Home Off Topic

The High Cost of Rising Tariffs

2

Replies

  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    fish_stix said:
    You're all taking the onesided view of tariffs; that view is that consumers take a hit when we impose tariffs. The other side of the story is that tariffs are a tremendous negotiating point. Mexico and Canada both signed a new NAFTA agreement with us, strengthening our position because Trump threatened new tariffs and they knew he would carry through with it. We currently carry a multi hundred billion dollar trade deficit with China because past Presidents didn't have the testicles to protect our interests or they thought that encouraging Chinese economic growth would lessen the threat from them. So now they steal our technology, tax the hell out of our goods and then build military bases in the S. China Sea. Great tradeoff, right!!!!
    This is how it works when empty-headed bureaucrats try to negotiate with the guy who wrote the book on the matter.

    In the case of China, the tariffs hurt them disproportionately and puts them at risk of global trade isolation, which means they will be more likely to change their unfair trade/currency policies.  
  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #33

    My "argument" has always been that economic policies produce costs and benefits.

    Unlike the increasingly discredited "phree traders" who insist there is a "magic carpet ride" available.

    The recent rapid economic growth of high tariff China coincides with extremely anemic economic growth in the low tariff USA.  This cannot be disputed.

    So, who pulled the rug out?

    You mean your argument now is the same as the last line of the WSJ article you dismissed?

    “That mild stimulative effect comes at a cost,” he says. “It’s distortive and can reduce productivity, efficiency and welfare.”

    Got it.

    Incidentally, the IMF report and the WSJ article written about it said nothing about high tariffs, it was talking about rising tariffs -- so your indisputable fact is immaterial.

    You pulled the rug out from yourself, and I would suggest actually reading the articles before commenting next time...Mike

  • mplspugmplspug Palmetto FloridaPosts: 12,617 AG

    Captain Todd Approves

  • sjm1582002sjm1582002 Posts: 4,364 Captain
    edited November 2018 #35

    My "argument" has always been that economic policies produce costs and benefits.

    Unlike the increasingly discredited "phree traders" who insist there is a "magic carpet ride" available.

    The recent rapid economic growth of high tariff China coincides with extremely anemic economic growth in the low tariff USA.  This cannot be disputed.

    So, who pulled the rug out?

    You mean your argument now is the same as the last line of the WSJ article you dismissed?

    “That mild stimulative effect comes at a cost,” he says. “It’s distortive and can reduce productivity, efficiency and welfare.”

    Got it.

    Incidentally, the IMF report and the WSJ article written about it said nothing about high tariffs, it was talking about rising tariffs -- so your indisputable fact is immaterial.

    You pulled the rug out from yourself, and I would suggest actually reading the articles before commenting next time...Mike
    Previous trade policy has helped produce stagnant economic growth in the USA, higher than necessary unemployment, and repressed wages. 

    Those are the inescapable  "costs"  and we don't need any  IMF "report" to tell us that as we all experienced it. 

    The overriding goal of the previous trade policy was achieved long ago and a now outdated strategy is finally being abandoned. 

    Poor Mike is among the many who don't even undertand the reasoning behind the previous trade policy.  So, don't expect them to comprehend why a new strategy, complete with its own costs and benefits, is not only appropriate but long overdue. 




  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #36
    OK, so back to "it will be different this time".

    So you know, I do international business for a living and understand it much better than you do.

    I also read things before I post them.  Again, you might try it next time so you don't have to resort to ad hominem when faced with it, or post an article that says this policy will do exactly what you claim the last policy was responsible for.

    I'm not poor, either.  ;)
  • sjm1582002sjm1582002 Posts: 4,364 Captain
    I see the discussion has now descended into "weenie waving". An activity an opponent rarely engages in when they are winning the argument.

    I doubt anyone is interested but, as a former business owner (aerial surveys, satellite imagery, and GIS) I had Procter and Gamble, International Paper, Weyerhaesuer, Scott Paper, and Georgia Pacific as clients for +- 20 years.

    Just a wee bit of international exposure there.

    "zip".


    .








  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #38
    That's what happens when you suggest I don't know what I'm talking about when it comes to international business and call me poor.  You get put in your place, former business owner.

    Tell me, did you transact with any of those companies outside the US?  Which countries?  What tariffs did you face in so doing?  

    I won the argument with my first post to you, incidentally, and again with my second and third.   Rather than acknowledge it, you continue to dig the hole deeper by arguing a point you disagreed with, lauding one outdated strategy for another, and then started with the passive aggressive ad hominem.

    Just read the article next time.  It's not that hard.
  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    Scminnow said:
    For years the unhinged left hated Walmart cried and wailed for more things made in America, where did those wackos go? Miss them
    The majority of them have been turned into allies of the "evil corporations" and ultimate (emotional) consumers.  They've been duped into purchasing products as a political stance.

    Back then no one thought buying a pair of shoes made by desperately poor people working in terrible conditions would make one a social justice champion.  
  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #40
    fish_stix said:
    You're all taking the onesided view of tariffs; that view is that consumers take a hit when we impose tariffs. The other side of the story is that tariffs are a tremendous negotiating point. Mexico and Canada both signed a new NAFTA agreement with us, strengthening our position because Trump threatened new tariffs and they knew he would carry through with it. We currently carry a multi hundred billion dollar trade deficit with China because past Presidents didn't have the testicles to protect our interests or they thought that encouraging Chinese economic growth would lessen the threat from them. So now they steal our technology, tax the hell out of our goods and then build military bases in the S. China Sea. Great tradeoff, right!!!!
    This is how it works when empty-headed bureaucrats try to negotiate with the guy who wrote the book on the matter.

    In the case of China, the tariffs hurt them disproportionately and puts them at risk of global trade isolation, which means they will be more likely to change their unfair trade/currency policies.  
    You mean co-wrote.  lol

    Incidentally, the US enacting tariffs for Chinese imports doesn't isolate them from any market other than ours, and it really doesn't even do that.

    Time will tell if China changes any policies or not, and the effect of that change.  What's for sure is Trump is trying tactics that haven't been tried for a while, but haven't really worked out historically (as the IMF paper that is the subject of this thread).  But perhaps this time it's different.

    Have you compared US and Chinese growth rates recently?  How do they compare?
  • mustang190mustang190 Posts: 10,104 AG
    China had better have a high growth rate. With a billion plus mouths to feed they gotta keep them happy. 
  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    edited November 2018 #42
    fish_stix said:
    You're all taking the onesided view of tariffs; that view is that consumers take a hit when we impose tariffs. The other side of the story is that tariffs are a tremendous negotiating point. Mexico and Canada both signed a new NAFTA agreement with us, strengthening our position because Trump threatened new tariffs and they knew he would carry through with it. We currently carry a multi hundred billion dollar trade deficit with China because past Presidents didn't have the testicles to protect our interests or they thought that encouraging Chinese economic growth would lessen the threat from them. So now they steal our technology, tax the hell out of our goods and then build military bases in the S. China Sea. Great tradeoff, right!!!!
    This is how it works when empty-headed bureaucrats try to negotiate with the guy who wrote the book on the matter.

    In the case of China, the tariffs hurt them disproportionately and puts them at risk of global trade isolation, which means they will be more likely to change their unfair trade/currency policies.  
    You mean co-wrote.  lol

    Incidentally, the US enacting tariffs for Chinese imports doesn't isolate them from any market other than ours, and it really doesn't even do that.

    Time will tell if China changes any policies or not, and the effect of that change.  What's for sure is Trump is trying tactics that haven't been tried for a while, but haven't really worked out historically (as the IMF paper that is the subject of this thread).  But perhaps this time it's different.

    Have you compared US and Chinese growth rates recently?  How do they compare?
    You're partially correct.  Tariffs are only part of the picture.  
    The US can also negotiate trade agreements with other countries that can prohibit them from trading with China.  This has already happened in the new US-Mexico-Canada agreement.

    Imagine the growth rate of China's economy if they listened to the IMF and eliminated tariffs?  :D

    The IMF predicts a 1.6% GDP drop for China and 0.9% for the US if the US follows through with increased tariffs on all Chinese imports.  

  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    Jeff, 

    You are right to point out that tariffs are only part of the picture, albeit the part of the picture being discussed in this thread.

    FYI, the USMCA doesn't prohibit Canada or Mexico trading with China.  It's NAFTA v2 with an out after 6 years intended on putting pressure on China (i.e. the "poison pill" provision).  It's a good measure -- and we can and should do more to bring them in line with fairer trade policies even if we disagree on the method to do so -- but not quite the way you described it the first or second time.

    Here's an article that goes into the poison pill clause in the USMCA in depth, in case you're interested:  https://www.reuters.com/article/us-usa-trade-ross-exclusive/exclusive-u-s-commerces-ross-eyes-anti-china-poison-pill-for-new-trade-deals-idUSKCN1MF2HJ

    Thanks for sharing the IMF data.  It reinforces the pain it will cause the US that some seem to dispute.   However, I suppose a great deal of folks will focus on the Chinese GDP drop and claim victory before realizing growth in China even with a -1.9% headwind would still make it 5% (but below the 9% they've been growing at for two decades).  I also suspect that China will be able to weather the storm politically at 5% a lot longer than we will be OK with 3% growth some seemed so unhappy with for so long.

    Just some food for thought....Mike



  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    Jeff, 

    You are right to point out that tariffs are only part of the picture, albeit the part of the picture being discussed in this thread.

    FYI, the USMCA doesn't prohibit Canada or Mexico trading with China.  It's NAFTA v2 with an out after 6 years intended on putting pressure on China (i.e. the "poison pill" provision).  It's a good measure -- and we can and should do more to bring them in line with fairer trade policies even if we disagree on the method to do so -- but not quite the way you described it the first or second time.

    Here's an article that goes into the poison pill clause in the USMCA in depth, in case you're interested:  https://www.reuters.com/article/us-usa-trade-ross-exclusive/exclusive-u-s-commerces-ross-eyes-anti-china-poison-pill-for-new-trade-deals-idUSKCN1MF2HJ

    Thanks for sharing the IMF data.  It reinforces the pain it will cause the US that some seem to dispute.   However, I suppose a great deal of folks will focus on the Chinese GDP drop and claim victory before realizing growth in China even with a -1.9% headwind would still make it 5% (but below the 9% they've been growing at for two decades).  I also suspect that China will be able to weather the storm politically at 5% a lot longer than we will be OK with 3% growth some seemed so unhappy with for so long.

    Just some food for thought....Mike



    It can prohibit trade deal agreements with China.  This is the kind of stuff that will get China to negotiate (or not).
  • sjm1582002sjm1582002 Posts: 4,364 Captain
    edited November 2018 #45
    That's what happens when you suggest I don't know what I'm talking about when it comes to international business and call me poor.  You get put in your place, former business owner.

    Tell me, did you transact with any of those companies outside the US?  Which countries?  What tariffs did you face in so doing?  

    I won the argument with my first post to you, incidentally, and again with my second and third.   Rather than acknowledge it, you continue to dig the hole deeper by arguing a point you disagreed with, lauding one outdated strategy for another, and then started with the passive aggressive ad hominem.

    Just read the article next time.  It's not that hard.
    Yea sure. 

    When you have a firmer grasp of the reasoning behind the current trade policies, along with their costs and benefits, and why those policies may no longer be beneficial to the American people maybe we can discuss this further.

    Until then, enjoy the enslavement your ignorance has placed you in.

  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #46
    Jeff, 

    You are right to point out that tariffs are only part of the picture, albeit the part of the picture being discussed in this thread.

    FYI, the USMCA doesn't prohibit Canada or Mexico trading with China.  It's NAFTA v2 with an out after 6 years intended on putting pressure on China (i.e. the "poison pill" provision).  It's a good measure -- and we can and should do more to bring them in line with fairer trade policies even if we disagree on the method to do so -- but not quite the way you described it the first or second time.

    Here's an article that goes into the poison pill clause in the USMCA in depth, in case you're interested:  https://www.reuters.com/article/us-usa-trade-ross-exclusive/exclusive-u-s-commerces-ross-eyes-anti-china-poison-pill-for-new-trade-deals-idUSKCN1MF2HJ

    Thanks for sharing the IMF data.  It reinforces the pain it will cause the US that some seem to dispute.   However, I suppose a great deal of folks will focus on the Chinese GDP drop and claim victory before realizing growth in China even with a -1.9% headwind would still make it 5% (but below the 9% they've been growing at for two decades).  I also suspect that China will be able to weather the storm politically at 5% a lot longer than we will be OK with 3% growth some seemed so unhappy with for so long.

    Just some food for thought....Mike



    It can prohibit trade deal agreements with China.  This is the kind of stuff that will get China to negotiate (or not).
    Really?  I must have missed it.  Please point to the clause that "prohibits trade with China" or even "can prohibit trade deal agreements with China":



  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    edited November 2018 #47
    Jeff, 

    You are right to point out that tariffs are only part of the picture, albeit the part of the picture being discussed in this thread.

    FYI, the USMCA doesn't prohibit Canada or Mexico trading with China.  It's NAFTA v2 with an out after 6 years intended on putting pressure on China (i.e. the "poison pill" provision).  It's a good measure -- and we can and should do more to bring them in line with fairer trade policies even if we disagree on the method to do so -- but not quite the way you described it the first or second time.

    Here's an article that goes into the poison pill clause in the USMCA in depth, in case you're interested:  https://www.reuters.com/article/us-usa-trade-ross-exclusive/exclusive-u-s-commerces-ross-eyes-anti-china-poison-pill-for-new-trade-deals-idUSKCN1MF2HJ

    Thanks for sharing the IMF data.  It reinforces the pain it will cause the US that some seem to dispute.   However, I suppose a great deal of folks will focus on the Chinese GDP drop and claim victory before realizing growth in China even with a -1.9% headwind would still make it 5% (but below the 9% they've been growing at for two decades).  I also suspect that China will be able to weather the storm politically at 5% a lot longer than we will be OK with 3% growth some seemed so unhappy with for so long.

    Just some food for thought....Mike



    It can prohibit trade deal agreements with China.  This is the kind of stuff that will get China to negotiate (or not).
    Really?  I must have missed it.  Please point to the clause that "prohibits trade with China" or even "can prohibit trade deal agreements with China":



    Article 32.10, non-market country = China.

    You're the only one that is saying it prohibits trade agreements with China. 

    The practical effect is that the provision can prohibit an agreement as the country seeking an unapproved trade agreement with China risks the other two countries terminating the USMCA.

    This is unfavorable to China, it can cause them to be isolated from some markets = they don't like it = they may be more open to negotiation on their protectionist practices.
  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    Yeah, we have an out, just like I said.

    32.10.4  Entry by any Party into a free trade agreement with a non-market country, shall allow the other Parties to terminate this Agreement on six-month notice and replace this Agreement with an agreement as between them (bilateral agreement).

    It doesn't prohibit anything, Jeff.

    Which part were you looking at?

  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    Of course it doesn't say "prohibit".  You're making a purposeful attempt to ignore the obvious.
    Canada is not going to risk being cut out of the USMCA over an unapproved trade agreement with China. 

    No more obfuscating and filibusterin' this otherwise reasonable debate, please  :)
  • mustang190mustang190 Posts: 10,104 AG
    Just wait until we get a trade deal with Vietnam. Then watch the Chinese squirm. 
  • mplspugmplspug Palmetto FloridaPosts: 12,617 AG
    Someone is having a bad day.

    Captain Todd Approves

  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #52
    Of course it doesn't say "prohibit".  You're making a purposeful attempt to ignore the obvious.
    Canada is not going to risk being cut out of the USMCA over an unapproved trade agreement with China. 

    No more obfuscating and filibusterin' this otherwise reasonable debate, please  :)
    Jeff,  I was just simply reading your word "prohibit" literally.  I also now see your edit a few post above. 

    I'm not sure that Canada will be compelled by this clause the way you think it will, and that's certainly an arguable point, but I do understand what you were saying.

    I wasn't being purposefully obtuse -- not this time at least :) -- I simply didn't follow you.
  • TarponatorTarponator Under a BridgePosts: 17,010 AG

    U.S. trade gap widens; deficit with China rises to record high

    WASHINGTON (Reuters) - The U.S. trade deficit rose to a seven-month high in September as imports surged to a record high amid strong domestic demand, offsetting a rebound in exports.

    The Commerce Department said on Friday the trade gap increased 1.3 percent to $54.0 billion, widening for a fourth straight month. Data for August was revised to show the trade deficit rising to $53.3 billion instead of the previously reported $53.2 billion.

    The trade deficit continues to deteriorate despite the Trump administration’s protectionist trade policy, which has left the United States locked in a bitter trade war with China as well as ****-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

    The politically sensitive goods trade deficit with China jumped 4.3 percent to a record high of $40.2 billion in September. Economists polled by Reuters had forecast the overall trade deficit rising to $53.6 billion in September.

    When adjusted for inflation, the goods trade gap increased to an all-time high of $87.0 billion in September from $86.3 billion in August.

    The government reported last week that the trade deficit subtracted 1.78 percentage points from gross domestic product in the third quarter. That was the most since the second quarter of 1985 and reversed the 1.22 percentage points contribution in the April-June period.


    Ignorant and enslaved indeed.



  • saltyreefersaltyreefer Posts: 245 Deckhand
    fish_stix said:
    You're all taking the onesided view of tariffs; that view is that consumers take a hit when we impose tariffs. The other side of the story is that tariffs are a tremendous negotiating point. Mexico and Canada both signed a new NAFTA agreement with us, strengthening our position because Trump threatened new tariffs and they knew he would carry through with it. We currently carry a multi hundred billion dollar trade deficit with China because past Presidents didn't have the testicles to protect our interests or they thought that encouraging Chinese economic growth would lessen the threat from them. So now they steal our technology, tax the hell out of our goods and then build military bases in the S. China Sea. Great tradeoff, right!!!!
    Exactly!! 
  • saltyreefersaltyreefer Posts: 245 Deckhand
    I can't believe I have to suffer a little to get to a better place....
  • sjm1582002sjm1582002 Posts: 4,364 Captain
    "The government reported last week that the trade deficit subtracted 1.78 percentage points from gross domestic product in the third quarter."

    Interesting.

    So, a trade deficit has a negative impact on GDP? 

    If I was intellectually dishonest I'd leave it right there, but I'm not.

    ".......... a higher trade deficit doesn’t have to make the United States poorer. It can make the country poorer, but it can also make the country richer, and it turns out that whether the United States is richer (that is, more productive) or poorer depends on whether or not what causes the deficit also causes productive investment to rise. This should be so obvious as to make it unnecessary to bother saying, but unfortunately it needs to be said over and over. The debate about trade tends to have little to do with logic and much to do with ideology. On the one hand, free trade ideologues deny that the United States can ever benefit from trade intervention, and on the other, protectionists seem to think that all deficits are harmful and any reduction of the deficit creates jobs.

    Both sides are wrong. Trade deficits can sometimes lead to higher growth and lower unemployment, and sometimes to lower growth and higher unemployment—the same is true of trade surpluses. For all the muddled debate, it really isn’t difficult at all to specify the conditions for one or the other. It is only after we have identified these specific conditions that we can begin to determine whether specific trade policies are likely to benefit or harm the economy. Policies that force a contraction in the U.S. trade deficit, in other words, can do so in ways that cause unemployment to rise and real household income to drop, while other policies that force a contraction in the U.S. trade deficit might do so with lower unemployment and higher real household income............"

  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #57
    I hope you didn't skip over the rest of the article to ask an irelevant question.  ;)

    Let's set aside the GDP impact of trade deficits for a moment and consider the article was offered to show that despite increasing tariffs, our trade imbalance grew instead of contracted, and grew to record levels.

    Now you can gloss right past that to discuss GDP all you want, but it doesn't change the underlying point of the post -- the trade gap is growing despite direct attempts to slow it down and reverse it.  Essentially, the power of the American consumer is outweighing the impact to real imported goods, and we are all paying the bill for it.  Which is cool if you're like Saltyreefer and are good with it, but it's safe to say that not all agree.

    If I were intellectually dishonest go on to dispute an impertinent detail of your post, but I won't because that about covers it.   :)

    Have a good evening and please don't call me ignorant or enslaved again.  

    Thanks...MIke
  • sjm1582002sjm1582002 Posts: 4,364 Captain
    Our country's trade policies been producing colossal trade deficits for how many decades now, Mike? 

    +4? 

    Should the numbers on one month provide you with enough evidence to start making conclusions about whether a recent change in trade policy is, or is not, proving to be effective then my previous assessment of you is charitable.

    Furthermore, if a huge trade deficit is indeed as damaging to our GDP as the article suggests then even more drastic interventionist trade policies would be called for. Thanks for sharing it with us.




  • sigiiligansigiiligan Posts: 158 Deckhand
    Here is a practical reality of the "trade war" with China". All LED lighting components come from China, regardless of whether the fixture they are used in are built in China or assembled in the USA. American companies have already invested heavily in China factories to make these components. These "jobs" were never here, and are not coming to the US. What is happening is the lighting industry have raised their costs, which has stalled or out right cancelled large and small construction projects due to lighting packages having increased 10-25 %. Other products used in the electrical industry have also raised their prices (rising tide lifts all boats). I won't go into the price of any component made from metal going up, same thing, trade war regarding ferrous metals and steel. I'm seeing this in my industry across the board. Our "economic growth" has been hurt by these tariffs, and it's only going to get worse unless they can come to an agreement regarding trade. No one wins in a trade war. Republicans used to pro free trade. I just hope as a country we can absorb this trade war without causing great economic harm to our current growth rate, which is already starting to stall.
  • nuevowavonuevowavo Posts: 6,822 Admin
    edited November 2018 #60
    Just wait until we get a trade deal with Vietnam. Then watch the Chinese squirm. 
    That was the point of the TPP.
    BTW, the new trade numbers came out yesterday:
    "The U.S. imported a record amount of goods in September, while the trade deficit with China rose to its highest level ever....
    The foreign-trade deficit in goods and services increased 1.3% from the prior month to $54 billion in September, the Commerce Department said Friday. A surge in products purchased from abroad helped widen the gap, with the value of imported goods ballooning to $218 billion, the highest level on record. Meantime, imports from China picked up, pushing the trade gap to $40.2 billion, another record high...."


    Federales, bring my baby back to me!
  • TarponatorTarponator Under a BridgePosts: 17,010 AG
    edited November 2018 #61
    Our country's trade policies been producing colossal trade deficits for how many decades now, Mike? 

    +4? 

    Should the numbers on one month provide you with enough evidence to start making conclusions about whether a recent change in trade policy is, or is not, proving to be effective then my previous assessment of you is charitable.

    Furthermore, if a huge trade deficit is indeed as damaging to our GDP as the article suggests then even more drastic interventionist trade policies would be called for. Thanks for sharing it with us.




    Thanks for the response, and I appreciate the change in tone.  You are correct to point out that we've been running a deficit for a long time now.

    However, the tariffs have been going on for more than a month, but let's give you the benefit of the doubt....

    What's a reasonable timeframe for the tariffs to have an effect on the trade gap?  How long until we should expect a change in trade policy?

    But, frankly, the more interesting question to me is who will blink first.....because I don't think anyone can answer the first two questions with any sense of precision.
Sign In or Register to comment.