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    Quote Originally Posted by PeteM View Post
    I just finished watching Cal's link to the end.

    The Fox commentator's main assertion is that Trump's tariffs on China are working -- and he challenges anyone to come up with their own plan.

    For several years that plan has been clear. Aim to have the US be the top quality workplace-safe producer AND acknowledge the reality of climate change and the need to put fewer greenhouse gases into the air during manufacturing. Put countervailing tariffs on China to level the playing field (to the extent they steal IP, employ child labor, don't honor warranties, and especially burn billions of tons of coal in manufacturing). Might end up with the same level of tariffs, but it's done in a predictable and justified way that passes muster with allies and trade partners. It also dings despots (Iran, Russia, Saudi Arabia) whose main source of income is oil (by reducing the value of their prime export). That leaves China scrambling on two fronts. First to stop polluting, stealing IP etc. -- and open up their records. Second, to face US manufacturers now competing on a level playing field.
    Except for the minor detail that we make a lot of money selling China coal and iron ore etc I'd agree with you.

    Hell, strategically I agree with you anyway. Been saying the same thing for a long time - you can make a good case for tariffing Chinese goods if you actually think about what you're doing and what you're trying to achieve.

    But - as has also been observed - there needs to be alternative sources of supply *and* you need to control domestic manufacturers who'll happily increase their prices to match the now-tariffed goods and still not bother to innovate. In fact they have even less incentive to innovate.

    Trick would be to tariff Chinese manufactures where there's other foreign suppliers - say EU for high tech/high quality goods - to keep the locals more or less honest.

    Another basis would be to do an ocean sweep, sort rubbish by country of manufacture (or use the main language printed on labels etc) and apply penalty tariffs to them in order to encourage pollution reduction.

    Lots that could be done if first you define what you're trying to achieve.

    PDW

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    Quote Originally Posted by PDW View Post
    there needs to be alternative sources of supply *and* you need to control domestic manufacturers who'll happily increase their prices to match the now-tariffed goods and still not bother to innovate. In fact they have even less incentive to innovate.
    (1) "Alternative sources of supply" means somebody has to be motivated to start a factory with the goal of beating the prevailing prices.
    (2) Incentive to innovate...see (1) above.

    Both these would require the drive of a Henry Ford and the economic conditions—favorable to entrepreneurialism—that existed circa 1910. Yes, there was Gene Haas—but like Ford he manufactured a big-ticket item at affordable prices. What is supposed to happen with more pedestrian products? I concede that in order to level the playing field with respect to China, radical and unpleasant steps have to be (and are being) taken. Even assuming entrepreneurs will come along and start factories to make products long departed from our shores, that is gonna take a while. Nobody with a brain will take the risk until the tariffs are an accepted fact of life, because of the danger they could be lifted which would allow another flood of Chinese goods to lay waste to one's investment.

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    Quote Originally Posted by Oldwrench View Post
    (1) "Alternative sources of supply" means somebody has to be motivated to start a factory with the goal of beating the prevailing prices.
    (2) Incentive to innovate...see (1) above.

    Both these would require the drive of a Henry Ford and the economic conditions—favorable to entrepreneurialism—that existed circa 1910. Yes, there was Gene Haas—but like Ford he manufactured a big-ticket item at affordable prices. What is supposed to happen with more pedestrian products? I concede that in order to level the playing field with respect to China, radical and unpleasant steps have to be (and are being) taken. Even assuming entrepreneurs will come along and start factories to make products long departed from our shores, that is gonna take a while. Nobody with a brain will take the risk until the tariffs are an accepted fact of life, because of the danger they could be lifted which would allow another flood of Chinese goods to lay waste to one's investment.
    That is a really good point. Move back and tariffs dropped. Moving back of course could be calculated and with the rise in manufacturing costs over time in China it might still be foolish to leave China and return.

    Since there are still a lot of things made here and in a more expensive business environment than China there is still businesses who stay and pay all taxes State and Federal. There must be other factors involved if everything made is cheaper in China for makers to stay.

    Considering the American way of life and yes freedom if it is valued then it makes sense companies would wish to sustain American prosperity and strength. When manufacturing goes overseas so does money and into the pockets of the citizens in that country. Profits are no doubt higher for companies who manufacture overseas yet Americans gainfully employed and buying products in the economy are less and less. I may be wrong in my opinion that if that plays all the way out then a strong and prosperous country becomes unsustainable.

    Wouldn’t that be the case? I am just a Machinist not a Economist.

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    Quote Originally Posted by Trueturning View Post
    I am just a Machinist not a Economist.
    That just means your guessing isn't as pretentious.

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    How long would it take to move manufacturing of consumer products out of China.
    Take just TV sets or video cards. If goes to another country does that help the USA or do we just have a new enemy?
    If we made it a national emergency what would it take as a time frame to bring this production back onto US soil? 5 years, 10, 20?
    We have been building plants and putting jobs there for a long time. Some guys I know spending lots of time and effort there before Tienanmen square so it's not like it was a quick transformation.
    All fine to stand and say move the jobs back or order companies to quit doing business in China but that becomes very complicated.
    Bob

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    Quote Originally Posted by CarbideBob View Post
    How long would it take to move manufacturing of consumer products out of China.
    Take just TV sets or video cards. If goes to another country does that help the USA or do we just have a new enemy?
    If we made it a national emergency what would it take as a time frame to bring this production back onto US soil? 5 years, 10, 20?
    We have been building plants and putting jobs there for a long time. Some guys I know spending lots of time and effort there before Tienanmen square so it's not like it was a quick transformation.
    All fine to stand and say move the jobs back or order companies to quit doing business in China but that becomes very complicated.
    Bob
    Some of the companies in question are large and I doubt if they like being "ordered" to do anything. Why did they move in the first place? There must be but I don't think I've ever seen a factory (the past 50 years) in the USA where an endless row of Americans (especially women) are sitting making and assembling small products.

    Re TVs. I've never heard of any Chinese manufactured TV being offered for sale in Europe. I am though sure that many products have Chinese made components in them. Probably much more than many realize.

    YouTube

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    Quote Originally Posted by Gordon B. Clarke View Post
    Re TVs. I've never heard of any Chinese manufactured TV being offered for sale in Europe.
    It's quite difficult to know. Lots of stuff that "comes from" Korea or Japan is really made in China. In some cases, in factories owned by the famous Japanese or Korean brand. Nikon makes cameras in China but they don't advertise it.

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    Quote Originally Posted by EmanuelGoldstein View Post
    It's quite difficult to know. Lots of stuff that "comes from" Korea or Japan is really made in China. In some cases, in factories owned by the famous Japanese or Korean brand. Nikon makes cameras in China but they don't advertise it.
    I'm not in the least bit surprised but doesn't that make "US companies in China get back to the USA" seem like peeing against the wind?

    What can be made in the USA (same quality) that is cheaper than having it made in China without lowering US wages? If it could be done I'm sure it would be done.

    Is there any industrial country where wages aren't going up or the standard of living isn't getting better?

    When I look at something like this:

    Living standards - Rankings - The Economist - World in Figures

    I wonder if the top countries are just where very many rich people choose to live or if wealth is distributed? I can't think of anything the top 4 countries make or sell.

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    Quote Originally Posted by Oldwrench View Post
    Apologies for departing from the discussion of topsoil decline etc., but

    Food for thought:

    Will a 25% tariff on some hypothetical Chinese-manufactured item result in some factory springing up in the US to produce said item here?
    What if nobody here makes said item?
    What if the US factories who presumably could make said item are too effing lazy to answer the phone or to reply to email inquiries requesting a quote for said item?
    What if you can sell the Chinese-manufactured item for 10-12x cost and still be competitive with the most comparable US-made item—which isn't exactly what you want anyway?

    It is entirely possible that a 50% tariff would not be a deterrent to having the said hypothetical item made in China, nor even a 100% tariff—particularly when the response of the typical US manufacturer is to raise prices and negate both the intent and the effect of protectionism. That happened with the ball bearing industry, although its demise was probably inevitable because of the devolution of ball bearings into a commodity product, thanks to modern automated machines being available everywhere. I remember not shedding a tear for those arrogant mofos and I buy ball bearings by the half ton.

    As for me, I'd just love to patronize a US manufacturer of the hypothetical item in question, but until one demonstrably wants my patronage, I guess I'll be cheerfully paying a 25% surcharge to the treasury.

    Maybe it'll be put to good use.
    this would be great- but it doesnt appear to be what is happening.
    Right now, as we type, production is leaving China- and moving to Vietnam, Bangladesh, India, and Indonesia. Not Indiana.

    Twist in Trump’s trade war: manufacturers are fleeing China, but just not for US shores | South China Morning Post

    Europe Joins U.S. Companies Moving Out Of China

    Remember, though, the USA is only something like 8% of China's GDP.
    Most companies are actually more concerned with their chinese market than their US one.
    GM, for example, consistently outsells in China, as opposed to the USA.
    BMW and Mercedes sell more cars in China than anywhere else.
    So, for some companies, if forced to choose, they would choose to keep the China market, and give up on the US one.

    Another unexpected, but real consequence might be Chinese companies making more here. We have seen a LOT of chinese investment in US and Euro factories. Dont the chinese now make most of the drivelines in america, with Neapco, Nexteer, and American Axle all actually chinese companies?
    I just read that this chinese company is building a $2 billion battery factory in Germany.
    With a $2 Billion Factory From China, a German City Lets Others Worry - The New York Times

    so, yes, we could well see more production in the USA and Europe, but by foreign owned companies, and, more and more, chinese companies. I guess a job is a job, but I dont think this is the result you are hoping for.

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    Quote Originally Posted by Gordon B. Clarke View Post
    ...I wonder if the top countries are just where very many rich people choose to live or if wealth is distributed? I can't think of anything the top 4 countries make or sell.
    That chart tells nothing about living standards- those countries have high per-capita GDP's because they are tax havens. Or in Norway's case, a big oil exporter.

    Ireland has one of the highest GDP's per capita in Europe, but disposable income in Ireland is below the EU and OECD averages.

    Ireland in 19th rank for disposable income: 22% below OECD average

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    Quote Originally Posted by jancollc View Post
    That chart tells nothing about living standards- those countries have high per-capita GDP's because they are tax havens. Or in Norway's case, a big oil exporter.

    Ireland has one of the highest GDP's per capita in Europe, but disposable income in Ireland is below the EU and OECD averages.

    Ireland in 19th rank for disposable income: 22% below OECD average
    I'm never sure how much faith to put in charts like those in that link.

    Probably the most honestly realistic way is if enough people in any country wrote whether they are better off today than they were say, 20 years ago. Then again, what is "better off" to each individual?

    I'm sure most in Ireland feel they are better off now than they were 20 years ago but it'd take someone from Ireland to answer that.

    Population and Migration Estimates April 2018 - CSO - Central Statistics Office

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    Quote Originally Posted by Gordon B. Clarke View Post
    ...Probably the most honestly realistic way is if enough people in any country wrote whether they are better off today than they were say, 20 years ago. Then again, what is "better off" to each individual?

    I'm sure most in Ireland feel they are better off now than they were 20 years ago but it'd take someone from Ireland to answer that.
    I wasn't criticizing Ireland- in the "satisfaction" indexes they rank pretty high.

    Just saying GDP per capita has to be viewed in the context of the particular country. There can be a lot of variability in distribution depending on how that GDP is generated- how much is Gov't spending, exporting raw materials, etc.

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    The new tariffs -US- are the first time this is directly hitting US retailers => consumers, but only past december 2019 in scale.

    Previous tariffs hit the macro economy, but typical joe sixpack won´t care, until 1.5-2 years later his cars and capital goods are 5% more expensive.

    More expensive caterpillars, reduced macro economy profits, only start to be visible when consumers are paying for them in higher ASP of goods.
    Houses, bridges, infra, etc.

    But consumer goods in february 2020 +/- at 20% higher retail prices will really be visible.
    And the big importers will pre-charge and over-charge the pipeline, for a few extra % of profit, since they have a good excuse, and they all know volumes will drop.

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    Quote Originally Posted by Ries View Post
    .....

    Another unexpected, but real consequence might be Chinese companies making more here. We have seen a LOT of chinese investment in US and Euro factories. Dont the chinese now make most of the drivelines in america, with Neapco, Nexteer, and American Axle all actually chinese companies?
    I just read that this chinese company is building a $2 billion battery factory in Germany.
    .....
    And how is this influx of cash going with the trade war?
    Nexteer close to me, much more than just diveline which is just plants 4 and 5 and in a fight to survive. They also make the things that steer your car and even your boat.
    Those pesky Chinese now own the ability to steer you car, how scary is that?
    In the real world such fears are non-founded and it runs just like a GM plant. If China had not steeped in it would be a wasteland with no employees.
    What we have done is pull back on the cash coming onto our shores from outside.
    Like it or not they have made money.
    Bob

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    Quote Originally Posted by jancollc View Post
    I wasn't criticizing Ireland- in the "satisfaction" indexes they rank pretty high.

    Just saying GDP per capita has to be viewed in the context of the particular country. There can be a lot of variability in distribution depending on how that GDP is generated- how much is Gov't spending, exporting raw materials, etc.
    I didn't take it as you criticizing Ireland. In fact I thought I was agreeing with you in my post.

    I suppose the real difference in how things are in countries is the difference there is between rich and poor and how many are in between. As many "in betweeners" as possible is good.

    Even on this chart the national poverty level varies from country to country so just going by percentages doesn't tell much.

    List of countries by percentage of population living in poverty - Wikipedia

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    Quote Originally Posted by CarbideBob View Post
    And how is this influx of cash going with the trade war?
    Nexteer close to me, much more than just diveline which is just plants 4 and 5 and in a fight to survive. They also make the things that steer your car and even your boat.
    Those pesky Chinese now own the ability to steer you car, how scary is that?
    In the real world such fears are non-founded and it runs just like a GM plant. If China had not steeped in it would be a wasteland with no employees.
    What we have done is pull back on the cash coming onto our shores from outside.
    Like it or not they have made money.
    Bob
    seems like the global corporate ownership will flourish in spite of the trade war, because, as you say, there are no rules against it in the US.
    Merely making stuff in the USA often doesnt benefit the US as much as people think.

    Mercedes and BMW both have factories here, but currently, Mercedes is around 10% chinese ownership, and an unknown but probably equal or larger percentage Saudi and Emirate ownership. BMW is partly owned by the state of Bavaria, in a classic democratic socialist way.
    So if the US exports Mercs or BMW's, which it does, who profits? Does the money really "come onto our shores"?


    Who owns Ford?
    Stockholders, who can be from anywhere- Norwegian government wealth funds, Saudi investors, Chinese billionaires all can, and do, own stock in US companies.

    Seems to me we would be better off trying to regulate ways to pay US workers more, rather than worry about where, globally, money is flowing.
    That cow left the barn decades ago.
    It you really worry about "trade deficits", you should be thinking about things like the constant microtrading, the Fore-Ex market, and similar ways money flows into and out of the USA every single day in much bigger amounts.
    The daily global ForeEx volume is $5 TRILLION.

    The complaining about how much we pay China for goods is kind of misleading- We are making money, and buying what we want. If I want to import a Basque, or German machine tool (which I have) it doesnt really mean America has "lost" the purchase price of those machines- instead, my profits, and america's manufacturing output, went up due to my increased capabilities and the business that comes from it.

    which is to say- its complicated.

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    Quote Originally Posted by Gordon B. Clarke View Post
    I didn't take it as you criticizing Ireland. In fact I thought I was agreeing with you in my post.

    I suppose the real difference in how things are in countries is the difference there is between rich and poor and how many are in between. As many "in betweeners" as possible is good.

    Even on this chart the national poverty level varies from country to country so just going by percentages doesn't tell much.

    List of countries by percentage of population living in poverty - Wikipedia
    Everyone has their own measure of "poverty". That Wiki page even says the comparisons can't be made by those statistics.

    A poor person in the US is a millionaire somewhere else. The US uses IRS reported income, but does not count Gov't transfers. European poverty figures do include Gov't transfers. That alone makes it impossible to compare poverty rates based on income alone- even between the US and the EU.

    There was a study made last year in the US that looked at the effects of the Clinton welfare reforms. We have a lot of people who report zero or near zero incomes on their tax returns. These households are not likely to report side incomes because it would subtract from their means-tested benefits.

    Funny thing- people are much more likely to tell you how much it costs them to live. When they looked at these households spending, it was a very different picture. They found that people who were reporting incomes below the poverty line ($12,400 for a single person) were actually spending about 45K per year, which is just under the median income. So while we have an "official" poverty rate of around 12%, those households have a standard of living that is much higher than their reported income would suggest.

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    Wrt the tariffs- I am paying less for stainless steel today then I was paying in 2016. My last aluminum buy was 2.30/lb vs. 2.20 in 2016.

    When the tariffs were imposed and the suppliers all jacked their prices, I passed the increase along. The net effect is my profit margins are better today than they were before the tariffs.

    Consumer confidence is still strong and inflation is still under 2%, so I will continue to take the predictions of big price increases to consumers with a grain of salt.

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    Re- confidence.

    With the move today the market is again nearing a test to break above a two year range.
    I can’t see what the trade is but the test is happening.

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    Quote Originally Posted by jancollc View Post
    A poor person in the US is a millionaire somewhere else.
    I wouldn't go as far as to say that unless say that unless you mean a country with about 1 million of their currency in $1.

    A few years ago in Vietnam we (me, wife and son) changed $100 into local currency to have pocket money for the first afternoon. Each of us became a millionaire when we divided the money amongst the three of us.

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