The trade and economy mega-thread (1 Viewer)

[superchuck500]

Is there a trade deal with China? Is it really a deal or just a pull-back to status quo ante? Is Trump advancing US interests in this well-executed trade battle plan or was this poorly conceived from the start . . . and harmful?

I think the jury's still out, but I haven't seen that the Chinese are offering much in compromise - and it's not even clear if there's going to be an agreement. But it's clear they are working on something and I'm sure Trump will sell it as the greatest trade deal ever. The proof will be in the details.

 

[brandon]

Whether they succeed in passing those increases along is up to the consumer. It depends on the product and how flexible the demand is for that product and what their competitors do.

If you import products that are also manufactured in the US or are imported from other countries not subject to the tariff, you may find it difficult to raise your prices. Being able to pass those costs along isn’t a given. You can raise prices. That doesn’t mean the consumer will buy the product at the higher price. Depends on the product.

I think we are saying the same thing. You can attempt to pass along a price increase to the consumer. That in no way means the consumer will be willing to buy your product at the higher price.

I think you’re saying the same thing, but implying different outcomes.

Yes, businesses will attempt to pass on higher prices, and yes, consumers may or may not choose to/be able to afford those higher prices.

The difference between the opinions is in what comes next. You seem to imply that businesses will just have to keep prices low as consumers refuse the higher prices, or only marginally increase prices to try to offset the increases.

The reality is, most businesses have such a small margin on their products that their business model no longer makes any sense with the tariffs, and they are immediately working with a deficit on their P&L sheet that is impossible to overcome.

Even if they cut costs in the form of wages, personnel, benefits, etc, it doesn’t matter if your product itself (without all of those other ancillary expenses) costs more than you can reliably sell it for. No amount of cost cutting can save you from the fact that you can no longer find a buyer for your product. Businesses will fold en masse. The economy will suffer tremendously

And onshoring for many of these products is impossible, at least for potentially decades. We simply don’t have in America the tooling capabilities for manufacturing that exist in China, and we don’t have a people in the country capable of establishing the necessary tooling. It’s not even about manufacturing capacity. We don’t have the specialized tools necessary to onshore the types of manufacturing that are done in China, and we literally have no one in the country that knows how to create the specialized tools.

GamersNexus made an incredible video/documentary that explains a lot about manufacturing and business from actual business owners, with actual, transparent numbers and issues they’re facing.

Everyone should watch it to gain some real perspective on how this affects businesses that import products from overseas.

 

[MT15]

I also have read that in the past if there is an onshore version of a product that has been tariffed, they will tend to increase their prices to match or only very slightly undercut the imported version. They won’t leave their prices significantly lower than the imported version.

Let’s use bottled water - imported already tends to cost more than domestic due to marketing or perceived superiority of the product. When the imported goes through another price increase, do you think domestic bottled water will stay at their current price, or will they also increase their prices proportionately?

We all know the answer to that - they will increase their prices to what the market will bear.

 

[efil4]

 

[Dragon]

Well medicin is going to be a lot more expensive in the US

 

[faceman]

Well medicin is going to be a lot more expensive in the US

He'll TACO in my opinion.

 

[UncleTrvlingJim]

I also have read that in the past if there is an onshore version of a product that has been tariffed, they will tend to increase their prices to match or only very slightly undercut the imported version. They won’t leave their prices significantly lower than the imported version.

Let’s use bottled water - imported already tends to cost more than domestic due to marketing or perceived superiority of the product. When the imported goes through another price increase, do you think domestic bottled water will stay at their current price, or will they also increase their prices proportionately?

We all know the answer to that - they will increase their prices to what the market will bear.

It depends on the elasticity of the demand curve for the product. The more inelastici it is, the more prices will rise.

The main thing to be aware of is tariffs are a sales tax that the importer pays. The downstream ramifications are complex, but it's a tax that the importer pays, and they will still try to maximize profits, so they will pass it on as much as they are able to depending on the elasticity of demand.

Another thing to consider is if the demand is elastic, and tariffs are high, we will simply stop having that product.

 

[bird]

Well medicin is going to be a lot more expensive in the US

He is an idiot. Trade deficit is not a threat.

 

[Eeyore]

https://www.sciencedirect.com/science/article/pii/S2452292924000493

 

[efil4]

This will effectively upend trade for everyone.

We will be on an island. I just returned from Hawaii, where everything is more expensive because everything in the store (aside from what is produced ON THE ISLAND) is more expensive because its either shipped or flown in.

Trump's focus on a transshipping loophole could reorder how global trade works

President Trump has made the issue of transshipping a centerpiece of his latest trade efforts. Other countries are still waiting for the fine print.

finance.yahoo.com

 

[bird]

This will effectively upend trade for everyone.

We will be on an island. I just returned from Hawaii, where everything is more expensive because everything in the store (aside from what is produced ON THE ISLAND) is more expensive because its either shipped or flown in.

Trump's focus on a transshipping loophole could reorder how global trade works

President Trump has made the issue of transshipping a centerpiece of his latest trade efforts. Other countries are still waiting for the fine print.

finance.yahoo.com

Damn, Trump is flat out out stupid.

 

[LA 2 L.A.]

I think you’re saying the same thing, but implying different outcomes.

Yes, businesses will attempt to pass on higher prices, and yes, consumers may or may not choose to/be able to afford those higher prices.

The difference between the opinions is in what comes next. You seem to imply that businesses will just have to keep prices low as consumers refuse the higher prices, or only marginally increase prices to try to offset the increases.

The reality is, most businesses have such a small margin on their products that their business model no longer makes any sense with the tariffs, and they are immediately working with a deficit on their P&L sheet that is impossible to overcome.

Even if they cut costs in the form of wages, personnel, benefits, etc, it doesn’t matter if your product itself (without all of those other ancillary expenses) costs more than you can reliably sell it for. No amount of cost cutting can save you from the fact that you can no longer find a buyer for your product. Businesses will fold en masse. The economy will suffer tremendously

And onshoring for many of these products is impossible, at least for potentially decades. We simply don’t have in America the tooling capabilities for manufacturing that exist in China, and we don’t have a people in the country capable of establishing the necessary tooling. It’s not even about manufacturing capacity. We don’t have the specialized tools necessary to onshore the types of manufacturing that are done in China, and we literally have no one in the country that knows how to create the specialized tools.

GamersNexus made an incredible video/documentary that explains a lot about manufacturing and business from actual business owners, with actual, transparent numbers and issues they’re facing.

Everyone should watch it to gain some real perspective on how this affects businesses that import products from overseas.

That's what I was getting at. Tariffs will have a negative impact and the bottom 90% of us always suffer a lot more from negative impacts on the economy, than the top 10% does. In fact, some in the top 10% benefit from negative economic impacts and they don't share those benefits with the rest of us at all.

 

[MT15]

The newest talking point for the MAGA propaganda circuit is that the US had a surplus in June of about $19M (income vs spending) and the number for tariffs in June also happens to be about $19M so they are saying see, the tariffs are working. But as always they’re not good at context, mostly because they’re not trying to understand anything they’re just trying to manipulate people into believing their BS.

What is the context? Well, Trump froze nearly all the money supposed to go to the states for education. Which dwarfs that $19M (for the entire country it was about $7B, IIRC). So as you can see that slight increase in tariff money didn’t swing the surplus at all.

And it was illegal for Trump to withhold the money, plus they did it without warning the evening before the money was to go to the states. It will impact great programs in every state, just as they are getting ready to start classes in about a month.

A bunch of states have banded together and are suing the federal government over it. This money was already allocated by Congress and earmarked for these programs. It’s not up to Trump to arbitrarily withhold it.

I cannot express how much I hate what these people are doing to this country.

 

[efil4]

The newest talking point for the MAGA propaganda circuit is that the US had a surplus in June of about $19M (income vs spending) and the number for tariffs in June also happens to be about $19M so they are saying see, the tariffs are working. But as always they’re not good at context, mostly because they’re not trying to understand anything they’re just trying to manipulate people into believing their BS.

What is the context? Well, Trump froze nearly all the money supposed to go to the states for education. Which dwarfs that $19M (for the entire country it was about $7B, IIRC). So as you can see that slight increase in tariff money didn’t swing the surplus at all.

And it was illegal for Trump to withhold the money, plus they did it without warning the evening before the money was to go to the states. It will impact great programs in every state, just as they are getting ready to start classes in about a month.

A bunch of states have banded together and are suing the federal government over it. This money was already allocated by Congress and earmarked for these programs. It’s not up to Trump to arbitrarily withhold it.

I cannot express how much I hate what these people are doing to this country.

$19mm in an economy that runs about $28 trillion annual, is proverbial pocket change.

 

[efil4]

cant make this shirt up

 

[superchuck500]

cant make this shirt up

My new favorite Trump trade talking point is the he "made deals" with all those countries he sent that ridiculous letter to - because "the letters are the deals". How TF did we get here??

 

[efil4]

My new favorite Trump trade talking point is the he "made deals" with all those countries he sent that ridiculous letter to - because "the letters are the deals". How TF did we get here??

Mine is the fact that they are touting " opening up these markets to US goods"

Yes, because we produce/mfg SOOO many goods that Indonesia WANTS, yet couldnt get due to the import duties/vat tax.

He just announced deal with Indonesia- a region in which the US had $10B in exports with in 2024.

Meanwhile, Indonesia has Free Trade agreements with China, Australia, South Korea, Chile, Japan etc etc ( RCEP )

So why dont we just get a FTA with Indonesia? Because we dont have SQUAT they WANT. They can get cheaper of like-kind from any one of those countries listed above.

Simply opening up markets does NOT equal increased US Exports. Its insane.

But whatever.

 

[superchuck500]

Mine is the fact that they are touting " opening up these markets to US goods"

Yes, because we produce/mfg SOOO many goods that Indonesia WANTS, yet couldnt get due to the import duties/vat tax.

He just announced deal with Indonesia- a region in which the US had $10B in exports with in 2024.

Meanwhile, Indonesia has Free Trade agreements with China, Australia, South Korea, Chile, Japan etc etc ( RCEP )

So why dont we just get a FTA with Indonesia? Because we dont have SQUAT they WANT. They can get cheaper of like-kind from any one of those countries listed above.

Simply opening up markets does NOT equal increased US Exports. Its insane.

But whatever.

But seriously bruh, Trump is doing a great job - he already secured $16 trillion in investment.

 

[Optimus Prime]