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Tariffs

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Incredibly our military relies on China to provide electronic components and circuit boards for some of our more sophisticated weapons systems.  Wonder who's bright idea it was in outsourcing that?  The Chinese have already been caught installing chips that can either spy on or disrupt electrical signals on these type of components which is why there is great reluctance to have their telecom company Huawei install any part of the pending 5G network.   Partial article below is from Nationalinterest.org

 

May 26, 2018

by Michael Peck

The U.S. Military's Greatest Weakness? China 'Builds' a Huge Chunk of It

"Made in China" is a label that Americans see everyday on everything from clothes to televisions. But when it comes to America's weapons, Made in China is a label you don't want to see. Despite political, military and trade tensions between America and China, Chinese or Chinese-owned firms play a dangerously large role in U.S. defense production, according to a new Pentagon report.

For instance, most U.S. military solid rocket engines use a substance called Dechlorane. However, "there is no domestic supplier for this material; the sole source is Occidental Chemical in Belgium," warns the Department of Defense's FY 2016 Annual Industrial Capabilities report. "Even more concerning is that the pre-cursor to make Dechlorane came from China. The Chinese source can no longer produce that pre-cursor and so there is now no source for Dechlorane in the world."

 

Another example is how America's war machine runs on advanced electronics, most of which are made abroad.  Ninety percent of the world's printed circuit boards are manufactured in Asia, and more than half in China. This is a consequence partly as a result of China's determined effort to build up a domestic research and manufacturing base for their own advanced technologies. Meanwhile, Chinese direct investment in American companies topped $64 billion between 1990 and 2015. While this lags behind Europe and Japan (Japan has invested around $400 billion), it does give Beijing a sizable stake in the U.S. economy and industries.

 

All of these concerns will only feed ammunition to President Trump and others who advocate a get-tough trade policy with China and other nations. But this toughness may be more smoke than fire. Short of nationalizing American defense contractors, the U.S. will depend on private industry to satisfy its military production needs. And private industry -- or their Wall Street shareholders -- will insist on minimizing costs and maximizing profits.

 

That's the essence of globalization, and the impetus for the relentless outsourcing of American manufacturing. That why Chinese goods have so captured so much of the U.S. market: not because they are good, but because they are cheap, which keeps American manufacturers and consumers happy. Made in America makes great sense in terms of national security, but American taxpayers will have to be willing to pay extra for Made in Seattle instead of Made in Shanghai.

 

 

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12 hours ago, ridenfish said:

We pay people billions of dollars a year to sit in their section 8 housing and eat dinner paid for with ebt cards while doing absolutely nothing.  I'm so ****ing sick of this arguement, there are plenty of people here to do the so called " work Americans won't do". The problem is politicians don't have the balls to reform welfare to a degree where it forces the lazy to get off their arses.

There are PLENTY of people to do the farm  and low skilled jobs. They would rather sit and do nothing on the tax payer dime. And, who can blame them? Why work when it's all handed to you.

Well said.

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There will be some pain, but we as a country cannot have these massive trade imbalances without consequences.The means to production is every bit as important as any other factor in our economy.The press used to say "learn to code" to displaced workers,they did not appreciate the joke when they were told to "learn to code." There is a lesson here for other segments of our economy that have not been yet been outsourced.

 

Patrick Buchanan: Tariffs -- The Taxes That Made America Great

As his limo carried him to work at the White House Monday, Larry Kudlow could not have been pleased with the headline in The Washington Post: "Kudlow Contradicts Trump on Tariffs."
The story began: "National Economic Council Director Lawrence Kudlow acknowledged Sunday that American consumers end up paying for the administration's tariffs on Chinese imports, contradicting President Trump's repeated inaccurate claim that the Chinese foot the bill."
A free trade evangelical, Kudlow had conceded on Fox News that consumers pay the tariffs on products made abroad that they purchase here in the U.S. Yet that is by no means the whole story.
A tariff may be described as a sales or consumption tax the consumer pays, but tariffs are also a discretionary and an optional tax.
If you choose not to purchase Chinese goods and instead buy comparable goods made in other nations or the USA, then you do not pay the tariff.
China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom.
Tariffs were the taxes that made America great. They were the taxes relied upon by the first and greatest of our early statesmen, before the coming of the globalists Woodrow Wilson and FDR.
Tariffs, to protect manufacturers and jobs, were the Republican Party's path to power and prosperity in the 19th and 20th centuries, before the rise of the Rockefeller Eastern liberal establishment and its embrace of the British-bred heresy of unfettered free trade.
The Tariff Act of 1789 was enacted with the declared purpose, "the encouragement and protection of manufactures." It was the second act passed by the first Congress led by Speaker James Madison. It was crafted by Alexander Hamilton and signed by President Washington.
After the War of 1812, President Madison, backed by Henry Clay and John Calhoun and ex-Presidents Jefferson and Adams, enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked.
Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer "has no right or claim to equality with our own. ... He pays no taxes. He performs no civil duties."
That is economic patriotism, putting America and Americans first.
The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson's income taxes, igniting that most dynamic of decades — the Roaring '20s.
That the Smoot-Hawley Tariff caused the Depression of the 1930s is a New Deal myth in which America's schoolchildren have been indoctrinated for decades.
The Depression began with the crash of the stock market in 1929, nine months before Smoot-Hawley became law. The real villain: The Federal Reserve, which failed to replenish that third of the money supply that had been wiped out by thousands of bank failures.
Milton Friedman taught us that.
A tariff is a tax, but its purpose is not just to raise revenue but to make a nation economically independent of others, and to bring its citizens to rely upon each other rather than foreign entities.
The principle involved in a tariff is the same as that used by U.S. colleges and universities that charge foreign students higher tuition than their American counterparts.
What patriot would consign the economic independence of his country to the "invisible hand" of Adam Smith in a system crafted by intellectuals whose allegiance is to an ideology, not a people?
What great nation did free traders ever build?
Free trade is the policy of fading and failing powers, past their prime. In the half-century following passage of the Corn Laws, the British showed the folly of free trade.
They began the second half of the 19th century with an economy twice that of the USA and ended it with an economy half of ours, and equaled by a Germany, which had, under Bismarck, adopted what was known as the American System.
Of the nations that have risen to economic preeminence in recent centuries — the British before 1850, the United States between 1789 and 1914, post-war Japan, China in recent decades — how many did so through free trade? None. All practiced economic nationalism.
The problem for President Trump?
Once a nation is hooked on the cheap goods that are the narcotic free trade provides, it is rarely able to break free. The loss of its economic independence is followed by the loss of its political independence, the loss of its greatness and, ultimately, the loss of its national identity.
Brexit was the strangled cry of a British people that had lost its independence and desperately wanted it back.
 

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A few folks on here are not grasping the reality of African Swine Fever on China's Economy.

It is especially devastating when you realize how much pork production factors into Chinese economy.

 

Spoke with market strategist, he doesn't believe that the trade war will end anytime soon, but he also doesn't believe the vaccine for AFS will be available for another 5 or 7 years.

 

3% of Chinese inflation is linked to pork. Pork prices are up 70% year over year, impact to headline inflation about 200 bps.

 

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1 hour ago, SallyGrowler said:

3% of Chinese inflation is linked to pork. Pork prices are up 70% year over year, impact to headline inflation about 200 bps.

Buying Smithfield Foods will prove strategic and highly profitable for its Chinese owners.

 

 

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America and China will adapt to the new reality. Overall it hurts China more. I'm out of the markets for the most part so I'll just sit back and see. If I have to pay a little more so be it. There is a move to restrict visas to Chinese students tied to the military. Not a bad idea. Feel bad for the farmers and other sectors that will suffer from a prolonged trade war, but that's the way it goes sometimes.

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Do some folks want a living wage for low skilled employees and free trade?

If I have a choice if don't buy Chinese crap,I often don't have a choice available on the shelf. Maybe over time, the tariffs will get some choice on the shelves,cheap Chinese or a product made in the West of higher quality.

The Chinese have been buying politicians for years,the Clinton's,Bush's and Obama were selling out the American worker.

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10 hours ago, Jetty Jumper said:

Do some folks want a living wage for low skilled employees and free trade?

If I have a choice if don't buy Chinese crap,I often don't have a choice available on the shelf. Maybe over time, the tariffs will get some choice on the shelves,cheap Chinese or a product made in the West of higher quality.

The Chinese have been buying politicians for years,the Clinton's,Bush's and Obama were selling out the American worker.

What will happen in reality is the manufacturing will move to places like Viet-Nam, Cambodia, Laos, Burma and Bangladesh-many of which are part of the Road and Belt initiative. The manufacturers will always move to where labor is cheapest and regulations are accommodating.

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Regulations are one of the factors,if leftists can pass enough regulations they can drive companies off shore,or in CA's case out of the state.

When leftists sign on to crap like the Paris Accords,it hurts our country and gives China a free ride,that drives domestic business to other countries as well.

Obama was pushing TPP,it was such a good deal it had to be kept secret.

 

 

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On 5/10/2019 at 11:59 AM, Billybob said:

I deal with them, and they have had an impact - and it gets rather complicated.

If an imported item receives a tariff which makes the domestic item competitive, then you switch to domestic, the price does go up, but the benefit is US jobs (and of course the fallacy of national security). 

But, if the tariffed import is still cheaper than the domestic or there is no domestic source, the net result is just a higher cost to the consumer without the benefit of onshoring the item. 

Both scenarios play out everyday.

You'd probably be hard pressed to find a window AC made here, will tariffs bring them back?

I don't know - the devil is in the details.

I have seen companies that were using foreign steel switch to domestic, and I have also seen some lose the whole job to a foreign supplier who can make the part cheaper with the same foreign steel that they used to be able to buy.

There's winners and losers for sure, and leaving it as it was sucked too.

The whole thing does add uncertainty when it comes to planning and Capex. 

I read that we are lifting tariffs on Canadian steel and aluminum, will that help you?

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Just hit the newswire.

 

US/Canada retaliatory tariffs go bye-bye.

 

Joint Statement by Canada and the United States on Section 232 Duties on Steel and Aluminum


From: Global Affairs Canada

 

Statement


After extensive discussions on trade in steel and aluminum covered by the action taken pursuant to Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862), the United States and Canada have reached an understanding as follows:

 

1.    The United States and Canada agree to eliminate, no later than two days from the issuance of this statement:

a.    All tariffs the United States imposed under Section 232 on imports of aluminum and steel products from Canada; and

b.    All tariffs Canada imposed in retaliation for the Section 232 action taken by the United States (identified in Customs Notice 18-08 Surtaxes Imposed on Certain Products Originating in the United States, issued by the Canada Border Services Agency on June 29, 2018 and revised on July 11, 2018).

 

2.    The United States and Canada agree to terminate all pending litigation between them in the World Trade Organization regarding the Section 232 action.

 

3.    The United States and Canada will implement effective measures to:

a.      Prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices; and

b.    Prevent the transshipment of aluminum and steel made outside of Canada or the United States to the other country. Canada and the United States will consult together on these measures.

 

4.    The United States and Canada will establish an agreed-upon process for monitoring aluminum and steel trade between them. In monitoring for surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not.

 

5.    In the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time, with consideration of market share, the importing country may request consultations with the exporting country. After such consultations, the importing party may impose duties of 25 percent for steel and 10 percent for aluminum in respect to the individual product(s) where the surge took place (on the basis of the individual product categories set forth in the attached chart). If the importing party takes such action, the exporting country agrees to retaliate only in the affected sector (i.e., aluminum and aluminum-containing products or steel).

 

Contacts
Adam Austen
Press Secretary
Office of the Minister of Foreign Affairs 
Adam.Austen@international.gc.ca

 

Media Relations Office
Global Affairs Canada
343-203-7700
media@international.gc.ca

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