Trade Chaos Causes Businesses to Rethink Their Relationship with the U.S.
nytimes.com
nytimes.com
For Christmas wish lists, my daughters always have ways of surprising me with items from Africa retailers, Netherlands… I had to tell them this year to stick with U.S. only because of tariffs. I guess that's awesome for the U.S.?
(The political cartoon of Santa having to pay tariffs kind of draws itself at this point.)
Britain, Canada, and one Nordic country or another are getting some business within a few months of tariffs dropping, lol. Maybe also Spain or Portugal.
What really blows is watching great stuff come up used on EBay overseas and not being able to buy it. It’s used, FFS! Sometimes it’s even US-made, which is extra goofy.
The current administration has not proven itself to be stable. Even for their base they’ve walked back beneficial tariffs when the anticipated price increases happen (e.g. beef).
And that’s before you get into the constitutionality of their actions or how likely they are to be reversed with the next congress
I’m entirely against Trump’s chaotic lunacy because it’s not going to accomplish any of the good things I’d hope for from such a thing. He’s got whole sectors treading water waiting for him to die, while smaller players simply shutter operations, because you can’t make huge capital investment decisions with this much uncertainty in the air. To say nothing of how bad an idea it is to try to decouple from China while also launching trade wars against your own allied trade bloc.
It's all about power and control.
Cohn starts assembling every piece of economic data to try and convince Trump that American workers did not aspire to work in assembly factories. “See,” he says to Trump at one point, “the biggest leavers of jobs – people leaving voluntarily – is from manufacturing.” “I don’t get it,” replies Trump. Cohn soldiers on. “I can sit in a nice office with air conditioning and a desk, or I can stand on my feet eight hours a day. Which one would you rather do for the same pay?” Trump still wasn’t buying it. Eventually, exasperated, Cohn simply asks Trump: “Why do you have these views?” “I just do,” Trump replies. “I’ve had these views for 30 years.” “That doesn’t mean they’re right,” says Cohn. “I had the view for 15 years I could play professional football.”
https://www.gq-magazine.co.uk/article/the-best-fights-betwee...
It's a net gain for everybody for low-skill products to be produced in regions with lower wages, like China, Vietnam, etc.
Super simple example... socks. Due to lower wages, China can produce socks with a retail price of $1/pair. A US-made equivalent costs $1.10/pair.
Trump placed a 20% tariff on Chinese goods, leading to Chinese socks having a retail price of $1.20.
US sock producer can now charge $1.19 and take 100% of the market. That's an additional, unearned $0.09 cents flowing to the owner of that sock business.
If the tariff had been set at 10%, creating equal retail prices, that might be good, as it would tend to shift more of the market to US-made socks.
Or, leave the prices alone, let us buy Chinese socks, and use that extra 10-20 cents for consuming something else.
I don’t have any particular insight into their operations, but all the ones that still manufacture in the US that I pay attention to seem to be showing signs of distress more this year than ever. Shrinking product lines, steep sales, desperate-looking promotions, shifting more of their catalog to imported lower-quality products (despite the tariffs!). My current concern is that tariffs are going to cut the legs out from under what remains of that sector, and there’ll soon be way fewer US-made clothing options.
I think broad prosperity is a ton more important to their health than tariffs. When people don’t have much disposable income they’re not going to buy American-made leather shoes and wool shirts and suits and fine cotton shirts, they’re going to pay the 100% (or whatever) tariffs on a $50 (pre-tariff) Chinese outfit made mostly of petroleum and still pay way less than for a hypothetical similar outfit made in the US.
US labor only makes sense for pretty-decent or better goods (it’s the reason it’s an alright signal of quality, doesn’t make sense to spend up for American labor then use shit materials to save a penny, if you’re using US labor you’re already priced out of the lower half or more of the market) and those markets are getting fucked as prosperity concentrates to the top.
I expect the next shock to what’s left of the middle class is going to kill a bunch of these companies, and tariff chaos is rushing us into that. Plus almost all of them use foreign goods or labor in parts of their processes, so this shit’s forcing them to raise prices or eat reduced profit. Pendleton? The cloth is made in a US mill, but the shirts are assembled in the DR or wherever. Rochester suit makers? The cloth is Italian or maybe British, obviously, or why bother. Can you even get US-made linen? LOL.
Or shop American and help keep manufacturing and jobs alive here.
I think it's a fair compromise. As Americans we are used to having an overwhelming amount of choice, partly due to our previous open trade policies. Something you don't really see in other countries. Go to Japan and you can count the American products sold on your hand.
I'm living on Japan right now and this is absurd. There are American brands everywhere (although as usual who knows where the products are made). American food brands. American steak. American sportswear. American backpacks. Entire shops in the mall devoted to American fashion. I'd say appliances and cars are more rarely American brands but there are reasons beyond trade barriers why that's true.
There are certain clothing brands (at a much higher cost), large fast food chains, and Apple are the exceptions. Basically really large companies that make specific deals.
https://www.seiyu.co.jp/assets/images/flyer_blackfriday25112...
For food items, the import regulations are much stricter in every country than for stuff like electronics or clothes. Meat especially is very highly restricted, due to differences in feeding, antibiotics, etc...
And how are "large companies" making deals? The same import duties apply to everyone.
You don't see GE appliances over there either.
Yet LG, Samsung appliances are plentiful in the states.
Could coffee be grown in reasonable quantities inside the USA? I find some mention of very expensive high-end 'boutique' coffee grown in California but it is not generally a crop that grows well in the continental USA.
(until global warming reduces the chances of frost in Florida perhaps?)
Another example from the article was a tea grower. Again, niche growing is limited to just some regions of the USA, with less than 0.1% of consumption domestically produced.
And of course with these products they have distinctive tastes that reflect where they were grown, so tea from California is distinctive tasting and not a direct substitute for tea from Japan from the article.
The growers in the article had been heavily disrupted by tariffs.
I don't mind at all reducing tariffs for things we dont manufacture or can't for various reasons.
I believe the administration is lowering tariffs for things like that.
Beef on the other hand should be temporarily lowered since our cattle herd is half of what it should be. (It plummeted under Biden takes awhile to return as the herd matures) Soooo import from Argentina until it's back up.
That’s not a new thing. It seems like you guys are the only ones whose goods aren’t interesting.
This kind of myopic view completely misses the scope of manufacturing chains that are simply missing in the US. Things like stainless steel rebar and LCD screens take many years to build up efficient production for.
>Go to Japan and you can count the American products sold on your hand
Do you honestly think that Japan makes almost everything domestically? There's a good reason for the absence of American products in Japan. You are so close :)
The reason is that there are hardly any products made in America.
I realise that my experience is limited to the handful of times I've tried to buy stuff from the US. Perhaps I've just been very unlucky, but frankly, the odds are against it.
Pretty much everything I buy, apart from computer tech, is from an American company.
Or you know, drive us into a recession. You do recall tariffs (Smoot-Hawley) were a contributing factor to the length and depth of the Great Depression, right?
If that's the model the US chooses, then i guess that's their choice.
Which part of the mutually exclusive triangle of "add manufacturing" or "add revenue" or "reduce deficits" do you consider to be "the intended effect"?
They mentioned that before the tariffs deadline, American businesses were rushing to make giant international orders. And since then, work had been slow for my friend.
This is such an obviously self-inflicted wound it's maddening.
That's it.
Just look up all the officials that he has pardoned or given clemency for corruption.
The Man Behind Trump’s Tariffs Strategy: https://archive.is/llGGR
Update: fixed link
https://www.wired.com/story/senators-probe-cantor-fitzgerald...
The ones that hit the news (that seem to be motivated by Trump's personal grievances) are probably a small drop in the bucket.
A mad king imposing tariffs (taxes) on a whim is not okay. Republicans control all three branches of government, they'd craft coherent policy if they wanted to bring back manufacturing to the US. Unserious and frankly stupid crowd of people who still support this government.
Let's all be clear, too. This is illegal. Trump does not have the power to do this. It exclusively belongs to Congress.
Just like the executive can't just randomly alter budgets and what programs get to run. Or declare ~~war~~ "special operations" against Venezuela. Or get away with any crime they simply want to call "official acts".
The Constitution is basically a joke at this point.
(This is in addition to the fact that imposing big, likely-illegal, capricious taxes on Americans is a de facto reduction in the freedom of all American citizens. We are being deprived of our freedom to purchase what we want from wherever we want, and now it extends far beyond cheap Chinese EVs and into practically everything. People should understand the tariffs first as an assault on our personal liberties and only second as a business matter.)
Sorry, but that is not a freedom you have in the US or anywhere else on earth. Of course you are right that tariffs on intermediate goods hurt US producers, but your claim that your freedom is being assaulted is laughable.
I agree with you that US citizens have a different suite of freedoms than those enjoyed by citizens of other countries.
But it's just factually incorrect to say that the economic freedoms of all US citizens (and residents) have not been curtailed this year.
I can't buy anything overseas anymore. For example, used guitars from Japan used to have free shipping. It's now hundreds of dollars.
I can't buy my cat's medicine from Canada anymore, and the U S. distributor was already price gauging, as the American health system is wont to do.
How is any of this make sense? Nothing prompted this.
The American public got taxed while the rich got tax breaks, and his followers are lapping it up.
Cameras and bicycles are my two main hobbies. Essentially zero US production for either. Prices have gone up, but for no good reason - there's no US industry to protect.
Limited, highly-targeted tariffs can serve a purpose. But the blanket stuff we've seen this year make zero sense at a macroeconomic level.
The Trump trade policy makes no sense and has been horribly executed on op of that, but I think that in the long run moving away from a policy of "as much cheap stuff for consumers as possible no matter the externalizes" will be a good thing.
That strikes me as something akin to the broken window fallacy. Tariffs are absolutely market-distorting and absolutely lead to higher prices.
We absolutely should be leveraging lower cost of labor overseas to build cheap stuff. If there is concern about other externalities (pollution, slave labor, etc) then address those directly with sanctions, targeted tariffs, or something else.
I've yet to see a good argument that overconsumption is bad (in a general economic sense). If we're overspending (not saving, or over-leveraging) then address that directly (not via tariffs). If it's a pollution argument, then address that directly. Etc.
Nope. Japanese guitars are substantially higher quality and at lower prices than U.S. made guitars.
I'm still waiting for you to describe how this makes sense. The U.S. doesn't have the industries the foreign market has.
That everyone was willing to stand by and let him do it (as in not apply real consequences or physically/procedurally actually stop him) is the opportunity that presented itself.
If a criminal suddenly walks by and steals your unlocked car (or breaks the window and steals it), and gets away, it’s a bit silly to stand there complaining you didn’t ask them to do that!
Obviously deals expire and can be renegotiated, but what Trump has done is just said "deal is off just because I said so, even ones that I myself previously negotiated and signed!"
Do you like to do business with people who just shred your prior deals when they change their mind? It makes no sense.
Notably, China, India, etc. still tax the every loving crap out of most imports in their jurisdiction (yes, tariffs!).
https://en.wikipedia.org/wiki/Economic_history_of_China_(194...
I have a friend I met last year who lives in China and he’s looking to move to Singapore. So I’m not super informed but also I think I have enough anecdotal knowledge that someone showing me a GDP chart won’t convince me life is better there.
But we may go in a few months after we take our daughter to her ancestral Taiwan. Then I’ll see for myself.
Many Indians told me India is rapidly approaching the West once and I went there for a friend’s wedding and they were right but in the sense that Andromeda is approaching us at 120 km/s: it’s fast but the gap is big in standard of living.
So I’m a bit hesitant to believe this stuff. I’ll see for myself.
There isn’t much ‘made in the USA (actually)’ at this point.
Plenty of other places have similar import policies - and still import most things from China. Like India, and well, frankly most of the world at this point.
Notably, those in power in both countries live pretty cushy lives.
There is a modern Bastiat style essay waiting to be written here.
War is peace. Freedom is slavery. Ignorance is strength.
I don't know why you can't just admit you're out of your depth here instead of doubling down on the dumbest and most chaotic trade policy we've ever seen.