Politics

mdwest said:

This is largely because of American culture... As a rule Americans adhere to one of two mindsets..

The vast majority want to consume high volumes of low cost "stuff"...

The "buy once, cry once" crowd is a small minority, even among the wealthy that can afford the absolute best of everything.. the typical American wants a "deal"..

As a rule, American manufacturing caters to the larger market (high volumes of low cost stuff)..

Youre not going to get low end junk like you get out of China and other Asian manufacturing centers from most US manufacturing..

But you're also not going to get Bentleys and Maybachs out of American manufacturing..

What you're going to see is a huge demand for Ruger Americans packaged "hunt ready" with a cheap bushnell scope on them for $400 out the door... as opposed to Rigby Highland Stalkers with Swaro optics.. even though there are more people in the US that can afford a Rigby than any other marketspace..

Its not that there is a lack of technical skill (there is a reason the F22 is bar none the most advanced air superiority fighter in the world as an example).. make no mistake, there are still excellent engineers, scientists, and skilled laborers in the US..

The issue is there is a lack demand for high volumes of those high quality goods..

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Wheels said:

VAT is not a barrier to entry for the consuming country which is levying the VAT on everything from everywhere. On a country to country basis, VAT is definitely a barrier to entry. In the Poland/America scenario it is a barrier of $16k in Polish government taxes that America doesn't require on it's imports. America's response is to impose $16k of American taxes to the Polish vehicle to balance the trade.

Vehicle trade between America and Europe was probably not a good example. There are way too many factors that go into it. I will try to remember to use widgets in future examples.

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Wheels said:

VAT is not a barrier to entry for the consuming country which is levying the VAT on everything from everywhere. On a country to country basis, VAT is definitely a barrier to entry. In the Poland/America scenario it is a barrier of $16k in Polish government taxes that America doesn't require on it's imports. America's response is to impose $16k of American taxes to the Polish vehicle to balance the trade.
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Red Leg said:

That is not exactly correct. As @Alistair notes, VAT is a consumption and not a production cost. It has no affect on the exported cost of the vehicle. The Polish citizen does not have the option to purchase the vehicle in the States. Thus, any vehicle with a $50K production cost will have the same VAT applied regardless of location of production. The tariff or duty differential would affect relative costs.

For example, take a $100 US-made gadget:

• Shipping and insurance: $20.
• Import duty (say 3%): $3 on the $100 value.
• Total taxable value: $123.
• VAT at 20% (e.g., UK rate): $24.60.
• Final cost to the European buyer: $147.60.

And a $100 EU-made item (pre-VAT):

• In Europe, with 20% VAT, it would cost $120 domestically.
• Shipping and insurance $20
• When exported to the US, VAT is removed, so the base price to the US buyer is $120.
• Import duty in the US (say 2% on the $100 value): $2.
• Cost before sales tax: $122.
• US state sales tax at 8% (e.g., a typical rate in states like California): $9.76
• Final cost to the US buyer: $131.76.

Yes, an equal production cost EU product may be cheaper in the US than it is in the EU, but that is a function of relative consumer costs. Again, as @Alistair VAT plays only a marginal role in determining the trade deficit.

The real drivers of trade deficits are larger forces: exchange rates, production costs, consumer demand, and trade policies. For instance, the US runs a persistent trade deficit (e.g., $947 billion in 2022) not because of VAT but due to high domestic consumption and reliance on cheaper foreign goods (e.g., from China, where VAT is 13% but labor costs are low). Government subsidies (the Airbus debate) is a different issue entirely.

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Tanks said:

$50K Polish made car (is there such a thing?)

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Royal27 said:

That's not exactly correct either. It is not a simple as you try to make it sound Joe.

By charging VAT truly at the end to the consumer it DOES lower production costs as there are less taxes within production whether it be Labor or corporate taxes as two examples. Charging a tariff to compensate is not unfair IMO. Well, unless you're from a country who has the built in the advantage at least. Then I can see why it would be thought of as "unfair" since the advantage that is believed to be desired is lost.

Side note for all, regardless of which side of the argument you are on. The "VAT hurts exports from America" isn't a new argument that Trump thought up in the last six months. The United States has been making the argument since the 1970s at least. Trump is just the first one to have the balls to get serious about addressing it.

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Alistair said:

If the argument now is that VAT leads to lower corporation taxes, and lower income taxes on labor, then you clearly haven't been to Europe. They have both higher sales taxes AND higher corporation taxes AND higher income taxes.

In fact, if that is the argument, then Trump should be applying tariffs on US produced goods, not European or Japanese ones. Only fair, after all.

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rigbymauser said:

A danish perspective on the Greenland affair..

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fourfive8 said:

Oh no! I’m crestfallen and heartbroken. Looks like with the Ontario Premier Ford on a tantrum, the old Cooey Winchester plant will never be resurrected A true loss for firearms enthusiasts worldwide. I was so looking forward to getting my hands on one .…, err… ahh, I forgot! I have one of those single shot bespoke shotgun clunkers in the safe right now!

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mdwest said:

I’m lost… hasn’t Cooey been shut down since the 70’s?

What would Ford have to do with anything related?

Ford has been spending a lot of time with Tim Walz negotiating specifically with Minnesota over energy from what I can tell in the news…

That tells me everything I need to know about how much anyone in the US federal government cares about Fords opinion on anything…

He might as well be a hobo on a train begging for a ham sandwich as far as the current administration is concerned, no matter how important Ford thinks he is no one in the US government cares at all about his position on any subject or issue..

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mdwest said:

I’m lost… hasn’t Cooey been shut down since the 70’s?

What would Ford have to do with anything related?

Ford has been spending a lot of time with Tim Walz negotiating specifically with Minnesota over energy from what I can tell in the news…

That tells me everything I need to know about how much anyone in the US federal government cares about Fords opinion on anything…

He might as well be a hobo on a train begging for a ham sandwich as far as the current administration is concerned, no matter how important Ford thinks he is no one in the US government cares at all about his position on any subject or issue..

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Alistair said:

Yes, that is Trumps goal, and to be fair to him, tariffs might do that, if at the expense of US consumers. I think it might ultimately be a wash for the middle class though. More jobs for some, higher prices for all.

As for if it's 'the long term' I'm not so sure. Trump is out in 2028. Who knows what the next administration will do. Plus it's Trump, 50/50 he'll have been distracted by the next shiny bauble by 2026 and all of this will be abandoned.

I do know however that most of that investment won't have produced a single unit by the time he's out again, and that the US consumer is going to feel the full brunt of tariffs in the interim. As will us companies.

If the US consumer is willing to tolerate that pain and ultimately that reduction in living standards is I think going to be a significant factor in the midterms, and in the next election. Your guess is as good as mine as to how that plays out.

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Tubby’s Canteen said:

If poilievre fails to win the election ford could be in contention for the next leader of the federal Conservative Party. There is talk of him running for the federal leadership in the next leaders race.

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Wheels said:

The tariffs from Trumps first term really didn't have an affect on consumers. Most nations ate the tariffs by devaluing their currency. Will that work this time. We will have to wait and see.

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Wheels said:

The tariffs from Trumps first term really didn't have an affect on consumers. Most nations ate the tariffs by devaluing their currency. Will that work this time. We will have to wait and see.

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Opposite Pole said:

Out of curiosity I decided to check if I own anything that has actually been manufactured in the USA. Both my cars are Japanese branded, Japanese made. My fridge and washing machine are Korean branded and Korean made. My stove and oven are Slovenian branded and made. My dishwasher is German branded and made. My watches are Swiss and German made. My projector (Epson) is American branded, and Chinese made. My projector screen is Italian branded and Polish made. My speakers are British branded and Chinese made. My laptop is American branded and Chinese made (as far as I can tell), my phone, phone chargers, two tablets, both my Kindles - all American branded and Chinese made. My $$$ American branded bicycle - actually mostly made in EU and USA (Poland - ABI, Italy - Selle Italia, USA - SRAM (really good stuff), Trek - parts from all over the place but mostly China). My firearms and firearm related items - mostly made in EU, USA and Australia with just two items made in the far east. My skis and ski gear, EU and Norwegian made. My sailing gear - lifejacket - UK branded (Crewsaver) and made, my 2 PLBs (ACR) UK made. My foul weather gear British/Polish branded and Polish made. My “outdoor electronics” mostly Garmin - American branded and made in China. My spendy diving gear - Italian branded and made; Italian branded and Chinese made; Polish branded and Polish made; US branded and Chinese made (Garmin); US branded and US made (Atomic Aquatics and Oceanic - both brands owned by US based Huish Outdoors) - really good quality stuff, actually made in USA although I have no means of determining where the titanium came from - most of it does come from the soviets though. I found a really decent wrench I thought was American - Milwaukee branded, but it’s been made in Taiwan. Good product though.

I tend to buy good stuff. I’m of the buy once cry once persuasion. My experience has been that Western, Japanese and Taiwanese made goods tend to be of good quality. It seems to me most US brands manufacture in China these days with various results. It’s not that the Chinese are incapable of manufacturing quality items for I’m sure they are, but budget squeezing and precision and quality rarely go hand in hand.

Will tariffs placed on EU and Canadian made goods fix the issue of US companies shifting manufacturing to the far east? Well, have a think about it.

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