Tariffs - trade war ?

[Hawnjigs]

I don't understand how the escalating tariffs "war" benefits us ?  Seems logical that foreign suppliers will maintain profitability by adding that cost onto their goods which will be passed on to consumers in the USA ?

Just got this email from Worth Co mfg-distr of tackle components:
"Effective September 17th, 2018, Worth will be raising prices by approximately 9% on all items made out of steel." 

 

[Bucho]

Trump is doing a good job going toe to toe with China, I give him that. Their attitude to free trade, subsidies, patent- and procuct piracy is absolutely shameless. And frankly, he`s not all wrong about the EU, either. On the one hand, consumer protection is significantly higher here and I`m not the only one who wants to keep it that way and fears a buy-out. On the other hand, there are many trade barriers that folks here have gotten fat and comfortable with and that should be given a second thought. If Trump succeeds to bluff the EU, the fear of trade war might change things to the better. 

Other than that, your right, of course. Local suppliers will raise their prices and neglect R&D if someone ridds them of foreign competition. The U.S. car industry never really recovered from Reagan`s protective policies against Japan. And the higher prices of U.S. made steel products are hampening their international competetiveness. High tariffs are a burden to your economy, even without the inevidable retaliation from trade partners.

On the upside, tariffs help reduce the defecit caused by the company tax cuts. It`s still money after all, just like taxes.

Sorry for posting so much about a U.S. topic again but I find this exciting to watch and analyze. My attitude to many of Trump`s policies is a bit like brexit - I`m glad someone does it, but I´m even more glad it is not us!

 

[Hawnjigs]

Just found this article from usually pro-Trump "Business Insider" dated Aug 28 2018:

"One of President Donald Trump's main goals in his shake-up of US trade policy: Bring down the large US trade deficit. But that deficit appears to be heading in the opposite direction since the trade war kicked off in earnest.

The US goods trade deficit increased to $72.2 billion in July, up from $67.9 billion in June, according to advance data from the US Census Bureau. Exports fell by 1.7% from the month before, while imports rose by 0.9%. This was the second straight month the trade deficit has increased.

Trump has repeatedly pointed to the large US goods trade deficit with countries like China and Mexico as reason to impose tariffs. Tariffs on Chinese goods, as well retaliatory tariffs against the US from Canada, Mexico, and the European Union, went into effect in July.

The monthly growth also means the year-to-date trade deficit is 7% larger than the same period in 2017."

 

[Hawnjigs]

Bucho, is your point of view like watching a fight with no winner and everyone gets beat up ?

Like you said, perhaps its all showmanship to get attention regardless of the consequences.

 

[Bucho]

I`m not seeing a fight in which everyone looses. Firstly, we have a saying here that goes something like "if two people fight, a third one gets lucky". Besides, I´m not even seeing too much action overall. Bullies don´t want to get beaten up, they want to push others around. Trump is a hustler, not a warrior. He pushes people`s buttons to watch their responses - and I like to watch them, too.

I already told you that a trade defecit means that you people get to consume more stuff than you produce. So who is exploiting who? The big question is "who supplies the capital - and for how much longer?"

 

[hookup]

Two sides to trade tariffs story

First side is if a foreign company charges the US tariffs on US manufactured goods, then the US should make the same charges tariffs on the foreign counties good. Fair?

The other side is if the US allows open boarders - no tariffs imposed on foreign goods - then goods from foreign companies would be cheaper to US consumers. Fair?

Allot is written on pros and cons

https://scholar.harvard.edu/files/nunn/files/nunn_trefler_aej-macro_2010.pdf

https://www.imf.org/~/media/Files/Publications/WP/2017/wp17151.ashx

I tend to fall on the first side

 

[Bucho]

Two sides to trade tariffs story

First side is if a foreign company charges the US tariffs on US manufactured goods, then the US should make the same charges tariffs on the foreign counties good.  Fair?

Its not that simple. Folks here had to be reminded that Europe charges 3 times higher tariffs on cars than the other way round, that much is true. The internationally respected legal basis for tariffs however is to tackle another country`s subsidies, and that is something that you can`t always put your finger on.

No two countries have equal strengths and weaknesses, so they will likely accept different tariffs on different goods. At the moment, Europe`s retaliation is aiming precisely at industries that are relevant to upcoming U.S. elections. These things are not meant to be fair. There`s a reason for the term "war".