, I ended up getting a dryer that you could remove the back panel. I would assume (more hope) this makes it easier to replace parts.
Continuing in to off-topic-ness, I had to replace the heater element on our Samsung dryer at about 6 years of age or so. It wasn't hard, but I have really good mechanical aptitude (for lack of a better way to put it). I think you should have attempted disassembly yourself (without buying the heater element first), just to see if it was actually hard to do. You might have surprised yourself.
I halfway disassembled it, and I knew I could do it, I just value my free time more than that (I'd rather spend the $400 to have my weekend). The other concern is a heating element is a relatively simple thing, so for that to go out after 3 years, I was concerned other things would go out too, making me have to fix it again.
the situation reminds me of 1950's American cars in Cuba, or the situation with MacBooks and other Macs. replacement is so expensive, some people just repair the product themselves.
is it necessarily a bad thing that, for some products in some times/places, people find repairing their own products the best option?
It is not, if the part was easier to replace I probably would have done that. However I was concerned other things would go out if the heating element died (it's not a complicated part, so I question the workmanship on it). I really wish I did not have to go to grey sources to get a spare part and the service manual, and that they would be designed with repairability in mind, I would pay extra for that.
Shit hardware too as you find out when they need repair. Components are combined for cheaper manufacture, so don't expect to easily replace a defrost heater element without a whole bunch of other components in the block and a regas at the same time.
Unfortunately most makers are at this game now. No surprise that it promotes a lot more replacements when you can't change the £20 broken part but have to get some £250 thing that includes lots else.
"I'm not a libertarian but The Wealth of Nations by Adam Smith states that all country will have certain expertise they are just good at. Whether it is because the geography that enable them to be better than other or other things, because they're good at certain thing, countries should play to their strength and trade for what they need."
And I am not against free trade (well, with reservations), but I think this idea has been proven wrong historically. I think countries that try to do a bit of everything, be self-sufficient, and perhaps specialize only in some very specific areas are generally more successful.
Just look at the U.S. as an example - if they followed Smith's advice, they would still continue to trade cotton. This advice will never let countries to build up an industrial base. (Or funny you mentioned LG - they were originally a textile corporation but the government forced them into electric industry.)
In my view, a country should have as many diverse industries as much it can keep all the specialists busy (the same is true for companies, by the way). That means to try to produce locally everything that is sufficiently consumed locally.
The reason why is that there are strong network effects in diversification. It's great if you e.g. produce agricultural machinery and you can talk directly to the farmer, who is going to use it. If you sell this machinery to people on the other side of the planet, with a cultural barrier, this gets much trickier.
That is a matter of scale more than anything else in my opinion. Countries natrually diversify when there are resources to exploit/nurture and even on a small scale they are decidedly not homogeneous. Even when restricted to 13 colonies scale the US would never remain agrarian. The north lacks cash crops and had too much in other resources natrual, labor, and educational to make industrialization nearly inevitable. Even if a fanatical regieme took extreme measures against it they would wind up knocked over by a world that passed them by and wants what they are sitting on.
Not to mention the chicken and egg problems - are they dysfunctional because of monoindustry or monoindustry because they are dysfunctional? Dysfunction leads to monoindustry since the base cannot be lost to war - see conflict minerals. Everyone wisely stays away and refuses to trade with smash and grab warlords and despots out of self preservation alone - owners wisely do not want to legitimise that sort of capital seizing for the same reason one doesn't try to work for a non survival desperation cannibal. They did it before and will probably do it again to you when convenient.
Causation and correlation with such messy subjects that I can see your point even if I disagree with the cause.
This idea is often formally referred to as the "Law of Comparative Advantage", and most economists do believe it provides a logical defense of free trade. That said, there are some interesting criticisms of it [1].
Absolutely, you can see the problem with relying on one source of income in the oil dependent countries. Towns and Cities with a dominant employer have similar problems.
On the other hand having a closed border and expecting to do everything yourself leaves you exposed to potential famines and in a general state of poverty, see North Korea for an example.
>And I am not against free trade (well, with reservations), but I think this idea has been proven wrong historically. I think countries that try to do a bit of everything, be self-sufficient, and perhaps specialize only in some very specific areas are generally more successful.
Oh? Which countries have been successful as you describe?
>Just look at the U.S. as an example - if they followed Smith's advice, they would still continue to trade cotton. This advice will never let countries to build up an industrial base. (Or funny you mentioned LG - they were originally a textile corporation but the government forced them into electric industry.)
Wrong. Smith's advice isn't arguing for static stagnant maintenance of the status quo. Economies, markets and products are always evolving. There's always opportunities to grow and change. That doesn't mean there's always an opportunity at every moment to outcompete a dominant foreign manufacturer.
>In my view, a country should have as many diverse industries as much it can
Countries do this already. If it's a capitalist economy and there's opportunity people will give it a go. I think you're grossly oversimplifying this and don't really understand how huge the market is and the number of industries there are.
I think you'll find it's much harder to manage your fantasy in reality than you imagine.
>It's great if you e.g. produce agricultural machinery and you can talk directly to the farmer, who is going to use it. If you sell this machinery to people on the other side of the planet, with a cultural barrier, this gets much trickier.
And yet people do sell all sorts of things on the other side of the planet, all the time, because while it may be "trickier" it means they have a much larger market, and greater opportunities for revenue and growth.
Frankly if your vision was at all workable it would have been settled upon by now.
In fact, in this HBR article [1], he does the opposite of citing Smith:
==
According to standard economic theory, factors of production—labor, land, natural resources, capital, infrastructure—will determine the flow of trade. A nation will export those goods that make most use of the factors with which it is relatively well endowed. This doctrine, whose origins date back to Adam Smith and David Ricardo and that is embedded in classical economics, is at best incomplete and at worst incorrect.
In the sophisticated industries that form the backbone of any advanced economy, a nation does not inherit but instead creates the most important factors of production—such as skilled human resources or a scientific base. Moreover, the stock of factors that a nation enjoys at a particular time is less important than the rate and efficiency with which it creates, upgrades, and deploys them in particular industries.
==
Their disagreements aside, the two theories line up fairly well. Smith argues that competitive advantage is inherent based on natural factors, Porter says that it is a by-product of investment. I would argue that the reality falls somewhere in the middle.
Take the Chicago region, we have a commodities cluster. It includes institutions like CBOE, CME and the University of Chicago and companies like ADM, State Farm, John Deere and Caterpillar. Porter would say the cluster exists due to all of these institutions and knowledge. Smith might argue that those only exist in Chicago due to the natural factors of fertile land, centralized location, fresh water and navigable rivers. In this way, both Smith and Porter are correct.
In other words you think that subsidies and senseless bureaucratic obstacles are better than tariffs?
The OP is not saying that tariffs are a good thing, he's saying that tariffs are so obviously bad & stupid that they're easier to get rid of and negotiate away. Subsidies and senseless bureaucratic obstacles are just as damaging as tariffs but they are harder to get rid of.
(OP) No, they're not senseless but they are barriers. They can be senseless and they can be designed to be obstacles, a disingenuous way of having obstacles without admitting it. The truth is in the specifics.
One advantage of tariffs is that they let you have product safety and environmental standards that were designed for consumer & environmwntal safety instead of an ulterior motives. The most obvious example is the entirely estranged European & American dairy regulations which started as a way of protecting consumers but are now a way of protecting industries.
My argument is that if you could just admit that an industry is being protected, and have tariffs then we could enjoy eachothers' cheeses (at a higher price). We'd also raise tax revenue and probably have better consumer safety regulations, since they wouldn't have to (disingenuously) make the case that the way cheese is made in Scotland or prosciutto is made in Italy is fundamentally unsafe.
Of course it's not objective, it's highly subjective. c.f. "ugly cars". Ugly is subjective, but it doesn't mean "all cars are ugly", it's referring to the subset of cars that are ugly.
At least the ones that actually improve commensurate with the increased cost product safety or environmental impact rather than protecting the established players aren’t.
I am a small electronic board manufacturer in US.
I buy bare PCB boards from China and populate them here.
Usually the parts are bought from Digikey, Mouser or other distributor.
Adding a 25% tax will not incentivize any American company to start produce parts here.It is way to little and to late.
If 10 boards are $2 in China, are maybe $30 in US , so even you put 100% import tax, the China price is still
competitive.
The law is unfairly hitting the small US companies. Sparkfun , Adafruit will be hit, but not Apple or HP because they are finishing the product in China.
The only ones winning from this is the US government that is getting 25% of the money .
This is definitely not creating jobs.
I think it's creating manufacturing jobs in China. If Trump had instead put a 25%tax on assembled electronics and not components then Apple et al would have an incentive to move manufacturing back to the US - and Adafruit and Sparkfun would not be effected
On the other hand I'm a small open source hardware manufacturer in New Zealand, I manufacture and ship from China - because I couldn't make a competitive product is I built or shipped stuff from here, I live at the end of the world's supply chain - NZ has almost no trade barriers, removed all govt subsidies propping up industry decades ago - we do have free-trade agreements with China - this new regime is good for me Trump's 25% trade barrier let's me compete better against American competitors, driving up their costs but not mine.
Remember you (in the US) have a higher standard of living than China - it's why your labour costs more - frankly you can't compete (and as their standard of living rises China can't compete with Vietnam .... we're already seeing that) - this is how 3rd world countries become 1st world ones, it's how China is building a middle class, which is a good thing, countries with large happy middle classes have a lot to lose and don't like to go to war.
Long term this process will tend to drag the US and China's standards of living to similar levels, if you can keep growth happening in the US at higher rates than China then you may see no change, if you stifle jobs you'll see it drop. Short term this is a problem, longer term looking at the bigger picture it's probably a good thing, a safer world
Reading the comments I think people are forgetting this is a cooercive and retaliatory tariff on China, not a merchantislist policy. Is someone going to change their whole supply chain if this gets resolved in 3-6 months? The US is arguing that effectively China has been waging a trade war with the US and has merchantialist and nationalistic economic policies that make it difficult for US companies to compete.
Providing US companies with an even greater financial incentive to move their final assembly in China seems like a rather counter-productive retaliation.
> "The impact of this cost hike will be felt throughout the industry, but most sharply by educators, especially those serving under-funded school districts."
I am not sure what stance to take on the tariffs, but I'm pretty sure manufacturing will feel the cost hike WAYYYY more than educators. Schools probably buy, at max, tens of thousands of dollars worth. Manufacturing buys millions of dollars. These are hyperbolic sentiments.
When it comes to trade war topic these days, most Western commentators completely miss that a trade war is what China was preparing for the last three decades. They well expected somebody like Trump eventually coming, as well as economic pressure on a scale even bigger than what the West puts on North Korea and banana republics. They totally understood that the West will not play nice with them forever, nor that the unprecedentedly long period of good weather in the global economy will last forever.
There is zero questions about China's economic policy being very strategic, and deliberate. Chinese state conglomerates may look to just littering around the world with money, but analyze it more, and you see a pattern, one that is very much like a game of Go - victory by limiting enemy moves.
They buy ally countries, strategically - they buy resource supplying countries, often with major holds on markets of vital commodities.
Their tech purchases - mostly underappreciated market leaders with industry wide influence. Kuka - the only company you can say to be Tier 1 in robotics, all other competitors combined will not be an equivalent for it. I has almost complete dominance over major heavy industries. Lattice Semi - the one and only FPGA company that can threaten the Xilinx-Altera duopoly. And so on and on and on.
Their domestic tech development - even more so. People talk about China dominating consumer goods manufacturing without realisation that it has even bigger hold of manufacturing machinery industry - manufacturing can't really leave China with Chinese made manufacturing equipment being locked down.
The whole industry you can call "Manufacturing machinery 2.0" is a domestic Chinese development. Biotech - China quietly ate the market for genetic engineering reagents, as well as much for complex organic chemistry. There are megatons of biotech startups in the West, but they all feel that they will eventually have to move to China to have any chance to scale - effectively they are already a Chinese property.
Military allies - well, there things are even more obvious.
Major trade agreements - same. Their idea is to bind any major developing market niche to Chinese economy before the West even realizes its emergence.
Their idea - to make it so that if somebody wants to do anything any much big being impossible without involving a Chinese company or state institution at some part of the process - to make it "You can't do that without China"
The US tried to do that for a long time in the Middle East and South America. China may be underestimating just how unstable these regions are. It's all fun and strategy until the Taliban starts blowing up your infrastructure because its haram
The difference is that outside China, Chinese leaders doesn't try to push for a model. They don't push for things like Human Right, Intellectual Right, Representative Democracy ...
I'm skeptical they'll be able to convince tribal Africa that cell phone towers are not haram. Islamic terrorist in Africa made cell site construction a very profitable business until they stopped all together in some areas
Eh you can prepare all you want, trade war isn’t complicated (and has happened hundreds of times over the years) so it’s like preparing for tic-tac-toe.
I'm neutral on the tariffs, I am(or was) actually excited about China getting into the memory market to help keep the other memory makers honest... but it's important to have an alternative source of those components in case there would be trouble between the US and China. There needs to be a way to nudge businesses to have a source of components out of China.
Considering that China immediately retaliates against the US by putting a tariff on their own food supply I doubt they care about US dependence at all. After all they are the ones with the big trade surplus that refuse to play fair and they are using the surplus on strategic investments on critical infrastructure to increase US dependence on China.
I think the win-win outcome is that China is forced to innovate more and the US is force to manufacture more. Both countries have been too reliant on each other for too long now
It will be a good outcome that China opens its market more to the world, which is actually to the interests of the Chinese consumers, they already want foreign goods and now it is more affordable and would probably force their domestic companies to up their own game finally to face the competition.
Just most of them. Certainly there are some edge cases where the other country's tariffs are so egregious the damage to the home country's citizens/ economy is helped by the tariff and they can be used to prevent dumping, but in anything close to ideal markets/ classical economics, tariffs are more likely to impose a cost on the host country's consumers while giving most of the benefit to a small group.
I don't support these tarrifs. I would, however, support tarrifs on offshoring. Let's say a company replaces a team of onshore programmers with offshore ones to "save money". They should have tarrifs/taxes imposed on them, so that those savings evaporate into thin air. That would both prevent exploitation of desperate workers overseas and protect jobs here.
Apart from some steep farm/dairy tariffs, what are the huge tariffs that other countries impose on US exports?
I thought the gist of this whole debate was that the US administration somehow thought VATs applied abroad somehow made US products less competitive and therefore was in fact a tariff? I do realize this sounds too dumb even for the current administration so I may be wrong.
I'm not sure quite what you are looking for, but you can browse tariff rates at the WTO website http://tariffdata.wto.org/ . It would be nice to find a better source, though.
For example, China has a 65% tariff on cereals such as wheat and rice, a 50% tariff on sugar, a 57% tariff on some tobacco products, and a 50% tariff on some fertilizers. (This is for other WTO members, or "most favored nation (MFN)".)
The United States has WTO MFN tariffs of 132-164% on some peanuts and peanut products (e.g., peanut butter), and 350% on some tobacco products.
After reading a bit about the history of tax in the USA, I was surprised to learn that in the very beginning federal government was mostly funded by tariffs.
So.. Extra tariffs will bring extra tax revenue. Will federal government cut income/corporate taxes to adjust for it? Or perhaps any paid tariff can be written off of tax bill?
In the short term. In the long term, that’s far from clear. The world economy is rather different now than it was when America was a fledgling economy being exploited by the Brits
And I've seen some articles/papers suggesting that protectionist policies can make sense for an emerging/developing economy to make sure that established/developed economies don't usurp that growth by blocking them from moving up the value chain.
So it may have been good policy back when America was a fledgling economy being exploited by the Brits.
My personal belief is that this can go either way. If the tariffs go hand in hand with other policies they may bring business back to the US or it can go the other way. It requires a well thought out strategy. I have my doubts that the US has such a strategy but we'll have to see.
Their merchandise won't incur any tariffs because the typical Amazon/eBay purchase is under the $800 de minimis. So that's another way Chinese merchants will have an advantage over US resellers.
They will be as affected as any other importer I would imagine, but they might try to get away with letting they buyer discover the import costs as their packages get stuck in customs.
Most cheapo small ebay things are sent as 'fat letters'(up to a point) but be warned if the thing is an actual box, you'll enjoy both import fees AND additional random importation tax handling fees.
really? never got hit with duties from imports that were under-declare, even in cases where the item in question was obviously worth more than $20 (eg. phones).
I was under the impression that the importer must do a declaration and pay the duty. The exporter is lying but the importer is really the one committing fraud.
This reminds me of how Hynix was able to evade anti-dumping duties by both EU and US in the mid-2000s by using the Eugene, Oregon and later Wuxi, China fabs.
Hmmm, I wonder what the long-term effects of this will be if the tariffs stay in place for a while. 25% is a huge bump.
I can see two major effects:
1) Lots of the "last screw" manufacturing will move to other countries and then imported into the US. Due to IP concerns it will probably move to countries with good IP protections such as the EU, Canada, Australia, NZ, etc. I can't say much for the other countries but it would be a boon to Canada (longer term anyway, it will be painful in the short term) providing diversification from the natural resource economy that Canada has too much of, and an incentive for the top talent to stop coming down to the US for the most interesting jobs.
2) Except in the case where US production is more than 25% more expensive than offshore, the domestic US industry for these components and raw materials will grow (this is probably Trump's goal). The "last screw" manufacturing that stays within the US will be much more expensive due to the higher input costs.
Since I am inclined to believe that the quantity of talent/expertise for high-tech manufacturing is higher outside the US than in, the effect of #1 will be much larger than the effect of #2. But I could be wrong, the US has pretty fantastic network effects and world-class talent, I wouldn't discount their ability to innovate just yet.
Anyone able and willing (and brave enough) to explain like I’m five why Trump’s decisions could possibly be rational and helpful as opposed to just reactionary and impulsive, as they appear to be?
Sure, I'll try. Keep in mind that I will only mention the benefits. Read other sources for the disadvantages so that you can make a decision.
* America feels that caring for the environment is important so there are laws preventing companies from polluting "too much". In China they don't have as strict laws. Therefore manufacturing in America is more environmentally friendly than in China. Therefore, it is worth the tax on the consumer to keep the environment cleaner.
* America believes that people deserve basic workers rights that are not offered in China. Without tariffs companies offering workers rights could not compete against those who aren't.
* In the case of a war, China may stop providing American with steel when they need it the most. By encouraging Americans to make steel plants, in the case of a war, America will be able to produce the steel.
* China is very powerful, so much so that they could be a threat to America. However most of China's economy comes from export. Tariffs will hurt America, but will hurt China much more, thereby making them less of a threat against America's world dominance.
* Canada tarrifs some of Americans goods. That is not good for America. By retaliating with tariffs, Canada may agree for both sides to stop tarrifs. (that is most likely not applicable for this case since Trump didn't announce that as his demands)
I think you can replace US by EU and China by US and then justify that EU raise tariffs against US. I don't think it makes sense to have tariff. EU ask mostly US goods to follow EU laws and regulations.
I don't think it's controversial to say the decisions are rational and helpful, as long as you remember to include "to certain entities".
Winners:
•Manufacturers of Steel, Aluminum, Electronic Components in US.
•Consumers of goods under retaliatory tariffs (pork chops are now going to cost Americans a little less because the Chinese aren't going to import as many).
Losers:
•Consumers of Steel, etc., including manufacturers of assemblies, and retail consumers.
•Producers of goods for export that are subject to retaliatory tariffs.
If you look under "chicken tax" you'll see these kinds of battles are neither new, nor did they ever completely go away.
It's widely agreed that more Americans will lose their jobs from these policies than will be hired, but if we're somehow at full employment, that might not bear out. I don't see that happening, but if you believe in magic...
Which is why finished consumer products are not part of the new tariffs, so companies that make stuff in China and ship it to the US are better off than companies buying parts in China and assembling in the US? Or was there a big push of end-product tariffs before that didn't make headlines?
In most cases, buying all your parts locally is fairly impractical. (The documentation of various "fair trade" electronics projects is often interesting in that regard, since they often are willing to accept higher prices from trustworthy local sources, and often find that only a few things can be gotten locally at all, and often only in specialist variants, e.g. high-precision parts, with matching prices). Maybe it'll be enough push to restart some component industries, but I'm skeptical.
I suspect it is about pandering to his base as opposed to health of the nation - assuming it isn't just mindboggling economic illiteracy. He is noticeably promoting trade completely backwards. Normally advanced nations push for more complex, higher capital and infrastructure requirements, or later in the supply chain goods both because of externalities and comparative advantage - any third world nation can cut down trees and allow pollution in - meaning less profit. Instead he has been pushing steel and coal at the expense of finished goods like even kegs. Economically it is like trying to get rich by being a mercantalist colony - the ones that wound up usually lost over mistreatment and doing better after independence.
The US makes most profit via services but is still #2 in manufacturing via the advanced end and remained #1 for a while even during their rise. Given the sheer effort and scale involved by China and it cannibalizing world markets to so that is still very impressive. It brings to mind the US agricultural sector - it is at the top and it is still a tiny portion of the GDP. The top end strategy pays economically.
I think you’re making an assumption that the ongoing trade negotiations is static. It’s not. Today it’s parts, tomorrow it could be fully assembled goods.
If you’re going to negotiate, you don’t play all your cards at once.
I don’t think the end state of the negotiations is protectionist tariffs for the US, it’s to get China to drop their protectionist tariffs. If we reach that end goal, how is that a bad thing?
It just seems odd to put tariffs on things that'll hurt local industries and make life harder for companies that have moved at least some production steps into your country (after lots of talk to encourage companies to do that, and apparently at least some successes doing that) over those that operate entirely outside.
> I don’t think the end state of the negotiations is protectionist tariffs for the US
We'll see, at least some of the recent tariffs seem to be exactly that, e.g. the steel and aluminium tariffs against the EU (which are now countered by the EU with tariffs on american exports) to limit their exports to the US, all the while complaining about Canada doing the same for agricultural products.
I’m not sure you understand how nations work. We elect people to work in our best interests. We are in competition with other countries.
Our blue collar jobs have stagnated since we’ve been off-shoring manufacturing to China.
The poor in the US were getting poorer. Not everyone has the ability to transition into a thinking job and we need a balanced economy for these people.
It's the whole competition mentality. If anything the US is in a competition against themselves. Everything seems to fight against helping your fellow man and all about gettings yours before anyone get's theirs.
Healthcare for you fellow citizens? So controversial. Billions of dollars for war and killing others? Well that's ok then, let's spend that money no questions asked.
You guys are at competition so much with each other that you create scary fake bogeymen (like the chinese) to distract that you're really fighting yourselves.
The whole world isn't always a competition to win. I'd rather cooperate and we can all have a win/win instead of a win/lose.
That competition mentality is why US innovation and dominance has reigned supreme for so many years. Competition is the driving force of the American economy and its fruits have benefited the world
I don't think anybody is fighting against helping their fellow man. What they are angry about is having the big guns of government pointed at their heads while the rewards of their labor are siphoned away under the guise of charity. Once you help someone at another person's expense, you've crossed the border between charity and extortion.
"What they are angry about is having the big guns of government pointed at their heads while the rewards of their labor are siphoned away under the guise of charity."
Health insurance, to keep that example rolling, has nothing to do with charity. It has all to do with the pooling of risks.
I do not understand how you arrived at that conclusion. Could you explain?
I think my point is simple and clear. If you choose to help the poor at your own expense, it is charity. If you want to help the poor at my expense, it is extortion. People don't mind the first. They mind very much the second.
That's it. That is the entirety of my point. There are no hidden layers to peel back. No need to downvote me for being against electric cars. I own one myself.
Yeah, choosing to help the poor - like Tesla. I see you made that choice, but why should I as a taxpayer have to foot the bill as well?
Edit: Oh sorry, I realized you might be referring to helping the poor banks during the 2008 financial crisis. Well, I don't want to pay for that either.
sigh. You seem to want to read into what I said more than is there, and to have an argument that is entirely unrelated to anything I've ever said throughout the entirety of my 50+ years on this planet. That being the case, you'll have to find another opponent of your political angst to argue with. I simply have no interest.
I think you misunderstood. I'm violently agreeing with you! I don't think we should have our property confiscated by the force of the government to support these poor corporations. They're not living, breathing people after all.
Not to disagree (or agree), but it seems to me most USians were quite happy to buy cheap Chinese crap at Walmart & Amazon in the last decades, thus off-shoring their own jobs. The chickens are home to roost.
This started well before the Chinese were into manufacturing, clear back in the 70s with cheap Japanese imports. Then it moved to Taiwan, and now China. Honestly, wages in the US have been too high to avoid this for quite a long time, and the only way I see consumer manufacturing moving back is through increased automation.
Unfortunately, I see no realistic way to bring back the kind of manufacturing jobs in the same numbers we had in the 50s-70s. And nobody wants to work them anyway, a family friend runs a small company making material handling equipment, and he is always short of assemblers. At one point he was starting assemblers higher than welders, and still struggled. We're fighting too many years of telling kids to avoid the trades and go to college. I can't find the link, but NPR recently ran a story about innovative schools that are starting maker spaces. All schools used to have that, it was called shop class.
These moves from the trump administration seem to me like closing the gate after the horses have already bolted, and stand to harm what manufacturing jobs we have left as well as pissing off our allies.
Especially your point about automation. Now imagine a world where the US can make things again at a cost competitive rate due to automation. Ok, now look at how those goods would be taxed overseas...
We still would have an export problem due to other country’s protectionist tariffs.
The point of the trade negotiations is to get better terms for US exports. This is critical as we come to a turning point in manufacturing.
The trouble, as bunnie points out in the article, is that the tariffs apply to things like components, not finished assemblies. So why would I locate a SMD assembly line in the US if my raw materials are higher, when I can also assemble the product overseas and avoid these tariffs?
Ah, so it is the poor peoples fault that as the good paying manufacturing jobs were shifted first to Mexico then to other countries they shopped at stores that offered cheaper goods so that they could keep up their standard of living!
Then tax the rich and feed the poor. Don’t erode the competitive advantage of America. The solution is pretty simple. People are looking east instead of west for everything.
Those where meant to be protectionist. We are playing hardball on trade renegotiation. The recently announced tariffs are leverage to get a fair deal at the negotiating table.
"The recently announced tariffs are leverage to get a fair deal at the negotiating table."
The US has a trade surplus with Canada, has a higher average tariff, has been the bigger beneficiary of trade, yet Trump has announced tariffs on Canada, to an enormous backlash (and Canadians seriously rethinking their integration in the US economy).
This isn't leverage, or masterful negotiating. It's a hamfisted moron bashing around with absolutely no clue what they're negotiating. Trump withdrew from TPP (you know -- one of those trade agreements that would remove most tariffs), and quickly thereafter announced that he would sure like to join TPP...only on the "US'" terms (which is hilarious because TPP was entirely at the US' terms).
At this point I marvel that anyone seriously puts forth an argument that Trump and his crew of misfits are serious negotiators. They're clowns in a clown show. Trump's great business prowess is that he fucked over so many people -- "negotiating" by refusing to pay them after they did the agreed work -- that anyone of legitimacy refuses to have anything to do with him. It's why his personal lawyer was a real life Saul Goodman. What a farce.
Don't forget that Trump ran several businesses into the ground as well as 'Trump University' which was 100% a con job. I have a degree in economics and the bullshit coming out of Trump's mouth displays such a lack of understanding that I wouldn't even expect it from a middle-school student.
Before you think of Trump as some kind of economics genius maybe you should think about how much bile the Wall Street Journal had to swallow when they had to endorse Hillary Clinton for the presidency.
Trump is a legitimately great conman but nothing more.
Your TDS is altering your perception of the world around you. I’m no Trump fan, but at least I can be objective.
Stop reading the headlines and start reading between the lines. It’s a skill that will serve you well in life.
Last time I checked most people in the US were against the TPP including Clinton.
A good trade deal doesn’t require 5,600 pages.
I’m not worried about trade imbalances in absolute dollars, I’m concerned with trade imbalances with tariffs and subsidies that make US exports unable to compete.
For Canada where did you get the higher average tariff from? What is that? A higher average of all tariffs on all goods? A higher amount of absolute dollars paid in tariffs? The number alone is meaningless without context.
Your first two lines are indistinguishable from parody.
"A good trade deal doesn’t require 5,600 pages."
A Trump talking point, like every one of your posts. But you're surely no Trump fan...
Yes, of course trade agreements are voluminous. Saying that it's suspicious because it's big is the sort of nonsensical claim that sells to idiots.
TPP was very unpopular, humorously because of sections added by the United States. Corporate rights, right to sue sovereigns, etc, were all at the behest of the US of A. Sections on extending copyrights and IP rights -- US of A. TPP was viewed as some new world order with some superseding power, and all of that was the work of the US.
>The number alone is meaningless without context.
Just as trade imbalances are meaningless because [waves hand], until they're what you want to argue.
When the US, with a large trade surplus, complains about a tariff in dairy, where the US has a large trade surplus, in an industry where the US has enormous subsidies ($22B USD per year in direct and indirect subsidies), the whole conversations turns to just farce. It is patter to sell to imbeciles.
You’re all over the place. You like the TPP, the TPP is crap because of the US (under Obama) added things you don’t like, Trump is an idiot for not signing it.
Agreements that can’t be read and comprehended in one day aren’t good agreements. I stand by that, no matter what Trump says, no matter what you say.
I’m not arguing about trade imbalances on a surplus/deficit amount. I don’t care about the amount. I care about access to markets and a level playing field. There is no hypocrisy there.
The difference between you and I, is that I’m willing to admit where you are right. The US subsidizes farmers and other industries. I imagine those are up for negotiation too.
I also admit Trump acts like a horses ass. I’m just willing to let that slide if he’s an effective horses ass.
I didn't say I like or dislike the TPP agreement, so I'm not sure where you get that from. Trump had no notable objection to it, beyond his normal pejoratives and limited palette of adjectives, when ultimately it addresses precisely many of his complaints.
Because he isn't arguing merits, or what's best for the US. He's pitching a grand show for his base.
The entire worldwide trade order was created by the US throwing its weight around. Those cheap Chinese goods, Korea, Japan, the WTO, the poles of axis. Drug prices, intellectual property protections. All courtesy of the US. That order that made the US the richest country in the world, home to the most powerful companies in the world.
So the whole Trump narrative that you're regurgitating is a bit odd.
And it is already backfiring spectacularly, and is poised to get much worse. Those "big boy pants" turned out to have a smattering of urine and feces in them. Trump's ignorant, hap-hazard way of "negotiating" has alienated friends and foes, and made the world re-evaluate why it is playing the US agenda.
Another post noted that the whole thing has been unfair to low income earners in the US, as if the outrageous disparity in the US is really the result of those damn foreigners. Only that disparity has only gotten worse under Trump's ignorant policies.
It seems like they are forced to play the US agenda. Are they going to end their military protection agreements with the most powerful military in the world? Are they going to close access to the world largest market? If they want to have a nation in 20 years they likely will not stop playing the US agenda
"If they want to have a nation in 20 years they likely will not stop playing the US agenda"
What a strange claim. How are they going to lose their nation? The EU has a GDP 20x Russia's (not to mention having nuclear armed nations). Canada alone has a GDP 2x Russia. Any of these countries can fend off any imaginary assault, most of which are instigated by the US.
The largest market...wait, do you think the US is going to close its doors? Well say goodbye to Google, Amazon, Apple, Microsoft...well just go through every US company. GM sells more cars in China than they do in the US.
It's a very, very different world. US pull just isn't as strong as the post war world when the US was mighty and everyone else was rebuilding.
Leaving the EU takes a few years which exceeds your presidents attention span by a few years. Nobody would trust he’d honor an agreement for that long.
I think it’s unlikely Italy will actually leave but if it does it won’t be because of Trump. It probably depends on what happens to the UK and as the EU people know that, they aren’t likely to let the UK off easy.
USA will not be able to play this card for long. Trump already expressed doubts about whether USA would defend eastern EU countries. Trust is almost gone already, so USA is losing "benefits" what to offer to allies quite fast.
What would be the point to sell products to USA with huge tariff on top of it to the point that local products would be way cheaper? Nobody would buy it.
What's the point to expect partnerships in military with USA when for example South Korea is left cold without any discussions about it?
"Trump's ignorant, hap-hazard way of "negotiating" has alienated foes and made the world re-evaluate why it is playing the US agenda."
What's much worse is that he has allienated friends (specifically when they refuse to kiss his ring, but I digress) and mostly for no good reason at all.
The US squandered their advantage of having been respected as a (mostly) reliable partner to a definite CAN NOT BE TRUSTED! in not even two short years.
You may argue that who cares? "We're America, Bitch" [1] But I really don't see any sustainability and long term gains in the current model for the world in general and especially for America.
I’ll concede that Trump indeed doesn’t say nice things. But there is little point in understanding what he says because tomorrow he could just as well say the complete opposite. Most of it is just empty posturing anyway so there isn’t a lot to understand.
I think most countries are just trying to shield themselves from his damage until his term ends.
Trump is clearly not a negotiator. If he was, he wouldn't be isolating all of our allies, instead of getting them to side with us to push change in China.
IMO, your confusing consensus with power. I don’t think consensus gives you power.
Ultimately consensus is only useful if all participants are willing to take the same action together. That is powerful.
But consensus that says “hey, China, you should have better dealings with us” but then none of the participants have the backbone to do anything, then there is no power and the concensus is worthless.
There seems to be a lot of groupthink on HN. Pretty much every comment in this thread that views tariffs remotely positively is being downvoted. I view them slightly negatively, but protectionism (not necessarily tariffs) does help struggling or new industries develop if coupled with good export policies (see China, Taiwan, South Korea, and Japan for examples), so the idea that tariffs have no arguments for them seems a little farfetched to me.
I agree with you that tariffs can be good for nascent industries. If these were just tariffs on things like computer chips, solar panels etc then I think there would be a valid argument.
Dairy, Steel and Aluminium are not new industries, tariffs are not to help these grow and become long term viable.
Did you read the article? The tariff is not protecting US businesses. It is encouraging as much manufacturing as possible to take place overseas, because the tariff does not apply to finished products.
Yes, I did. The article does a good job of explaining the downsides. As I explained, I'm moderately opposed to the tariffs, but protectionism does work in some cases and there are certainly arguments for tariffs. I would be interested in hearing them rather than seeing discussion of them stifled.
I think that's mostly because most of the comments feel like either borderline insane (like the ones claiming all regulation including environmental and consumer protection are evil bureaucracy or the one claiming stability is a bad thing for the world) or feel kinda like cheap shills ("Trump is just doing what needs to be done! So brave!").
Yours looks like the first though out one.
EDIT: mostly I think people just think Trump and his regime is so incompetent and also evil, that they will automatically consider everything in a bad light.
Looking at what they done so far, it's not a bad assumption, but maybe this is the one thing they don't fuck up?
Except the trump administration isn't incompetent - by government standards, the same way he isn't utterly stupid but rather above average intelligence at the very least. This is just wishful thinking from the left.
They are of course at war with the media. What I don't understand is when educated people started to side with the war mongering media. The only time they were favourable was when he attacked syria.
If the cost of food doubles, your cost of a meal out doesn't double, but merely increases by a lesser amount.
This is a 25% bump, a portion of which will be borne by the manufacturer, seller, shipper, and money handler.
I don't see how it's even close to possible for customs to intercept 50% of the mail coming in from China to ensure they've paid the tariffs.
So, things will range from unenforceable and unenforced, to a minor price increase, so small most of us would never notice. Akin to a minor currency fluctuation that everybody who doesn't use or peg to the US dollar has to deal with already.
If you can afford the time to be a maker, this will not impact anything at the end of the day.
Or they raise the price. Then they just don't sell as much, leaving you to either consume less food or buy cheaper substitutes (retaliatory pork tariffs should mean cheaper bacon back home, shouldn't they?).
Asked no serious manufacturer ever: "Gee, should I use this minor setback as an excuse to shut my entire operation down or slightly adjust my prices?"
New suppliers may spring up, or existing suppliers may change locales. The economic system is like a stream and tariffs are like a boulder. It'll flow around, under, and over. Sucks if you are splat upon the boulder, though.
We're talking about food. You can't just put up a farm and start producing a few weeks later. Depending on the crop it can take years before a farm is productive. So no, new suppliers don't just 'spring up'. This sort of economic activity can lead to food shortages.
It's so that we have a surplus of farms and product and won't need to defy physics by spinning up new productive farms quickly. It's a buffer in case of emergencies and disasters.
Your comment assumes that there's all this fertile farmland just sitting around unused, ready to "spin up new farms." I'm disputing that and asking you where all the (unused) farmland is going to come from.
I think he's taking about the other parts of our food costs: distribution, storage, etc. Those won't be affected by tariffs, so they dampen the effects of the tariff a bit.
Your $25 steak dinner cost about $6 in foodstuffs. If a tariff raises the cost of that raw material to $8, it would be absurd for that entire meal to now cost $32. Much of the cost in restaurant prices is wages, and rent, and other overhead, not the actual food.
It is silly because food cost is only one part of the cost of providing a meal. Really all of the costs should be dumped into a program which spits out exactly what to charge for each menu item.
The overhead also grows because the waste is more expensive. Also if things the employees need, like food, become more expensive, they’ll need more wages.
There is no need to be going into a trade war against not only traditionally our rivals but also our allies now too.
The economy is recovering and I believe it may now be heading toward a recession.
Here's the quick data on job created in raw number without the quality of the job to show that it is recovering since the 2008 recession:
https://www.washingtonpost.com/news/fact-checker/wp/2017/12/...
So the question is why do we need this tradewar? It only introduce instability and fear in our market and we have never really recover from 2008 recession yet. The quality of job suck by the way.
It's protectionism and it does not make our country competitive at all.