China

By free trade wt China, did we supply the rope by which they will eventually hang us with economical

  • Yes

    Votes: 0 0.0%

  • No

    Votes: 4 33.3%

  • Everything goes in cycles. It may be China's turn to be top dog.

    Votes: 0 0.0%

  • The USA is just too storng and balanced economically and will remain the prime economic power in the

    Votes: 8 66.7%
  • Total voters
    12
It all reminds me of Smoot-Hawley.  The protectionist act that is widely considered the trigger to

the great depression. 

https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act

This sounds too familiar as our dear leader needs no advisors but yes men who will confirm his bad judgment:

Despite a petition from more than 1,000 economists urging him to veto the legislation, Hoover signed the bill into law on June 17, 1930.
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A unintended consequence - apply this to our current world:

In 1934 President Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act, reducing tariff levels and promoting trade liberalization and cooperation with foreign governments. Some observers have argued that by deepening the Great Depression the tariff may have contributed to the rise of political extremism, enabling leaders such as Adolf Hitler to improve their political strength and gain power.
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TGHusker said:
It all reminds me of Smoot-Hawley.  The protectionist act that is widely considered the trigger to

the great depression. 

https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act

This sounds too familiar as our dear leader needs no advisors but yes men who will confirm his bad judgment:

A unintended consequence - apply this to our current world:
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This definitely has shades of Smoot-Hawley, but be careful assuming a single or even one major cause for the Great Depression. The tariffs probably had a some effect, but here's a few other causes:

Top 5 Causes of the Great Depression

1. Stock Market Crash of 1929

2. Bank Failures

3. Reduction in Purchasing Across the Board

4. American Economic Policy with Europe

5. Drought Conditions
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http://www.ushistory.org/us/48.asp

Long-term underlying causes sent the nation into a downward spiral of despair. First, American firms earned record profits during the 1920s and reinvested much of these funds into expansion. By 1929, companies had expanded to the bubble point. Workers could no longer continue to fuel further expansion, so a slowdown was inevitable. While corporate profits, skyrocketed, wages increased incrementally, which widened the distribution of wealth.

The richest one percent of Americans owned over a third of all American assets. Such wealth concentrated in the hands of a few limits economic growth. The wealthy tended to save money that might have been put back into the economy if it were spread among the middle and lower classes. Middle class Americans had already stretched their debt capacities by purchasing automobiles and household appliances on installment plans.
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That last quote is VERY scary. The US is even more unequal economically today than it was heading into the Great Depression. The new tariffs could be the straw that broke the camel's back.

 
So, what exactly are we supposed to do about China? Anyone who works in industry knows that they regularly steal IP. We know that they routinely violate trade laws and circumvent current tariffs. So why can't we slap tariffs and penalties on them? Are we just supposed to sit back and take it while it kills our own businesses here at home?

 
ZRod said:
So, what exactly are we supposed to do about China? Anyone who works in industry knows that they regularly steal IP. We know that they routinely violate trade laws and circumvent current tariffs. So why can't we slap tariffs and penalties on them? Are we just supposed to sit back and take it while it kills our own businesses here at home?
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I have lots of different things to say about it.

#1, when Trump is making a decision, I don't believe he's making the decision for the correct reasons, and I don't think he's doing it the right way. He doesn't even understand simple concepts.

There are lots of concepts I don't understand, but I'm not the President, and if I was, I wouldn't hire a bunch of yes men and then do whatever the hell I wanted it, thinking I'm the smartest person on earth.

So to the actual question, I don't know the answer but I'm going to think out loud here, just talking about steel and not the new tariffs and pretending China and America are the only countries on earth.

Let's pretend American steel and aluminum cost 120% what Chinese steel costs, and currently 99% of the steel manufactured in the U.S. is being sold (they wouldn't make more than they need to, right?). Let's say the tariff makes it so American steel costs 95% of what Chinese steel costs, so it's the best deal there is. That's nice, but we don't have nearly as many steel plants as we used to because China started selling it cheaply quite awhile ago. I'm assuming we can increase production at the plants we have but that we would have a shortfall if every American company was forced to only buy from America. It has to be a long-term project to start up a manufacturing plant again.

So eventually, maybe 5-10 years from now, we might be able to open up some new plants and make up for that shortfall, now that there's more demand because of the tariffs, and then the plants would be doing well which would, at least in a small way, help the economy. That's great.

But doing a big tariff immediately might put a bunch of companies out of business, because they can't handle the sudden increase in cost. We likely CANNOT produce enough steel for them. We don't have the plants now. These companies will HAVE to buy some from China for awhile and it will cost more. The U.S. steel already costs more, obviously. There are likely smart ways we can introduce tariffs that will not put steel-buying companies out of business, and will increase the chances that we can increase our steel production in the coming years. A 25% tariff risks putting companies out of business which will reduce the demand. OR, if they don't go out of business, they raise prices on all of us.

An example I will use, that I've already used, is a company in Omaha that uses a lot of steel and creates a crapton of products for Wal-mart. They are either going to have to raise their prices, or make less $. Maybe if they raise their prices Wal-mart goes elsewhere. Maybe Wal-mart buys the product directly from China because it's not on the tariff list! Maybe Wal-mart can't go elsewhere, so they raise prices on their products to make up for the $ lost, which means the consumer pays for it directly. But if this was a gradual thing it would have less chance of being damaging, imo. That sounds logical to me, anyhow.


Finally, back to Trump. He doesn't understand trade deficit. Americans have the ability to consume more products than other countries, which increases our need for imports. There is also such a thing as supply and demand. If Americans love chocolate more than other countries and it's in high demand, South American countries will charge us more than they charge other countries - pretty simple concept. It doesn't mean they are duping us. And I read the other day that they have trouble calculating electronic transactions when it comes to import and export $. Their most accurate counts are for customs - so we're talking physical items entering harbors. Think about that for a minute... which countries sell the s#!t people buy electronically? I'm talking software, movies, video games, online services. Those exports are underrepresented, and they're American exports. Without looking, I'm pretty sure America and Japan are the top exporters of that kind of stuff. and I bet other countries are very far behind.

Ok I looked. I guess Japan just has a lot of video games.

Largest software companies according to Forbes are:

1. Microsoft, USA
2. Oracle, USA
3. SAP, Germany
4. Symantec, USA
5. VMware, USA
6. Fiserv, USA
7. CA Technologies, USA
8. Intuit, USA
9. Salesforce, USA
10. Amadeus IT Group, Spain

 
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Moiraine said:
I have lots of different things to say about it.

#1, when Trump is making a decision, I don't believe he's making the decision for the correct reasons, and I don't think he's doing it the right way. He doesn't even understand simple concepts.

There are lots of concepts I don't understand, but I'm not the President, and if I was, I wouldn't hire a bunch of yes men and then do whatever the hell I wanted it, thinking I'm the smartest person on earth.

So to the actual question, I don't know the answer but I'm going to think out loud here, just talking about steel and not the new tariffs and pretending China and America are the only countries on earth.

Let's pretend American steel and aluminum cost 120% what Chinese steel costs, and currently 99% of the steel manufactured in the U.S. is being sold (they wouldn't make more than they need to, right?). We don't have nearly as many of these plants as we used to because China started selling it cheaply quite awhile ago. I'm assuming we can increase production at the plants we have but that we would have a shortfall if every American company was forced to only buy from America.

So eventually, maybe 5-10 years from now, we might be able to open up some new plants and make up for that shortfall, and then the plants would be doing well which would, at least in a small way, help the economy. That's great.

But, and I've probably spent way too many words explaining my thoughts, doing a big tariff immediately might put a bunch of companies out of businesses, because they can't handle the sudden in crease in cost. We likely CANNOT produce enough steel for them. We don't have the plants now. These companies will HAVE to buy some from China and it will cost more. The U.S. steel already costs more, obviously. There are likely smart ways we can introduce tariffs that will not put steel-buying companies out of business, and will increase the chances that we can increase our steel production in the coming years. A 25% tariff risks putting companies out of business which will reduce the demand. OR, if they don't go out of business, they raise prices on all of us.

An example I will use, that I've already used, is a company in Omaha that uses a lot of steel and creates a crapton of products for Wal-mart. They are either going to have to raise their prices, or make less $. Maybe if they raise their prices Wal-mart goes elsewhere. Maybe Wal-mart can't go elsewhere, so they raise prices on their products to make up for the $ lost. (I don't like Wal-mart anyway but that's another topic). But if this was a gradual thing it would have less chance of being damaging, imo. That sounds logical to me, anyhow.


Finally, back to Trump. He doesn't understand trade deficit. And I read the other day that they have trouble calculating electronic transactions when it comes to import and export $. Their most accurate counts are for customs - so we're talking physical items entering harbors. Think about that for a minute... which countries sell the s#!t people buy electronically? I'm talking software, movies, video games, online services. Those exports are underrepresented, and they're American exports.
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I wish the blubbering idiot would understand that. 

 
I mean, Moiraine, your logic is sound but it still doesn't address the fact that China routinely violates trade rules and no one seems to care. It like the North Korea problem, past administrations have let it fester too long and it's become a major issue. I know that myself and others at my work routinely talk about how a counter part in China asks for a drawing on a patented part, and we refuse to give it to them because they don't need it and we know exactly what will happen. We aren't playing on a level playing field.

 
ZRod said:
I mean, Moiraine, your logic is sound but it still doesn't address the fact that China routinely violates trade rules and no one seems to care. It like the North Korea problem, past administrations have let it fester too long and it's become a major issue. I know that myself and others at my work routinely talk about how a counter part in China asks for a drawing on a patented part, and we refuse to give it to them because they don't need it and we know exactly what will happen. We aren't playing on a level playing field.
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It kind of does address it. I don't know what I, personally, would do, but introducing a tariff, let's say 5%, does not necessarily sound like a bad idea to me. Then increasing it over time if that seems like a good idea. Can you tell me more about China routinely violating trade rules that other countries don't violate? I don't know much about it.

TheSker said:
Time will tell, but maybe....just maybe....getting a little tougher on unfair trade might not be a bad deal in the long run.
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I think it's possible it will be better in the long run, too, but I don't know why it can't be gradual. That seems a hell of a lot less dangerous. I've often been annoyed we didn't introduce tariffs on Chinese goods back in the 1980's when China was basically producing them in sweatshops. My opinion is that we should have tried to avoid buying things from countries that were doing things in creating those things that are illegal here. E.g. having child workers. I just think the timing is 30 years too late. Saving a company or industry sounds a lot cheaper to me than starting it over.

 
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ZRod said:
I mean, Moiraine, your logic is sound but it still doesn't address the fact that China routinely violates trade rules and no one seems to care. It like the North Korea problem, past administrations have let it fester too long and it's become a major issue. I know that myself and others at my work routinely talk about how a counter part in China asks for a drawing on a patented part, and we refuse to give it to them because they don't need it and we know exactly what will happen. We aren't playing on a level playing field.
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I’ve had personal experience with issues like this that cost us thousands to fix. 

I do do think the US government should be very heavily involved in fixing this issue. 

 
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