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New US Tariffs are Anti-Maker and Will Encourage Offshoring
- thisisit 8y agoCurious how will this affect the Chinese sellers (both fake and genuine goods) on Amazon/Ebay?
- SiempreViernes 8y agoThey will be as affected as any other importer I would imagine, but they might try to get away with letting they buyer discover the import costs as their packages get stuck in customs.
- agumonkey 8y agoMost cheapo small ebay things are sent as 'fat letters'(up to a point) but be warned if the thing is an actual box, you'll enjoy both import fees AND additional random importation tax handling fees.
- gruez 8y agoAFAIK most sellers under-declare the value and mark as gift on their manifest, so the packages don't get taxed.
- agumonkey 8y agoThis trick is only working randomly
- gruez 8y agoreally? never got hit with duties from imports that were under-declare, even in cases where the item in question was obviously worth more than $20 (eg. phones).
- jfk13 8y agoI take it that knowingly participating in fraud doesn't bother you at all?
- gruez 8y agoThe seller does it for everyone. I didn’t request it to be underdeclared.
- DomreiRoam 8y agoI was under the impression that the importer must do a declaration and pay the duty. The exporter is lying but the importer is really the one committing fraud.
- agumonkey 8y agoyes, I got a case of bad luck even though the guys said they'd mark it as gift to avoid issues (but said it wasn't failproof).
- oh-kumudo 8y agoLarger sellers would count the tariffs into the pricing, or you can test your luck to see whether customs will pick your package or not.
- paulie_a 8y agoCustoms will rarely pick your package, I received a letter that some items were confiscated 6 months after I was reshipped and received them.
- drcoopster 8y agoThe importer pays the tariff, not the exporter. Usually that's the buyer, not the seller.
- zorgat 8y agoTheir merchandise won't incur any tariffs because the typical Amazon/eBay purchase is under the $800 de minimis. So that's another way Chinese merchants will have an advantage over US resellers.
- mchannon 8y agoIf the cost of food doubles, your cost of a meal out doesn't double, but merely increases by a lesser amount. This is a 25% bump, a portion of which will be borne by the manufacturer, seller, shipper, and money handler. I don't see how it's even close to possible for customs to intercept 50% of the mail coming in from China to ensure they've paid the tariffs. So, things will range from unenforceable and unenforced, to a minor price increase, so small most of us would never notice. Akin to a minor currency fluctuation that everybody who doesn't use or peg to the US dollar has to deal with already. If you can afford the time to be a maker, this will not impact anything at the end of the day.
- mtw 8y agoThis is just wrong. If the cost of food doubles, then price of eating merely increases by small amount ?? Where did you get that fact? Any studies??
- lallysingh 8y agoI think he's taking about the other parts of our food costs: distribution, storage, etc. Those won't be affected by tariffs, so they dampen the effects of the tariff a bit.
- megaman22 8y agoYour $25 steak dinner cost about $6 in foodstuffs. If a tariff raises the cost of that raw material to $8, it would be absurd for that entire meal to now cost $32. Much of the cost in restaurant prices is wages, and rent, and other overhead, not the actual food.
- tinus_hn 8y agoThe overhead also grows because the waste is more expensive. Also if things the employees need, like food, become more expensive, they’ll need more wages.
- danieltillett 8y agoYou are correct, but most restaurants just multiple the food cost by 4 to set the price. It is rather silly, but that is the way the industry works.
- IanDrake 8y agoThese new tariffs are posturing. Trump seems to understand how to negotiate and is willing to take short term hardship for long term gain. We need to have balanced trade agreements. Not balanced in the sense of trade amount, but balanced in the sense of tariffs and subsidies. Access to US consumers is a big bargaining chip. If China won’t deal, there are other countries that will. I think we all understood we had an unhealthy relationship with China.
- Ensorceled 8y agoAnd the rest of the world? Some how the US is the most powerful economy in the world, it’s corporations the richest but the US is being ripped off?
- IanDrake 8y agoI’m not sure you understand how nations work. We elect people to work in our best interests. We are in competition with other countries. Our blue collar jobs have stagnated since we’ve been off-shoring manufacturing to China. The poor in the US were getting poorer. Not everyone has the ability to transition into a thinking job and we need a balanced economy for these people.
- what-the-grump 8y agoThen tax the rich and feed the poor. Don’t erode the competitive advantage of America. The solution is pretty simple. People are looking east instead of west for everything.
- IanDrake 8y agoHow does one tax the rich? Please be specific.
- 1over137 8y agoNot to disagree (or agree), but it seems to me most USians were quite happy to buy cheap Chinese crap at Walmart & Amazon in the last decades, thus off-shoring their own jobs. The chickens are home to roost.
- hugh4life 8y agoI'm neutral on the tariffs, I am(or was) actually excited about China getting into the memory market to help keep the other memory makers honest... but it's important to have an alternative source of those components in case there would be trouble between the US and China. There needs to be a way to nudge businesses to have a source of components out of China.
- baybal2 8y ago> it's important to have an alternative source of those components in case there would be trouble between the US and China. Except there is none...
- tonyedgecombe 8y agoPerhaps the US dependence on China for some products neutralises the chance of trouble between the US and China.
- imtringued 8y agoConsidering that China immediately retaliates against the US by putting a tariff on their own food supply I doubt they care about US dependence at all. After all they are the ones with the big trade surplus that refuse to play fair and they are using the surplus on strategic investments on critical infrastructure to increase US dependence on China.
- hugh4life 8y agoThe interdependence neutralizes to the chance of a full out war but it also neutralizes consequences to pursuing expansion into the South China Sea.
- dalbasal 8y agoOut of all possible trade barriers, I think tariffs are generally the better option. The alternative is subsidies, quotas or "unofficial" barriers like product safety rules or other burry-you-in-bureaucracy setups. Tariffs bring in taxes (as opposed to costing the public) They're easier to understand. This one makes Chinese microwaves x% more expensive. It's clearer who is paying for it (consumers) and who benefits, as opposed to pretending a policy is intended to protect consumers. Importantly, they are easier to change. Politicians can make a decision and do it. With other options, it's harder to implement patches or predict the results of any change. Basically, they're simpler, more explicit and more honest than any other approach. ..if you've already decided to have trade barriers.
- digitalzombie 8y agoI disagree. Wavepool, Maytag, etc.. Americans washer and dryer cloth machines pushed for Tariff from the Obama administration to fight against Samsung and other. The tariff target machine coming out from specific countries so Samsung and other moved to other South Eastern companies such as Vietnam. So the American companies pushed for tariff for all incoming washing machine that aren't American. Trump administration gave that to them. The result is Samsung and other moved to America for manufacturing. But these companies got HUGE tax breaks incentive to move their company to their states while the American companies aren't getting anything. This is on top of the prices of metal going up. There is a $100 extra on top of washing/drying machines now. I'm not a libertarian but The Wealth of Nations by Adam Smith states that all country will have certain expertise they are just good at. Wether it is because the geography that enable them to be better than other or other things, because they're good at certain thing, countries should play to their strength and trade for what they need. Samsung and other non USA companies are just better than US manufacturer in building washing/drying machine. That's just a fact and this tariff thing is only costing the consumer. The consumers are the losers. These are the sources before the effect of the tariffs: https://www.assemblymag.com/articles/94166-washing-machine-tariffs-deliver-a-mixed-bag https://www.assemblymag.com/articles/94166-washing-machine-t... https://www.nytimes.com/2018/01/22/business/trump-tariffs-washing-machines-solar-panels.html https://www.nytimes.com/2018/01/22/business/trump-tariffs-wa... I don't recall where I got the sources of LG and Samsung moving to USA but it could be PBSnews.
- digitalzombie 8y agoI really hate the new tariff. There is no need to be going into a trade war against not only traditionally our rivals but also our allies now too. The economy is recovering and I believe it may now be heading toward a recession. Here's the quick data on job created in raw number without the quality of the job to show that it is recovering since the 2008 recession: https://www.washingtonpost.com/news/fact-checker/wp/2017/12/14/comparing-the-trump-economy-to-the-obama-economy/?utm_term=.2eed815c4901 https://www.washingtonpost.com/news/fact-checker/wp/2017/12/... So the question is why do we need this tradewar? It only introduce instability and fear in our market and we have never really recover from 2008 recession yet. The quality of job suck by the way. It's protectionism and it does not make our country competitive at all.
- xienze 8y ago> There is no need to be going into a trade war against not only traditionally our rivals but also our allies now too. And yet other countries never seem to entertain the idea of both sides getting rid of all their tariffs, which is something Trump suggested at that G7 summit. Everyone goes nuts when the US suggests implementing tariffs against countries that already have tariffs against us. You gotta admit, the message seems to be that other countries are allowed to protect their domestic industry via tariffs and the US is just supposed to deal with it, don’t wanna start a trade war!
- justin66 8y agoHopefully you realize that eliminating all tariffs was never a US negotiating position, it was a random stupid thing the president said.
- xienze 8y agoHe wants reciprocity — you tariff me, I tariff you. It’s not just for grins. Get back to the original point: why is it acceptable for other countries to levy tariffs against the US but not the other way around?
- matt_the_bass 8y agoI think this is a great example of hampering technical manufacturing growth in the US.
- frockington 8y agoI think the win-win outcome is that China is forced to innovate more and the US is force to manufacture more. Both countries have been too reliant on each other for too long now
- tanilama 8y agoIt will be a good outcome that China opens its market more to the world, which is actually to the interests of the Chinese consumers, they already want foreign goods and now it is more affordable and would probably force their domestic companies to up their own game finally to face the competition.
- baybal2 8y agoA repost of my comment from few months ago: When it comes to trade war topic these days, most Western commentators completely miss that a trade war is what China was preparing for the last three decades. They well expected somebody like Trump eventually coming, as well as economic pressure on a scale even bigger than what the West puts on North Korea and banana republics. They totally understood that the West will not play nice with them forever, nor that the unprecedentedly long period of good weather in the global economy will last forever. There is zero questions about China's economic policy being very strategic, and deliberate. Chinese state conglomerates may look to just littering around the world with money, but analyze it more, and you see a pattern, one that is very much like a game of Go - victory by limiting enemy moves. They buy ally countries, strategically - they buy resource supplying countries, often with major holds on markets of vital commodities. Their tech purchases - mostly underappreciated market leaders with industry wide influence. Kuka - the only company you can say to be Tier 1 in robotics, all other competitors combined will not be an equivalent for it. I has almost complete dominance over major heavy industries. Lattice Semi - the one and only FPGA company that can threaten the Xilinx-Altera duopoly. And so on and on and on. Their domestic tech development - even more so. People talk about China dominating consumer goods manufacturing without realisation that it has even bigger hold of manufacturing machinery industry - manufacturing can't really leave China with Chinese made manufacturing equipment being locked down. The whole industry you can call "Manufacturing machinery 2.0" is a domestic Chinese development. Biotech - China quietly ate the market for genetic engineering reagents, as well as much for complex organic chemistry. There are megatons of biotech startups in the West, but they all feel that they will eventually have to move to China to have any chance to scale - effectively they are already a Chinese property. Military allies - well, there things are even more obvious. Major trade agreements - same. Their idea is to bind any major developing market niche to Chinese economy before the West even realizes its emergence. Their idea - to make it so that if somebody wants to do anything any much big being impossible without involving a Chinese company or state institution at some part of the process - to make it "You can't do that without China"
- frockington 8y agoThe US tried to do that for a long time in the Middle East and South America. China may be underestimating just how unstable these regions are. It's all fun and strategy until the Taliban starts blowing up your infrastructure because its haram
- hsnewman 8y agoTariffs are anti-competitive, a tax on the economy, and go against all sound economic theories. I am out of the market, you should be too.
- frgtpsswrdlame 8y agoTariffs do not go against all sound economic theories lol.
- tclancy 8y agoJust most of them. Certainly there are some edge cases where the other country's tariffs are so egregious the damage to the home country's citizens/ economy is helped by the tariff and they can be used to prevent dumping, but in anything close to ideal markets/ classical economics, tariffs are more likely to impose a cost on the host country's consumers while giving most of the benefit to a small group.
- pwaivers 8y ago> "The impact of this cost hike will be felt throughout the industry, but most sharply by educators, especially those serving under-funded school districts." I am not sure what stance to take on the tariffs, but I'm pretty sure manufacturing will feel the cost hike WAYYYY more than educators. Schools probably buy, at max, tens of thousands of dollars worth. Manufacturing buys millions of dollars. These are hyperbolic sentiments.
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- afpx 8y agoAnyone able and willing (and brave enough) to explain like I’m five why Trump’s decisions could possibly be rational and helpful as opposed to just reactionary and impulsive, as they appear to be?
- mchannon 8y agoI don't think it's controversial to say the decisions are rational and helpful, as long as you remember to include "to certain entities". Winners: •Manufacturers of Steel, Aluminum, Electronic Components in US. •Consumers of goods under retaliatory tariffs (pork chops are now going to cost Americans a little less because the Chinese aren't going to import as many). Losers: •Consumers of Steel, etc., including manufacturers of assemblies, and retail consumers. •Producers of goods for export that are subject to retaliatory tariffs. If you look under "chicken tax" you'll see these kinds of battles are neither new, nor did they ever completely go away. It's widely agreed that more Americans will lose their jobs from these policies than will be hired, but if we're somehow at full employment, that might not bear out. I don't see that happening, but if you believe in magic...
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- bumblebritches5 8y ago> It's widely agreed that more Americans will lose their jobs from these policies than will be hired Maybe by shills and complete idiots.
- firic 8y agoSure, I'll try. Keep in mind that I will only mention the benefits. Read other sources for the disadvantages so that you can make a decision. * America feels that caring for the environment is important so there are laws preventing companies from polluting "too much". In China they don't have as strict laws. Therefore manufacturing in America is more environmentally friendly than in China. Therefore, it is worth the tax on the consumer to keep the environment cleaner. * America believes that people deserve basic workers rights that are not offered in China. Without tariffs companies offering workers rights could not compete against those who aren't. * In the case of a war, China may stop providing American with steel when they need it the most. By encouraging Americans to make steel plants, in the case of a war, America will be able to produce the steel. * China is very powerful, so much so that they could be a threat to America. However most of China's economy comes from export. Tariffs will hurt America, but will hurt China much more, thereby making them less of a threat against America's world dominance. * Canada tarrifs some of Americans goods. That is not good for America. By retaliating with tariffs, Canada may agree for both sides to stop tarrifs. (that is most likely not applicable for this case since Trump didn't announce that as his demands)
- hippich 8y agoAfter reading a bit about the history of tax in the USA, I was surprised to learn that in the very beginning federal government was mostly funded by tariffs. So.. Extra tariffs will bring extra tax revenue. Will federal government cut income/corporate taxes to adjust for it? Or perhaps any paid tariff can be written off of tax bill?
- psergeant 8y ago> So.. Extra tariffs will bring extra tax revenue In the short term. In the long term, that’s far from clear. The world economy is rather different now than it was when America was a fledgling economy being exploited by the Brits
- passthefist 8y agoAnd I've seen some articles/papers suggesting that protectionist policies can make sense for an emerging/developing economy to make sure that established/developed economies don't usurp that growth by blocking them from moving up the value chain. So it may have been good policy back when America was a fledgling economy being exploited by the Brits.
- oldsklgdfth 8y agoI believe that is the way that S.Korea developed it's economy. Specifically, they raise tariffs on automobiles to boast their own automotive industry. I think this book explains that: https://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596915986 https://www.amazon.com/Bad-Samaritans-Secret-History-Capital...
- mprovost 8y agoIncome taxes (the primary source of current US gov't revenue) were unconstitutional until the 16th amendment in 1913.
- bumblebritches5 8y agoThat is complete and utter nonsense. That's not even how tariffs work in the first place, I'll go ahead and give you a little primer. Tariffs like NAFTA are removed, allowing companies to move to new locations with cheaper resources, so they do. Tarriffs are introduced, oh no it's no longer profitable to be outside of the country, companies move back. Perfect example: Foxconn building plants in Wisconsin for Apple. Is this thread being shilled? how is anyone buying this nonsense when it's so transparently incorrect?
- jeffreyrogers 8y agoThere seems to be a lot of groupthink on HN. Pretty much every comment in this thread that views tariffs remotely positively is being downvoted. I view them slightly negatively, but protectionism (not necessarily tariffs) does help struggling or new industries develop if coupled with good export policies (see China, Taiwan, South Korea, and Japan for examples), so the idea that tariffs have no arguments for them seems a little farfetched to me.
- psergeant 8y agoAnother word for “groupthink” is “consensus”
- kevin_thibedeau 8y agoConsensus implies reasoned thought. Groupthink is mob rule.
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- Balero 8y agoI agree with you that tariffs can be good for nascent industries. If these were just tariffs on things like computer chips, solar panels etc then I think there would be a valid argument. Dairy, Steel and Aluminium are not new industries, tariffs are not to help these grow and become long term viable. (disclaimer, not from USA)
- glogla 8y agoI think that's mostly because most of the comments feel like either borderline insane (like the ones claiming all regulation including environmental and consumer protection are evil bureaucracy or the one claiming stability is a bad thing for the world) or feel kinda like cheap shills ("Trump is just doing what needs to be done! So brave!"). Yours looks like the first though out one. EDIT: mostly I think people just think Trump and his regime is so incompetent and also evil, that they will automatically consider everything in a bad light. Looking at what they done so far, it's not a bad assumption, but maybe this is the one thing they don't fuck up?
- alkonaut 8y agoApart from some steep farm/dairy tariffs, what are the huge tariffs that other countries impose on US exports? I thought the gist of this whole debate was that the US administration somehow thought VATs applied abroad somehow made US products less competitive and therefore was in fact a tariff? I do realize this sounds too dumb even for the current administration so I may be wrong.
- greeneggs 8y agoI'm not sure quite what you are looking for, but you can browse tariff rates at the WTO website http://tariffdata.wto.org/ http://tariffdata.wto.org/ . It would be nice to find a better source, though. For example, China has a 65% tariff on cereals such as wheat and rice, a 50% tariff on sugar, a 57% tariff on some tobacco products, and a 50% tariff on some fertilizers. (This is for other WTO members, or "most favored nation (MFN)".) The United States has WTO MFN tariffs of 132-164% on some peanuts and peanut products (e.g., peanut butter), and 350% on some tobacco products.
- rdlecler1 8y agoReading the comments I think people are forgetting this is a cooercive and retaliatory tariff on China, not a merchantislist policy. Is someone going to change their whole supply chain if this gets resolved in 3-6 months? The US is arguing that effectively China has been waging a trade war with the US and has merchantialist and nationalistic economic policies that make it difficult for US companies to compete.
- scroogly 8y agoSo why institute a tariff that makes it harder for US companies to compete, by excusing finished products in order not to piss off consumers?
- larrydag 8y agoTo change trade policy between the competing governments. Whether it's an effective policy we will have to wait and see.
- throwawayjava 8y agoProviding US companies with an even greater financial incentive to move their final assembly in China seems like a rather counter-productive retaliation. What am I missing?
- hector_ka 8y agoI am a small electronic board manufacturer in US. I buy bare PCB boards from China and populate them here. Usually the parts are bought from Digikey, Mouser or other distributor. Adding a 25% tax will not incentivize any American company to start produce parts here.It is way to little and to late. If 10 boards are $2 in China, are maybe $30 in US , so even you put 100% import tax, the China price is still competitive. The law is unfairly hitting the small US companies. Sparkfun , Adafruit will be hit, but not Apple or HP because they are finishing the product in China. The only ones winning from this is the US government that is getting 25% of the money . This is definitely not creating jobs.
- Taniwha 8y agoI think it's creating manufacturing jobs in China. If Trump had instead put a 25%tax on assembled electronics and not components then Apple et al would have an incentive to move manufacturing back to the US - and Adafruit and Sparkfun would not be effected On the other hand I'm a small open source hardware manufacturer in New Zealand, I manufacture and ship from China - because I couldn't make a competitive product is I built or shipped stuff from here, I live at the end of the world's supply chain - NZ has almost no trade barriers, removed all govt subsidies propping up industry decades ago - we do have free-trade agreements with China - this new regime is good for me Trump's 25% trade barrier let's me compete better against American competitors, driving up their costs but not mine. Remember you (in the US) have a higher standard of living than China - it's why your labour costs more - frankly you can't compete (and as their standard of living rises China can't compete with Vietnam .... we're already seeing that) - this is how 3rd world countries become 1st world ones, it's how China is building a middle class, which is a good thing, countries with large happy middle classes have a lot to lose and don't like to go to war. Long term this process will tend to drag the US and China's standards of living to similar levels, if you can keep growth happening in the US at higher rates than China then you may see no change, if you stifle jobs you'll see it drop. Short term this is a problem, longer term looking at the bigger picture it's probably a good thing, a safer world
- Kyragem 8y agoChina only has to block rare earth metals from shipping to the US and Trump will cave with his tail between his legs.
- maxxxxx 8y agoMy personal belief is that this can go either way. If the tariffs go hand in hand with other policies they may bring business back to the US or it can go the other way. It requires a well thought out strategy. I have my doubts that the US has such a strategy but we'll have to see.
- kazinator 8y agoWow; that Brazilian network card. It has three Z80 CPU's on it.
- robbrit 8y agoHmmm, I wonder what the long-term effects of this will be if the tariffs stay in place for a while. 25% is a huge bump. I can see two major effects: 1) Lots of the "last screw" manufacturing will move to other countries and then imported into the US. Due to IP concerns it will probably move to countries with good IP protections such as the EU, Canada, Australia, NZ, etc. I can't say much for the other countries but it would be a boon to Canada (longer term anyway, it will be painful in the short term) providing diversification from the natural resource economy that Canada has too much of, and an incentive for the top talent to stop coming down to the US for the most interesting jobs. 2) Except in the case where US production is more than 25% more expensive than offshore, the domestic US industry for these components and raw materials will grow (this is probably Trump's goal). The "last screw" manufacturing that stays within the US will be much more expensive due to the higher input costs. Since I am inclined to believe that the quantity of talent/expertise for high-tech manufacturing is higher outside the US than in, the effect of #1 will be much larger than the effect of #2. But I could be wrong, the US has pretty fantastic network effects and world-class talent, I wouldn't discount their ability to innovate just yet.
- yuhong 8y agoThis reminds me of how Hynix was able to evade anti-dumping duties by both EU and US in the mid-2000s by using the Eugene, Oregon and later Wuxi, China fabs.
- aussieguy1234 8y agoI don't support these tarrifs. I would, however, support tarrifs on offshoring. Let's say a company replaces a team of onshore programmers with offshore ones to "save money". They should have tarrifs/taxes imposed on them, so that those savings evaporate into thin air. That would both prevent exploitation of desperate workers overseas and protect jobs here.
- jakeogh 8y agoA day later, Germany offers to scrap the 10% auto tariff. I bet there are more to come.