Politics

[Wheels]

Too bad Trump does not understand how tariffs work...American businesses are hurt by tariffs

I am as much a proponent for freemarkets as anyone on this forum. The problem is America hasn't been in a freemarket in decades. Basically we have subsidized other countries with our low tariffs and those countries have ex-filtrated our wealth. If we had freemarkets, trade would balance out over time. That has not been happening. If you go to the WTO website, you will see that America's average tariff is 3.54% for most favored nation trade. Look at China where it is over 12%. We have never had balanced trade with China since Nixon reset our relationship with them.

Yes, I realize the US Chamber of Commerce and the main stream media say we have free markets. I drank that koolaid for the majority of my life. Their interests are completely at odds with main street America and the average American. Trump knows and understands this. Trump assembled the most amazing group of people in Wilbur Ross, Steven Mnuchin, Robert Lighthizer and Peter Navaro. They are renegotiating with countries we do business with and they won't accept a better deal. It has to be a fair deal.

The media pushes the agenda that tariffs will kill Americans consumers. I understand where they are coming from but lets do some simple math. American GDP is apx. $20T. Trump just put a 25% tariff on $200B of Chinese goods coming into America with the threat of a tariff on all $500B of imports. A 25% tariff on $200B of goods is $50B. $50B divided by $20T equals .0025% increase in the cost of goods that Americans buy. This means that for every $100 you spend at the store, your cost has gone up a quarter! That is the total of what Trump's tariffs are costing you. Yes, it is more complicated than that but those are fairly easy numbers to understand without crawling through so many weeds that no one will read the post.

Trump knows how tariffs work extremely well. That is why he is using them. When Trump took office, the only countries that had lower tariffs according to the WTO than America were Australia, New Zealand,Peru, and a fourth country in eastern Europe that I don't recall off hand. Trump knows that he can use tariffs against all the countries of the world except those four and help the average American. Our low cost tariffs is a main culprit to the offshoring of American manufacturing jobs.



Now to respond to your post that was in response to my post regarding Trump putting a 5% tariff on products coming out of Mexico that will rise to 25% if Mexico doesn't stop illegal immigration into America. This has nothing to do with trade. It has everything to do with politics. While campaigning last year, Obrador pushed open borders with America and said migration "is a human right we will defend". Trump has asked Obrador to help close down the border. Obrador has not done this, probably due to the income stream going to the cartels that run northern Mexico.

Last year I talked to about a dozen illegal hispanics from Mexico and Central America and asked them what the cartels charge to get them into America. $4,000 was the lowest number I heard. The others gave numbers between $6,000 and $8,000 for a one way trip. Illegals do not bypass the cartels or they are killed. People with green cards have no issue as they cross at the border crossings. Lets just say the average cost is $5,000 and a million illegals cross per year. That is $5B to the northern Mexican economy, without getting into the remitances that come back to Mexico.

Trump knows all of this. He is fighting congress, both Democrats and Republicans with their hands in the swamp, along with Obama appointed judges. Frustrated with Obrador not doing anything to help, Trump announces the tariff. Obrador immediately blasts Trump, but then guess what? Obrador asks for an emergency meeting today!

Trump is using tariff's as a hammer, to protect the southern border from illegal aliens coming into the country. Oh, by the way. Approximately 50% of illegals go immediately into the American welfare system. This costs America between $135-$160B per year. Yet congress can't find $5B for the wall.

I could continue for hours but need to get some work done. If you read all of this, I know you are thankful to be done with my blathering.

 

[WAB]

Well stated Wheels.

 

[Wheels]

I am as much a proponent for freemarkets as anyone on this forum. The problem is America hasn't been in a freemarket in decades. Basically we have subsidized other countries with our low tariffs and those countries have ex-filtrated our wealth. If we had freemarkets, trade would balance out over time. That has not been happening. If you go to the WTO website, you will see that America's average tariff is 3.54% for most favored nation trade. Look at China where it is over 12%. We have never had balanced trade with China since Nixon reset our relationship with them.

Yes, I realize the US Chamber of Commerce and the main stream media say we have free markets. I drank that koolaid for the majority of my life. Their interests are completely at odds with main street America and the average American. Trump knows and understands this. Trump assembled the most amazing group of people in Wilbur Ross, Steven Mnuchin, Robert Lighthizer and Peter Navaro. They are renegotiating with countries we do business with and they won't accept a better deal. It has to be a fair deal.

The media pushes the agenda that tariffs will kill Americans consumers. I understand where they are coming from but lets do some simple math. American GDP is apx. $20T. Trump just put a 25% tariff on $200B of Chinese goods coming into America with the threat of a tariff on all $500B of imports. A 25% tariff on $200B of goods is $50B. $50B divided by $20T equals .0025% increase in the cost of goods that Americans buy. This means that for every $100 you spend at the store, your cost has gone up a quarter! That is the total of what Trump's tariffs are costing you. Yes, it is more complicated than that but those are fairly easy numbers to understand without crawling through so many weeds that no one will read the post.

Trump knows how tariffs work extremely well. That is why he is using them. When Trump took office, the only countries that had lower tariffs according to the WTO than America were Australia, New Zealand,Peru, and a fourth country in eastern Europe that I don't recall off hand. Trump knows that he can use tariffs against all the countries of the world except those four and help the average American. Our low cost tariffs is a main culprit to the offshoring of American manufacturing jobs.



Now to respond to your post that was in response to my post regarding Trump putting a 5% tariff on products coming out of Mexico that will rise to 25% if Mexico doesn't stop illegal immigration into America. This has nothing to do with trade. It has everything to do with politics. While campaigning last year, Obrador pushed open borders with America and said migration "is a human right we will defend". Trump has asked Obrador to help close down the border. Obrador has not done this, probably due to the income stream going to the cartels that run northern Mexico.

Last year I talked to about a dozen illegal hispanics from Mexico and Central America and asked them what the cartels charge to get them into America. $4,000 was the lowest number I heard. The others gave numbers between $6,000 and $8,000 for a one way trip. Illegals do not bypass the cartels or they are killed. People with green cards have no issue as they cross at the border crossings. Lets just say the average cost is $5,000 and a million illegals cross per year. That is $5B to the northern Mexican economy, without getting into the remitances that come back to Mexico.

Trump knows all of this. He is fighting congress, both Democrats and Republicans with their hands in the swamp, along with Obama appointed judges. Frustrated with Obrador not doing anything to help, Trump announces the tariff. Obrador immediately blasts Trump, but then guess what? Obrador asks for an emergency meeting today!

Trump is using tariff's as a hammer, to protect the southern border from illegal aliens coming into the country. Oh, by the way. Approximately 50% of illegals go immediately into the American welfare system. This costs America between $135-$160B per year. Yet congress can't find $5B for the wall.

I could continue for hours but need to get some work done. If you read all of this, I know you are thankful to be done with my blathering.

Trump says it better and more concise than me.


@realDonaldTrump
Mexico has taken advantage of the United States for decades. Because of the Dems, our Immigration Laws are BAD. Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem. Time for them to finally do what must be done!

6:30 AM - 31 May 2019



Donald J. Trump‏Verified account @realDonaldTrump 3h3 hours ago
In order not to pay Tariffs, if they start rising, companies will leave Mexico, which has taken 30% of our Auto Industry, and come back home to the USA. Mexico must take back their country from the drug lords and cartels. The Tariff is about stopping drugs as well as illegals!


Donald J. Trump‏Verified account @realDonaldTrump
90% of the Drugs coming into the United States come through Mexico & our Southern Border. 80,000 people died last year, 1,000,000 people ruined. This has gone on for many years & nothing has been done about it. We have a 100 Billion Dollar Trade Deficit with Mexico. It’s time

 

[Brent in Az]

Tariffs are paid directly by the importer. That tariff has to be paid to U.S Customs before it is allowed to cross into the USA. The importer can raise the costs to its distributors, or absord the cost, depending on the economic condition of the market. Persishable goods will be hit the hardest.

I am willing to pay more, if Trumps tariff plan helps stem the tide of illegal invaders. In whatever form that comes in.

Trump is sending a message. The dumpster fire Democrats, and many worthless idiots within the GOP, have done nothing to fix the broken immigration system.

I live 60 miles from the border. I have seen Tucson, and the southern Arizona desert transform into the shithole that it is today. All thanks to illegal immigration, and the lawlessness, and lack of respect, that many of these people bring over.

Enough is enough.

 

[Saul]

American businesses don't pay the tariff, American consumers pay the tariff. Businesses ultimately do not pay tax at all, they are only remitters of tax. Their customers pay their taxes, just like their customers pay for every other cost of doing business.

Businesses only have income and expenses. I think you will agree that cutting a check to the tax man doesn't fall on the "income" side of the ledger. Higher taxes may decrease profitability, but increasing any expense has the same effect. Remember when Diesel prices went to almost $5 a few years ago? But if you raise taxes high enough for long enough, the business principals will eventually shutter US operations and move overseas, provided they have enough capital to do so. Otherwise, they just shutter operations. Regulation has the same effect on businesses, and on consumer's wallets, as taxes do.

Yes they pass the cost on to consumers because they have to pay the cost of tariffs. The point is that tariffs hurt Americans.

 

[Royal27]

Yes they pass the cost on to consumers because they have to pay the cost of tariffs. The point is that tariffs hurt Americans.

That's a WAYYYY over simplified statement. Read @Wheels post #1001. Americans have already been and continue to be hurt by tariffs from other countries among other things.

The argument you're making is the same as saying guns should be outlawed because they hurt people, while ignoring the fact that they protect us as well. Neither guns nor tariffs are going anywhere, and I'm just fine with our country being armed.

There isn't any such thing as fixing a problem as massive as this one without some pain. That's why corrupt politicians have ignored it for so many years. They'd rather do the wrong thing for the country and get a vote.

 

[Saul]

That's a WAYYYY over simplified statement. Read @Wheels post #1001. Americans have already been and continue to be hurt by tariffs from other countries among other things.

The argument you're making is the same as saying guns should be outlawed because they hurt people, while ignoring the fact that they protect us as well. Neither guns nor tariffs are going anywhere, and I'm just fine with our country being armed.

There isn't any such thing as fixing a problem as massive as this one without some pain. That's why corrupt politicians have ignored it for so many years. They'd rather do the wrong thing for the country and get a vote.

Simply put, mercantilism does not work neither do tariffs. If I were going to buy a new gun but I now have to pay more because of a 25% tariff, I am going to pass. No sale means no profit for American companies. If it is something I really need, I am going to have to eat the cost, which means I will be spending less money on other things. At the end of the day, tariffs hurt American pocketbooks far more than they hurt other countries.

 

[Royal27]

Simply put, mercantilism does not work neither do tariffs. If I were going to buy a new gun but I now have to pay more because of a 25% tariff, I am going to pass. No sale means no profit for American companies. If it is something I really need, I am going to have to eat the cost, which means I will be spending less money on other things. At the end of the day, tariffs hurt American pocketbooks far more than they hurt other countries.

I'm not concerned with other countries. I'm concerned with ours and keeping our standard of living up in the long run, not the next day, week, or year. Tariffs are much more obvious as the MSM makes the $.25 seem like more than it is, and the bleeding of money out of the country is less obvious to us over the years. It's death by a thousand cuts.

I'll gladly pay an extra dollar to live if I can earn two dollars more. But, if you'd rather pay the same price while earning less than more power to you.

Will the tariffs work? Ask me in a couple of years. Has the policy our corrupt politicians have used for the last 50 years or so worked? Only for the enrichment of the politicians and those who paid them...

 

[Hogpatrol]

The Chinese and Japanese have not only eviscerated our manufacturing, they've destroyed the tax base. They, through our so called "representatives" in D.C. and the "free trade" fanatics, are DIRECTLY responsible for the huge trade AND Federal deficit. They replaced manufacturing and engineering jobs that paid 20, 30, 40, 50 or more dollars an hour with retail and service industry jobs that pay 10 to 15 bucks an hour. Those countries' standard of living increased while ours declined. As far as American consumers being "hurt", who says everyone has the right to a new foreign car, a cheap phone, TV, etc. We have people in this country using EBT cards watching 65" TVs, driving rented KIAs and Hyundais, owning Chinese made smart phones,wearing hundred dollar Nike shoes, etc., ad nauseum. The idea that the American consumer making ten or fifteen bucks an hour is on a living wage and "DESERVES" to have all these things is a bunch of BS. Back in my day, if one wanted to increase their standard of living, they either got more education, or worked more hours.

 

[Saul]

The Chinese and Japanese have not only eviscerated our manufacturing, they've destroyed the tax base. They, through our so called "representatives" in D.C. and the "free trade" fanatics, are DIRECTLY responsible for the huge trade AND Federal deficit. They replaced manufacturing and engineering jobs that paid 20, 30, 40, 50 or more dollars an hour with retail and service industry jobs that pay 10 to 15 bucks an hour. Those countries' standard of living increased while ours declined. As far as American consumers being "hurt", who says everyone has the right to a new foreign car, a cheap phone, TV, etc. We have people in this country using EBT cards watching 65" TVs, driving rented KIAs and Hyundais, owning Chinese made smart phones,wearing hundred dollar Nike shoes, etc., ad nauseum. The idea that the American consumer making ten or fifteen bucks an hour is on a living wage and "DESERVES" to have all these things is a bunch of BS. Back in my day, if one wanted to increase their standard of living, they either got more education, or worked more hours.

No one deserves nice things and that is not what I am arguing. But if you want to grow the economy, people actually have to buy things. The fact of the matter is that some countries produce better products than we do (I do not drive American for instance) and other countries produce products far cheaper than we ever can. That is why manufacturing jobs left. The way to bring them back is not through a race to the bottom to make more cheap chachkies like China, but rather to invest in future technology that we can build here better than others.

 

[Hogpatrol]

Simply put, mercantilism does not work neither do tariffs. If I were going to buy a new gun but I now have to pay more because of a 25% tariff, I am going to pass. No sale means no profit for American companies. If it is something I really need, I am going to have to eat the cost, which means I will be spending less money on other things. At the end of the day, tariffs hurt American pocketbooks far more than they hurt other countries.

Now you're getting the idea. The exporting country will sell less and that's the intent of the tariff. You or I don't "deserve" to buy that gun or any other foreign made product and the company that makes it will hurt more than the American company that sells it. Maybe we'll get lucky and an there will be an American made product that will meet our requirements.

I'll put it as succinctly as a I can. We've been getting fucked up the ass on trade for so long, it feels normal. Unfortunately it's still one sided and dysfunctional.

 

[Hogpatrol]

No one deserves nice things and that is not what I am arguing. But if you want to grow the economy, people actually have to buy things. The fact of the matter is that some countries produce better products than we do (I do not drive American for instance) and other countries produce products far cheaper than we ever can. That is why manufacturing jobs left. The way to bring them back is not through a race to the bottom to make more cheap chachkies like China, but rather to invest in future technology that we can build here better than others.

If you want to grow the economy you have to MAKE things. Don't think so? Look at China! Taking raw materials and adding value is a time tested method of increasing the standard of living and growing the economy. That's how this country got started and how it's existed since its inception. Go back to colonial times where we imported everything from England. We were COLONIES. Once we got our feet in to manufacturing, we could tell the King to go to hell. This country was built on manufacturing, just like modern day China is doing.

 

[Saul]

If you want to grow the economy you have to MAKE things. Don't think so? Look at China! Taking raw materials and adding value is a time tested method of increasing the standard of living and growing the economy. That's how this country got started and how it's existed since its inception. Go back to colonial times where we imported everything from England. We were COLONIES. Once we got our feet in to manufacturing, we could tell the King to go to hell. This country was built on manufacturing, just like modern day China is doing.

The only way you are going to bring back that type of manufacturing is to ban all imports and investments by American companies in foreign countries. Either that or establish sweatshops here. On the other hand, refocusing our manufacturing on future technology (electric cars for instance) is something we can actually do here better than in other countries and at a lower cost. THAT is the future of manufacturing.

 

[markm]

The Chinese and Japanese have not only eviscerated our manufacturing, they've destroyed the tax base. They, through our so called "representatives" in D.C. and the "free trade" fanatics, are DIRECTLY responsible for the huge trade AND Federal deficit. They replaced manufacturing and engineering jobs that paid 20, 30, 40, 50 or more dollars an hour with retail and service industry jobs that pay 10 to 15 bucks an hour. Those countries' standard of living increased while ours declined. As far as American consumers being "hurt", who says everyone has the right to a new foreign car, a cheap phone, TV, etc. We have people in this country using EBT cards watching 65" TVs, driving rented KIAs and Hyundais, owning Chinese made smart phones,wearing hundred dollar Nike shoes, etc., ad nauseum. The idea that the American consumer making ten or fifteen bucks an hour is on a living wage and "DESERVES" to have all these things is a bunch of BS. Back in my day, if one wanted to increase their standard of living, they either got more education, or worked more hours.

Spot on another problem is all these sh## bag politicians have a bunch of vested interest in all these countries .

 

[markm]

No one deserves nice things and that is not what I am arguing. But if you want to grow the economy, people actually have to buy things. The fact of the matter is that some countries produce better products than we do (I do not drive American for instance) and other countries produce products far cheaper than we ever can. That is why manufacturing jobs left. The way to bring them back is not through a race to the bottom to make more cheap chachkies like China, but rather to invest in future technology that we can build here better than others.

That's a crock of crap

 

[Saul]

That's a crock of crap

Care to explain?

 

[markm]

Care to explain?

The only way and it won't happen is to get all the politicians and CEOs on board with the U.S first and as far as nice things it's called work your butt off.

 

[PHOENIX PHIL]

Care to explain?

The only way and it won't happen is to get all the politicians and CEOs on board with the U.S first and as far as nice things it's called work your butt off.

Sitting in Doha waiting for next flight to Joburg and I jump into the politics thread.....how stupid is that?

Saul / markm,
I'll disagree somewhat with you both. It is bullshit that we "can't" make products that compete on quality with anyone else. It's about the business model and how they decide to make money. Doubt it, my Tundra was manufactured in San Antonio. Camry's I think are made in Kentucky. Honda and BMW also have plants here.

But it's not about putting America first and unfortunately I never see where capitalism will ever put a geography first. It's about profits. You increase profit by reducing cost typically.

Nike, HQ'd up there in the liberal paradise of Oregon pays pennies in labor cost for sneakers that someone dumb suburban kid will pay well over $100 for.

So Nike could never bring back manufacturing to the U.S. in the face of such higher labor costs right? Wrong, you just have to compete better on other costs : taxes, land, infrastructure etc.

And on this example, this is the perfect one in my opinion on liberal / Democrat hypocrisy. Nike.....Asian sweatshops.....HQ'd in Portland........you should see the Nike palace. Built on damn near slave labor, and at least a certain amount of money from kids who don't have it to spend.

Damn!!!!! I'll be hunting in 24 hours or so in Africa, screw this shinola.

 

[markm]

Sitting in Doha waiting for next flight to Joburg and I jump into the politics thread.....how stupid is that?

Saul / markm,
I'll disagree somewhat with you both. It is bullshit that we "can't" make products that compete on quality with anyone else. It's about the business model and how they decide to make money. Doubt it, my Tundra was manufactured in San Antonio. Camry's I think are made in Kentucky. Honda and BMW also have plants here.

But it's not about putting America first and unfortunately I never see where capitalism will ever put a geography first. It's about profits. You increase profit by reducing cost typically.

Nike, HQ'd up there in the liberal paradise of Oregon pays pennies in labor cost for sneakers that someone dumb suburban kid will pay well over $100 for.

So Nike could never bring back manufacturing to the U.S. in the face of such higher labor costs right? Wrong, you just have to compete better on other costs : taxes, land, infrastructure etc.

And on this example, this is the perfect one in my opinion on liberal / Democrat hypocrisy. Nike.....Asian sweatshops.....HQ'd in Portland........you should see the Nike palace. Built on damn near slave labor, and at least a certain amount of money from kids who don't have it to spend.

Damn!!!!! I'll be hunting in 24 hours or so in Africa, screw this shinola.

Very well said best of luck on your hunt

 

[Wheels]

Yes they pass the cost on to consumers because they have to pay the cost of tariffs. The point is that tariffs hurt Americans.

Simply put, mercantilism does not work neither do tariffs. If I were going to buy a new gun but I now have to pay more because of a 25% tariff, I am going to pass. No sale means no profit for American companies. If it is something I really need, I am going to have to eat the cost, which means I will be spending less money on other things. At the end of the day, tariffs hurt American pocketbooks far more than they hurt other countries.

Saul, Please don't think I am picking on you. That is certainly not my intent. I appreciate where you are coming from. I can and would have argued some of your points not that many years ago.

You are definitely correct that Trump's tariffs hurt American consumers. If you are buying a widget from China for $100 and the cost just went to $125, that is a big hurt. It doesn't however take into consideration other alternatives. Perhaps that product can be bought from Malaysia for $104, Viet Nam for $105 or from an American company for $116. There are very few items where there are not alternatives. As I mentioned in the post at the top of this page, the 25% tariff on China is equal to a price increase to the average consumer of well less than 1% across the board, although it may hurt an individual consumer to the tune of 25% if he bought everything he consumed from China.

You are looking out for the American consumer which is laudable. Trump is looking at both sides of the equation, American producer and the consumer. For decades, American tariffs have been among the lowest in the world. Other nations have taken advantage of this by exporting more to America than America has been able to export to them. Let's re look at China. America's WTO, MFN average tariff is 3.54% while China's is over 12%.(I am lazy and don't want to look it up) To sell product's to China, American companies have to pay over three times the tariffs that China does to sell into America. This is a major disadvantage for American companies. Trump's goal is to reset the tariffs, thereby allowing fair trade between the two countries.

Last year America sold $120B to China while China sold $540B to America. Lopsided tariffs are a significant contributing factor to this. Three decades of poorly set up tariffs have cost America it's manufacturing base. Trump is trying to get some of those jobs back to America and he holds the cards to do it. If all the world's tariff's were equal, then American business would be producing much more and the wages of American's would be much better.

Trump has helped decrease unemployment to some of the lowest levels ever. Wages are rising. I think over 3% in 2018 if I remember correct. If wages go up by 3% and tariff's cost the consumer an average of well less than 1%, it is a win to America, until the other country comes into line on their tariffs. Once that happen's, wages should continue to go up and the short term cost of the tariff will go away.

If two countries have zero tariff's for the other countries products, then one country raising tariff's is stupid because you start a trade war, and you loose. This is where I think you are coming from. If two countries have unbalanced tariff's concerning each other's products, the country with the lower tariff's has a duty to it's citizenry to raise tariff's to equal the other countries tariff rates. Otherwise the country with lower tariff's is hurting it's citizens and it's economy on the production side. This is exactly what Trump is doing with MAGA.

Sorry, this was written fast and may not be as concise and discernible as I would like for it to be.