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.

 

[efil4]

That’s pretty much how it works. They try to pass the added costs along. Next they try to cut their costs elsewhere.

Investors pay attention to those kind of things.

they dont try

they do. Every single time.

Because they are beholden to one group and one group only- shareholders.

There isnt a single shareholder or large institutional investor willing to absorb lower shareprice/dividends so a corporation can pay the tariff/tax so the consumer doesnt bear the costs.

 

[TampaJoe]

Since i can remember my Econ 101 in 1992.

our semester project was we were CEO of our own tennis shoe company and we had to navigate building mfg facility domestically or abroad, price points, shipping costs and each week we had a task to do one step of like 12. And each week, our decisions were fed into a program that determined where we stood ( market share of our product and profitability )

You learn REAL FAST what works and what doesnt for profitability- and i can assure you, domestic mfg was a death knell. Even with VAT/Ad Valorem or tariffs.

This $@#@ simply wont work if the bulk of consumers want affordability.

We may cycle to a few years of domestic mfg for certain industries, but eventually, the threat of tariffs will wane, companies will, as fast as they can, move BACK to overseas cheap labor, and new cycle begins.

You have a point if the manufacturing process in question is more labor intensive versus robotics. Automation impacts the dynamic.

 

[TampaJoe]

they dont try

they do. Every single time.

Because they are beholden to one group and one group only- shareholders.

There isnt a single shareholder or large institutional investor willing to absorb lower shareprice/dividends so a corporation can pay the tariff/tax so the consumer doesnt bear the costs.

Depends on elasticity of demand. They cannot force the consumer to accept higher prices. But in theory, I agree they will first attempt to pass along those increases in costs. They may also try to cut costs elsewhere as well to offset the increase.

 

[efil4]

You have a point if the manufacturing process in question is more labor intensive versus robotics. Automation impacts the dynamic.

Automation is great for the corporation

not so much for the workers.

So you need to pick a side. Are you for automation, which removes/severely lowers workforce, or the workers/employees ( now you are effectively against the corps maximizing profits ) ?

Its a double-edged sword and while many attempt to straddle the fence, eventually corporations win out. They are the ones with the most $$$.

 

[efil4]

Depends on elasticity of demand. They cannot force the consumer to accept higher prices. But in theory, I agree they will first attempt to pass along those increases in costs. They may also try to cut costs elsewhere as well to offset the increase.

Ahhh - yes on "luxury" items of course. But luxury items are just that, luxury. If you are willing to pay $800 for a purse, whats another $120 from 15% tariff? Nothing.

However, there is inelastic demand as well. Thats regarding products folks MUST have.

And yes, now the higher price is indeed "forced upon" consumer. They have no choice. ( see pharmaceuticals as one example )

and ALL of what we are discussing has a DIRECT effect on our economy in both the MACRO and MICRO. And none of it is beneficial.

 

[TampaJoe]

Automation is great for the corporation

not so much for the workers.

So you need to pick a side. Are you for automation, which removes/severely lowers workforce, or the workers/employees ( now you are effectively against the corps maximizing profits ) ?

Its a double-edges sword and while many attempt to straddle the fence, eventually corporations win out. They are the ones with the most $$$.

It is not about being for or against labor IMV. The workplace constantly changes. So we either adapt or we fall behind. I would rather have businesses locate here with automation versus locate somewhere else with cheap labor.

I don’t think resisting progress is a viable long term business strategy. It is a global economy. You do what you need to do to compete.

 

[efil4]

I don’t think resisting progress is a viable long term business strategy. It is a global economy. You do what you need to do to compete.

it is EXACTLY that - a GLOBAL economy.

that is precisely the argument vs tariffs. The GLOBAL economy is going to move on with or without the US.

Consumers will be replaced elsewhere, meanwhile we will be producing product for sale at prices no one willing to buy ( elasticity ) in markets we have zero to less than 5% exposure.

Japan- Trump touts that now they will allow US cars in their market. Great. ( which, was only important if you lived under a rock- Japan has always allowed US cars for sale )

Hey AI- how many cars does Ford sell in Japan?

They withdrew from the Japanese market in 2016 due to low sales and a lack of profitability. While they previously had a presence there, Ford has since focused on other, more profitable markets, according to automotive industry reports
What about Chevrolet?
Chevrolet sells very few cars in Japan. While GM, Chevrolet's parent company, maintains a presence in Japan, sales are minimal. In recent years, Chevrolet has primarily focused on selling the Corvette in Japan, with annual sales below 1,000 units. A few years ago, the combined sales of Chevrolet and Cadillac were around 1,200 units out of a total of 5.38 million cars sold in Japan

LOL 1200 cars sold out of 5.38million. that is .00025% of all sales. At that rate, its COSTING CHEVROLET more than the car itself to sell one vehicle in Japan.

Point is, alienating yourself ( America First mantra ) in a FAST MOVING, ever innovating, GLOBAL economy, is pure folly.

 

[TampaJoe]

it is EXACTLY that - a GLOBAL economy.

that is precisely the argument vs tariffs. The GLOBAL economy is going to move on with or without the US.

Consumers will be replaced elsewhere, meanwhile we will be producing product for sale at prices no one willing to buy ( elasticity ) in markets we have zero to less than 5% exposure.

Japan- Trump touts that now they will allow US cars in their market. Great.

Hey AI- how many cars does Ford sell in Japan?

They withdrew from the Japanese market in 2016 due to low sales and a lack of profitability. While they previously had a presence there, Ford has since focused on other, more profitable markets, according to automotive industry reports
What about Chevrolet?
Chevrolet sells very few cars in Japan. While GM, Chevrolet's parent company, maintains a presence in Japan, sales are minimal. In recent years, Chevrolet has primarily focused on selling the Corvette in Japan, with annual sales below 1,000 units. A few years ago, the combined sales of Chevrolet and Cadillac were around 1,200 units out of a total of 5.38 million cars sold in Japan

LOL 1200 cars sold out of 5.38million. that is .00025% of all sales. At that rate, its COSTING CHEVROLET more than the car itself to sell one vehicle in Japan.

Point is, alienating yourself ( America First mantra ) in a FAST MOVING, ever innovating, GLOBAL economy, is pure folly.

I tend to view tariffs as more of a surgical tool to be deployed on a targeted basis depending on economic or strategic national security concerns.

 

[UncleTrvlingJim]

I tend to view tariffs as more of a surgical tool to be deployed on a targeted basis depending on economic or strategic national security concerns.

That's reasonable, but that's not what we're doing now.

 

[Optimus Prime]

I tend to view tariffs as more of a surgical tool to be deployed on a targeted basis depending on economic or strategic national security concerns.

Do you think that's what's being done now?

 

[TampaJoe]

Do you think that's what's being done now?

No. I am not a fan of these broad based tariffs. They can have unintended consequences.

 

[Sendai]

Ahhh - yes on "luxury" items of course. But luxury items are just that, luxury. If you are willing to pay $800 for a purse, whats another $120 from 15% tariff? Nothing.

However, there is inelastic demand as well. Thats regarding products folks MUST have.

And yes, now the higher price is indeed "forced upon" consumer. They have no choice. ( see pharmaceuticals as one example )

and ALL of what we are discussing has a DIRECT effect on our economy in both the MACRO and MICRO. And none of it is beneficial.

So, most European imports tariffs are going to be paid by high income earners. Good way to tax the rich. Probably the same for Japanese goods.

 

[efil4]

No. I am not a fan of these broad based tariffs. They WILL have unintended consequences.

fixed it for you.

 

[TampaJoe]

fixed it for you.

There is no need to modify my post. I wrote it as I intended.

 

[efil4]

So, most European imports tariffs are going to be paid by high income earners. Good way to tax the rich. Probably the same for Japanese goods.

you know how the rich avoid the tariff? Dont buy domestically.

which circles back to @TampaJoe discussion about "elasticity of demand" - If Louis Vuitton is now charging $2500 for purse which, 6 months ago was $2000, it might dawn on consumer that hey, ill be in Paris next month, buy the bag for 1900 Euros, get VAT refund, bring back to US as if its my purse ( dont declare at customs ) and i just saved $600~

Or simply dont buy. But now LV isnt selling as many bags out US stores.

So they dont need 15 employees at each store. Downsize to 10. If sales keep dropping, downsize to 6. Now 9 folks are out of work.

The spiral has begun. Until bottom is reached, cycle starts anew, and sales increase.

And LV bag sales are not limited to "high income earners" - a very large swath of their customers are middle income earners as well. THOSE folks are not going to buy.

They will either go resale or counterfeit market ( if they absolutely must have )

 

[efil4]

There is no need to modify my post. I wrote it as I intended.

What you intended was to add the possibility there wont be. ( unintended consequences )

 

[TampaJoe]

What you intended was to add the possibility there wont be. ( unintended consequences )

You are free to make that point using your own words. All I ask is that you don’t modify a post of mine to make it appear I wrote something other than what I actually wrote.

Shouldn’t be too much to ask.

 

[efil4]

You are free to make that point using your own words. All I ask is that you don’t modify a post of mine to make it appear I wrote something other than what I actually wrote.

Shouldn’t be too much to ask.

its not.

now its under consideration.

ill have an answer for you in two weeks.