5 ms·

>the US steel was very low quality >The US steel near me is generally higher quality than the chinese steel around here While this may seem contradictory, it'

by dexen 7y ago

>the US steel was very low quality >The US steel near me is generally higher quality than the chinese steel around here While this may seem contradictory, it's perfectly natural on an open market. There's always some demand for cheap, low quality steel and also some demand for the expensive, high quality steel. Knocking together a bookshelf has much different requirements than building a car; the economy needs both. For the low quality, cheap steel, transportation costs would constitute a higher fraction of cost than for high quality, expensive one. Thus it makes sense to buy the low quality locally, while importing the high quality from far away - where the low q would not be cheap enough due to the transportation. Nonetheless the US has enough of know-how and infrastructure to produce high quality materials whenever there's enough demand. I firmly believe the current round of tariffs are primarily a geopolitical tool - aimed mostly at imports from China, to help with geopolitical negotiations and also encourage diversification of import sources. Likewise with the recent kerfuffle with Mexico - where the proposed tariffs were used to entice them to handle the immigration crisis. To the boot, the article emphasizes the effect is not really protectionist.

jjwhitaker 7y ago
One dilemma is the tariff is more a tax on imports, paid by consumers ie citizens. It complicates trade form China and may convince suppliers or buyers to purchase goods from an alternative source, if available, but has major up front costs. In terms of diversifying supply, tariffs may have an impact over time but due to no preparation by US firms to set up alternative supply chains or sourcing before implementation and considering how many goods come out of China, the US probably will lose a lot more long term than any feasible gains. Without an alternative in place, China can mostly wait it out. For example, US agriculture like soy beans lost the China market, but China has alternatives able to pick up capacity like from Brazil. Soy Beans aren't a highly refined or engineered product, just a crop that can be grown in bulk in many places around the world. Although the tariffs may now be pushing Apple to source for other countries, there is no in place alternative for a refined, highly engineered good like an iPhone. Short term Apple is hit hard and long term may move to be impacted less, but at the end of the day consumers see higher costs due to the import tax and long term price increases as Apple has to make back their investment in a diversified supply chain. Meanwhile, Us farmers won't get that soy bean market back for many years which will have serious repercussions in that industry. As a geopolitical tool for trade negotiation a tariff is not great, especially if misused or over used. In this case, targeted tariffs could be an extra straw on top of negotiations to push through a final deal or late stage negotiation. Instead it has been a hammer/nail situation without complexity. Think of it more as the flashy dinner with open bar to seal the deal and less a first time around the table tactic. With the Mexico tariff being a bluff given Mexico had already agreed to discuss or take actions before the tweet was even made, it is feasible the current administration could be smarter about their trade policies or at least try to add nuance to benefit their cards in negotiations. There are better ways of getting someone to the table namely targeted sanctions that don't tax you own citizens or wipe out agricultural exports. As others have said here, there is more than enough material to impose sanctions in many sectors like stolen IP/technologies, human rights violations and concerns, military posturing, and more. Simplifying trade negotiation to tariff this and tariff that is not only a poor tool and negotiation tactic but also damaging to our economy, directly and in the short and long term. We come out behind pretty much regardless of what deal is made, if any.
- dexen 7y ago
  >tariff is more a tax on imports, paid by consumers ie citizens Only in the pathological case when most or all imports of the particular good is under the tariffs. Just for sake of example, suppose for a second America had diversified source of steel; four distinct countries each supplying about 25% of imports. Suppose a tariff was laid on the Chinese imports only. Would the prices of other imports move up? A bit, but much, much less than the tariff. Competition does wonders. OTOH, if the only significant source of imports is from China -as is the case right now- well yes, in that case the americans will end up paying. Luckily this also creates positive pressure to diversify sources - which in a longer run will make imports much more competitively priced. Doubly luckily, the money raised on tariffs goes into the governmental budget, which means it gets spent back into the american economy anyway (minus the inefficiency of the government).

by dexen 7y ago

jjwhitaker 7y ago

One dilemma is the tariff is more a tax on imports, paid by consumers ie citizens. It complicates trade form China and may convince suppliers or buyers to purchase goods from an alternative source, if available, but has major up front costs. In terms of diversifying supply, tariffs may have an impact over time but due to no preparation by US firms to set up alternative supply chains or sourcing before implementation and considering how many goods come out of China, the US probably will lose a lot more long term than any feasible gains. Without an alternative in place, China can mostly wait it out. For example, US agriculture like soy beans lost the China market, but China has alternatives able to pick up capacity like from Brazil. Soy Beans aren't a highly refined or engineered product, just a crop that can be grown in bulk in many places around the world. Although the tariffs may now be pushing Apple to source for other countries, there is no in place alternative for a refined, highly engineered good like an iPhone. Short term Apple is hit hard and long term may move to be impacted less, but at the end of the day consumers see higher costs due to the import tax and long term price increases as Apple has to make back their investment in a diversified supply chain. Meanwhile, Us farmers won't get that soy bean market back for many years which will have serious repercussions in that industry. As a geopolitical tool for trade negotiation a tariff is not great, especially if misused or over used. In this case, targeted tariffs could be an extra straw on top of negotiations to push through a final deal or late stage negotiation. Instead it has been a hammer/nail situation without complexity. Think of it more as the flashy dinner with open bar to seal the deal and less a first time around the table tactic. With the Mexico tariff being a bluff given Mexico had already agreed to discuss or take actions before the tweet was even made, it is feasible the current administration could be smarter about their trade policies or at least try to add nuance to benefit their cards in negotiations. There are better ways of getting someone to the table namely targeted sanctions that don't tax you own citizens or wipe out agricultural exports. As others have said here, there is more than enough material to impose sanctions in many sectors like stolen IP/technologies, human rights violations and concerns, military posturing, and more. Simplifying trade negotiation to tariff this and tariff that is not only a poor tool and negotiation tactic but also damaging to our economy, directly and in the short and long term. We come out behind pretty much regardless of what deal is made, if any.

dexen 7y ago
>tariff is more a tax on imports, paid by consumers ie citizens Only in the pathological case when most or all imports of the particular good is under the tariffs. Just for sake of example, suppose for a second America had diversified source of steel; four distinct countries each supplying about 25% of imports. Suppose a tariff was laid on the Chinese imports only. Would the prices of other imports move up? A bit, but much, much less than the tariff. Competition does wonders. OTOH, if the only significant source of imports is from China -as is the case right now- well yes, in that case the americans will end up paying. Luckily this also creates positive pressure to diversify sources - which in a longer run will make imports much more competitively priced. Doubly luckily, the money raised on tariffs goes into the governmental budget, which means it gets spent back into the american economy anyway (minus the inefficiency of the government).