5 ms·

I keep seeing articles about inflation and the supply chain and not a single one mentions that the previous administration's trade war policies are still in eff

by bunnie 5y ago

I keep seeing articles about inflation and the supply chain and not a single one mentions that the previous administration's trade war policies are still in effect, which means significant (10-25%) tariffs on many kinds of raw materials and the equipment you'd need to build new factories domestically. Is it just that we forgot that these cost increases and trade barriers are still in effect, or is it that the trade war is so politically popular that even the suggestion of perhaps suspending it for a couple of years is simply unmentionable?

echelon 5y ago
America has a few key industries where we have the lead, but that won't be for long given the pace of China and various other developing economies. Even Europe is growing a tech sector. If we lose the lead in the things we export, what else do we have to sell the world? Even more of a risk is that we can be strong-armed once we no longer have leverage. This is a reason to onshore critical pieces. And we can't have a fledgling domestic industry be cost competitive without tax and trade incentives. The trade war needs to be an investment. Otherwise we'll just continue to cede ground. A trade war might hurt, but an America without exports will hurt worse. As will an America that has to take what's given to it.
- nyokodo 5y ago
  > If we lose the lead in the things we export, what else do we have to sell the world? The US is a massive importer and exporter but as a percentage of the US economy it’s relatively small compared to export lead economies like China, Japan, Europe etc. It’s not that being globally competitive isn’t an issue, it’s just not an immediate existential issue for America. Especially as we continue to have the biggest most productive contiguous agricultural region in the world with the cheapest transport and no major security concerns; close to the cheapest oil and nat gas which has lead to the cheapest global production of many industrial inputs. Combined with the global baby bust leading to record rapidly aging population means that the US is on top for some time.
  - vasco 5y ago
    > most productive Biggest sure, but the most productive is in the Netherlands. And y'all produce huge useless quantities of corn that are killing your population.
  - Dah00n 5y ago
    >it’s just not an immediate existential issue for America That both depends on how immediate "immediate" is and how the US will react. When CPU/GPUs have nothing made or designed in the US in them any more and the Google/Microsoft/Facebook/Amazons of the world are all non-US and the US is no longer in the top of military and GDP then the US will no longer be in a position to lead anyone anywhere. It might not become a existential problem for the US economy -who knows- but it will most definitely crush any belief in The American Dream or that the US is some kind of world leader. Without a way to steer technology or force other nations to do what it wants by power, in my opinion, the US will go the route of ancient Rome by trying to hold on to what is lost. So maybe not an immediate existential issue but likely an existential threat to the Union nonetheless.
    - elcritch 5y ago
      The United Kingdom post-WWII would be a much better comparison, since well it's more recent and the UK and USA share more history, culture, and context. I tend to side with the viewpoint that the lessening role of international leadership by the USA is more due to our internal infighting and lack of resolve as a few recent Economist articles suggested. That also fits with the UK's shift in status as an international power post WWII as well. However, even with that type of shift, leadership in tech industries and other fields won't disappear from the US that quickly if at all.
    - nyokodo 5y ago
      > That both depends on how immediate "immediate" is and how the US will react. Broadly speaking if countries are able to feed their population, keep the lights on, and protect their borders, regardless of access to global markets then they have relatively few existential worries. The USA is one of a few in this category. > but it will most definitely crush any belief in The American Dream or that the US is some kind of world leader. The US is currently re-industrializing as globalism is crumbling, so the long term forecast for the American dream is bright. Globalism is crumbling greatly due to the bipartisan sentiment in the USA being not wanting to police, “lead,” the world any longer. The global population will crash in the coming decades, secessionist movements will rise up in many countries, famine, and resource wars will ensue, and the graphs of global development will go south very quickly. All except in the USA and a relatively few other countries which will feel pain but be able to recover relatively easily. The USA has been artificially propping up vast regions of the globe by making global shipping the safest it has ever been in history; that is ending and no one is going to like the result.
- XorNot 5y ago
  > but that won't be for long given the pace of China China is about to run straight into a population wall, and is a kleptocracy that has funded itself off of the economic boom of transitioning from developing to developed economy - but it never developed the type of institutions to limit corruption which are needed to be a rich, developed economy. Everything you see with censorship and social credit scores is geared towards one thing: pre-oppress the population to try and not be annihilated when the growth rate slows down to the point the trade off in freedoms is not worth it. The move towards a dictatorship is also a problem since dictatorships generally perform extremely badly economically if they're not resource economies that are independent of the treatment and quality of the labor.
  - mark_l_watson 5y ago
    Well, I hope that most people can agree that the USA and China both have huge corruption problems, but in different forms.
- baybal2 5y ago
  > America has a few key industries where we have the lead, America has much less key industries than China has. Any discussions about microchips are silly when much bigger elephants in the room are not talked about. https://www.steel.org/2021/07/steel-imports-up-18-5-year-to-date-through-june/ https://www.steel.org/2021/07/steel-imports-up-18-5-year-to-... America is dangerously dependent on imported steel — all at the same time while having the best iron ore deposits, and coke deposits, and cheap energy. Now, prepare for a total despair if you haven't seen this graph before: https://thephillypi.com/wp-content/uploads/2021/06/1622778727_872_US-Crude-Steel-Production-Plunged-Global-Production-Stalled-But.png https://thephillypi.com/wp-content/uploads/2021/06/162277872... The situation across dozens more key industries is equally dire.
  - echelon 5y ago
    Can you enumerate other key industries? Is there any way we can build them domestically again?
    - baybal2 5y ago
      1. Aluminium https://www.ftmmachinery.com/uploads/image/20200526105639_67325.jpg https://www.ftmmachinery.com/uploads/image/20200526105639_67... 2. Nickel 3. Fertiliser https://static.nationmaster.com/assets/1ccceff/charts/ranking/23c5d58f504853595290f056ce68f3e4_1200x628.png https://static.nationmaster.com/assets/1ccceff/charts/rankin... 4. Non-ferrous alloys 5. Machinery parts, especially consumables like things (i.e. electrodes) 6. Powerplant machinery 7. Electrical distribution equipment, especially transformers 8. Merchant marine (even tiny Greece is ahead of US) 9. Shipbuilding, and naval engineering at large 10. Railways equipment, and vehicles 11. Pharma, with medical consumables, antibiotics, and other essential medicines in particular 12. Heavy industry in general 13. Chromium 14. Manganese 15. Vanadium 16. Chemical catalysts 17. Cobalt
  - nostrademons 5y ago
    > America is dangerously dependent on imported steel — all at the same time while having the best iron ore deposits, and coke deposits, and cheap energy. 93% of North American steel produced each year is from recycled products [1], and 98% of products are recycled [2]. There is no reason to use either iron ore or coke for steel production when the vast majority of it is produced in electric arc furnaces from scrap steel. It's better economically and better environmentally. This is also why Nucor has been eating U.S. Steel's lunch for about 50 years, long before China entered the steelmaking business. [1] https://cssbi.ca/mid-rise-construction/sustainable-steel https://cssbi.ca/mid-rise-construction/sustainable-steel [2] https://www.aisc.org/why-steel/sustainability/ https://www.aisc.org/why-steel/sustainability/
nyokodo 5y ago
> is it that the trade war is so politically popular Biden has doubled down on Trumps trade policies to the extent that he appointed a Taiwanese-American trade lawyer, Katherine Tai, as US Trade Representative. She has no experience brokering trade deals but lots of experience suing countries for trade violations. Anti-globalism is now bipartisan in America.
- echelon 5y ago
  > Anti-globalism is now bipartisan in America. Globalism is fantastic for business and stocks, but horrible for the American worker. Now dozens of countries can do what we can do, and our labor and talent is expensive. We eroded a lot of our capabilities to chase after higher value of being the final step in production. Now we see how fragile that makes us. And everyone is gunning to compete at our level.
  - nicbou 5y ago
    I might understand this incorrectly, but doesn't it also mean that American businesses have a greater market to sell to? Globalism within the EU seems to work really well for Germany, even though there is far cheaper labour in the EU. I am way out of my depth here, so I could be wrong.
    - echelon 5y ago
      > I might understand this incorrectly, but doesn't it also mean that American businesses have a greater market to sell to? "American" companies aren't always entirely owned by Americans. Sometimes they get purchased outright by foreign conglomerates or shareholders (eg. Anheuser-Busch) or take on foreign investment (eg. SoftBank). Once they're public, lots of entities can own the stock. Labor doesn't have to be based in the US. Wages go overseas all the time. Your iPhone is manufactured abroad. Amazon hires lots of non-American programmers.
      - lotsofpulp 5y ago
        Companies move to states with fewer labor laws and cheaper labor also. Is the only difference here that there is a possibility of federal tax revenue being distributed throughout one country? You can even go one more level down to cities and states rather than states and country.
baybal2 5y ago
> and not a single one mentions that the previous administration's trade war policies are still in effect, which means significant (10-25%) tariffs on many kinds of raw materials and the equipment you'd need to build new factories domestically I find it more surprising that even the 25% tariff is not enough to make American MNCs to move from China. I am watching how the supply chain moves from China to South, and Southeast Asia. Koreans are moving to Vietnam, Japanese to Bangladesh, Taiwanese back home, and to Indonesia. But American companies in their majority keep clenching their teeth, and staying in China. I guess, they really like it there
- rsj_hn 5y ago
  It's not a 25% subsidy, it's a tariff. Moving to China would force the American MNC to pay the tariff on the full value of the product sold to the US market rather than on just the foreign components.
hourislate 5y ago
Cost of raw materials? What raw materials are we importing to build factories? As for consumer goods, the Chinese didn't raise their prices, they ate the cost of that tariff. The price increases we are seeing are almost entirely related to shipping costs. Manufacturers who have long term contracts or their own leased vessels (Walmart), are still able to deliver and keep prices in check.
- bunnie 5y ago
  Everything from motors to steel to conveyor belts to soldering irons to laser cutters to CNC machines to metrology equipment? It turns out China is good at making factories, because they make a lot of them. whereas most small to mid size b2b equipment makers in the USA have shuttered manufacturing operations. The brand may have an HQ in the USA but the factory - or more importantly, key vendors for subassemblies even if the 'last screw' happens in the USA - frequently have tie-ups in China. I personally haven't had any vendors in China eat the cost of tariffs. Export terms are often FOB or EXW which means variable tariff costs get eaten by the importer or distributor. Even if a large buyer like Walmart owns/jv/leases a facility in China, to say the tariff is borne by the China entity is like saying money in the left pocket is different from money in the right pocket... eventually the cost catches up to them. It'd be helpful to share citations on arrangements where the manufacturer simply ate the cost of the tariff, it could help to educate a lot of struggling importers and small businesses.

by bunnie 5y ago

echelon 5y ago

America has a few key industries where we have the lead, but that won't be for long given the pace of China and various other developing economies. Even Europe is growing a tech sector. If we lose the lead in the things we export, what else do we have to sell the world? Even more of a risk is that we can be strong-armed once we no longer have leverage. This is a reason to onshore critical pieces. And we can't have a fledgling domestic industry be cost competitive without tax and trade incentives. The trade war needs to be an investment. Otherwise we'll just continue to cede ground. A trade war might hurt, but an America without exports will hurt worse. As will an America that has to take what's given to it.

nyokodo 5y ago
> If we lose the lead in the things we export, what else do we have to sell the world? The US is a massive importer and exporter but as a percentage of the US economy it’s relatively small compared to export lead economies like China, Japan, Europe etc. It’s not that being globally competitive isn’t an issue, it’s just not an immediate existential issue for America. Especially as we continue to have the biggest most productive contiguous agricultural region in the world with the cheapest transport and no major security concerns; close to the cheapest oil and nat gas which has lead to the cheapest global production of many industrial inputs. Combined with the global baby bust leading to record rapidly aging population means that the US is on top for some time.
- vasco 5y ago
  > most productive Biggest sure, but the most productive is in the Netherlands. And y'all produce huge useless quantities of corn that are killing your population.
- Dah00n 5y ago
  >it’s just not an immediate existential issue for America That both depends on how immediate "immediate" is and how the US will react. When CPU/GPUs have nothing made or designed in the US in them any more and the Google/Microsoft/Facebook/Amazons of the world are all non-US and the US is no longer in the top of military and GDP then the US will no longer be in a position to lead anyone anywhere. It might not become a existential problem for the US economy -who knows- but it will most definitely crush any belief in The American Dream or that the US is some kind of world leader. Without a way to steer technology or force other nations to do what it wants by power, in my opinion, the US will go the route of ancient Rome by trying to hold on to what is lost. So maybe not an immediate existential issue but likely an existential threat to the Union nonetheless.
  - elcritch 5y ago
    The United Kingdom post-WWII would be a much better comparison, since well it's more recent and the UK and USA share more history, culture, and context. I tend to side with the viewpoint that the lessening role of international leadership by the USA is more due to our internal infighting and lack of resolve as a few recent Economist articles suggested. That also fits with the UK's shift in status as an international power post WWII as well. However, even with that type of shift, leadership in tech industries and other fields won't disappear from the US that quickly if at all.
  - nyokodo 5y ago
    > That both depends on how immediate "immediate" is and how the US will react. Broadly speaking if countries are able to feed their population, keep the lights on, and protect their borders, regardless of access to global markets then they have relatively few existential worries. The USA is one of a few in this category. > but it will most definitely crush any belief in The American Dream or that the US is some kind of world leader. The US is currently re-industrializing as globalism is crumbling, so the long term forecast for the American dream is bright. Globalism is crumbling greatly due to the bipartisan sentiment in the USA being not wanting to police, “lead,” the world any longer. The global population will crash in the coming decades, secessionist movements will rise up in many countries, famine, and resource wars will ensue, and the graphs of global development will go south very quickly. All except in the USA and a relatively few other countries which will feel pain but be able to recover relatively easily. The USA has been artificially propping up vast regions of the globe by making global shipping the safest it has ever been in history; that is ending and no one is going to like the result.
XorNot 5y ago
> but that won't be for long given the pace of China China is about to run straight into a population wall, and is a kleptocracy that has funded itself off of the economic boom of transitioning from developing to developed economy - but it never developed the type of institutions to limit corruption which are needed to be a rich, developed economy. Everything you see with censorship and social credit scores is geared towards one thing: pre-oppress the population to try and not be annihilated when the growth rate slows down to the point the trade off in freedoms is not worth it. The move towards a dictatorship is also a problem since dictatorships generally perform extremely badly economically if they're not resource economies that are independent of the treatment and quality of the labor.
- mark_l_watson 5y ago
  Well, I hope that most people can agree that the USA and China both have huge corruption problems, but in different forms.
baybal2 5y ago
> America has a few key industries where we have the lead, America has much less key industries than China has. Any discussions about microchips are silly when much bigger elephants in the room are not talked about. https://www.steel.org/2021/07/steel-imports-up-18-5-year-to-date-through-june/ https://www.steel.org/2021/07/steel-imports-up-18-5-year-to-... America is dangerously dependent on imported steel — all at the same time while having the best iron ore deposits, and coke deposits, and cheap energy. Now, prepare for a total despair if you haven't seen this graph before: https://thephillypi.com/wp-content/uploads/2021/06/1622778727_872_US-Crude-Steel-Production-Plunged-Global-Production-Stalled-But.png https://thephillypi.com/wp-content/uploads/2021/06/162277872... The situation across dozens more key industries is equally dire.
- echelon 5y ago
  Can you enumerate other key industries? Is there any way we can build them domestically again?
  - baybal2 5y ago
    1. Aluminium https://www.ftmmachinery.com/uploads/image/20200526105639_67325.jpg https://www.ftmmachinery.com/uploads/image/20200526105639_67... 2. Nickel 3. Fertiliser https://static.nationmaster.com/assets/1ccceff/charts/ranking/23c5d58f504853595290f056ce68f3e4_1200x628.png https://static.nationmaster.com/assets/1ccceff/charts/rankin... 4. Non-ferrous alloys 5. Machinery parts, especially consumables like things (i.e. electrodes) 6. Powerplant machinery 7. Electrical distribution equipment, especially transformers 8. Merchant marine (even tiny Greece is ahead of US) 9. Shipbuilding, and naval engineering at large 10. Railways equipment, and vehicles 11. Pharma, with medical consumables, antibiotics, and other essential medicines in particular 12. Heavy industry in general 13. Chromium 14. Manganese 15. Vanadium 16. Chemical catalysts 17. Cobalt
- nostrademons 5y ago
  > America is dangerously dependent on imported steel — all at the same time while having the best iron ore deposits, and coke deposits, and cheap energy. 93% of North American steel produced each year is from recycled products [1], and 98% of products are recycled [2]. There is no reason to use either iron ore or coke for steel production when the vast majority of it is produced in electric arc furnaces from scrap steel. It's better economically and better environmentally. This is also why Nucor has been eating U.S. Steel's lunch for about 50 years, long before China entered the steelmaking business. [1] https://cssbi.ca/mid-rise-construction/sustainable-steel https://cssbi.ca/mid-rise-construction/sustainable-steel [2] https://www.aisc.org/why-steel/sustainability/ https://www.aisc.org/why-steel/sustainability/

nyokodo 5y ago

> is it that the trade war is so politically popular Biden has doubled down on Trumps trade policies to the extent that he appointed a Taiwanese-American trade lawyer, Katherine Tai, as US Trade Representative. She has no experience brokering trade deals but lots of experience suing countries for trade violations. Anti-globalism is now bipartisan in America.

echelon 5y ago
> Anti-globalism is now bipartisan in America. Globalism is fantastic for business and stocks, but horrible for the American worker. Now dozens of countries can do what we can do, and our labor and talent is expensive. We eroded a lot of our capabilities to chase after higher value of being the final step in production. Now we see how fragile that makes us. And everyone is gunning to compete at our level.
- nicbou 5y ago
  I might understand this incorrectly, but doesn't it also mean that American businesses have a greater market to sell to? Globalism within the EU seems to work really well for Germany, even though there is far cheaper labour in the EU. I am way out of my depth here, so I could be wrong.
  - echelon 5y ago
    > I might understand this incorrectly, but doesn't it also mean that American businesses have a greater market to sell to? "American" companies aren't always entirely owned by Americans. Sometimes they get purchased outright by foreign conglomerates or shareholders (eg. Anheuser-Busch) or take on foreign investment (eg. SoftBank). Once they're public, lots of entities can own the stock. Labor doesn't have to be based in the US. Wages go overseas all the time. Your iPhone is manufactured abroad. Amazon hires lots of non-American programmers.
    - lotsofpulp 5y ago
      Companies move to states with fewer labor laws and cheaper labor also. Is the only difference here that there is a possibility of federal tax revenue being distributed throughout one country? You can even go one more level down to cities and states rather than states and country.

baybal2 5y ago

> and not a single one mentions that the previous administration's trade war policies are still in effect, which means significant (10-25%) tariffs on many kinds of raw materials and the equipment you'd need to build new factories domestically I find it more surprising that even the 25% tariff is not enough to make American MNCs to move from China. I am watching how the supply chain moves from China to South, and Southeast Asia. Koreans are moving to Vietnam, Japanese to Bangladesh, Taiwanese back home, and to Indonesia. But American companies in their majority keep clenching their teeth, and staying in China. I guess, they really like it there

rsj_hn 5y ago
It's not a 25% subsidy, it's a tariff. Moving to China would force the American MNC to pay the tariff on the full value of the product sold to the US market rather than on just the foreign components.

hourislate 5y ago

Cost of raw materials? What raw materials are we importing to build factories? As for consumer goods, the Chinese didn't raise their prices, they ate the cost of that tariff. The price increases we are seeing are almost entirely related to shipping costs. Manufacturers who have long term contracts or their own leased vessels (Walmart), are still able to deliver and keep prices in check.

bunnie 5y ago
Everything from motors to steel to conveyor belts to soldering irons to laser cutters to CNC machines to metrology equipment? It turns out China is good at making factories, because they make a lot of them. whereas most small to mid size b2b equipment makers in the USA have shuttered manufacturing operations. The brand may have an HQ in the USA but the factory - or more importantly, key vendors for subassemblies even if the 'last screw' happens in the USA - frequently have tie-ups in China. I personally haven't had any vendors in China eat the cost of tariffs. Export terms are often FOB or EXW which means variable tariff costs get eaten by the importer or distributor. Even if a large buyer like Walmart owns/jv/leases a facility in China, to say the tariff is borne by the China entity is like saying money in the left pocket is different from money in the right pocket... eventually the cost catches up to them. It'd be helpful to share citations on arrangements where the manufacturer simply ate the cost of the tariff, it could help to educate a lot of struggling importers and small businesses.