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Thread: US Steel & Aluminum Tariffs

  1. #91
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Gun Boat View Post
    Mate it's not that difficult an issue to understand. You obviously have severe Trump Derangement Syndrome.

    Trump thinks that the 'look the other way' approach to China and trade should stop. Time for the training wheels to come off their economic bicycle as they don't need them.
    When Made in The Phillipines Levi jeans are sold to China, where to you count the trade? Is it in the Philippines, where all the cutting and stiching is done, or is it in California, where the brand lives? The answer might not seem that important until you realize that the same factory making Levis is also making other brands and non-branded products that sell for far lower prices.

    An inaccurate blue jeans example.

    Item One
    Production price: $5
    No-brand: $0
    Total FOB price: $5

    Item Two
    Production price: $5
    Brand value A: $5
    Total FOB price: $10

    Item Three
    Production price: $5
    Brand value B: $25
    Total FOB price: $30

    Item One adds $5 to the Philippines' exports to China. Item Two adds $10 and the Item Three, $30.

    But, half the value of Item Two, and 83% of the value of Item Three are in things that originate elsewhere.
    The total brand value added in the Philippines is sewing a patch on the back.

    However, the $25 value added to Item Three does not show up as an American export to China. [ADD: or to the Philippines.]

    The IMF is working on a value-added definition of global trade, but it isn't ready yet. The iPhone example that has been around for about 10 years should illustrate the concept well enough to understand that a Trump-level understanding of trade might include "look the other way" and "time to take off the training wheels" doesn't cut it.

    But, serious traders know better.
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  2. #92
    Senior Contributor DOR's Avatar
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    China's tariff list
    Nuts (including coconuts) and their byproducts: 22 items
    Fruit, dried, frozen and fresh: 55 items
    Wine: 6 items
    Ginseng: 3 items
    Steel: 33 items
    Pork: 7 items
    and, scrap aluminum.

    https://qz.com/1242652/china-tariffs...lass-of-goods/


    = = = = =

    Gunboat,

    If General Motors China wants to sell a car in the US, you can bet your bottom dollar that the car will meet every US safety and environmental standard.

    And, if Huawei wants to sell kitchen appliances in the US, there aren't going to be any safety or environmental issues. If there are problems, the same fate will befall Huawei as would a Made in America product: ban, recall, fines, compensation and a whole slew of bad press.
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  3. #93
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    I agree with Xinhui (Andy? Someone said his name was Andy?) and DOR on this. China runs a import-re-export model on many goods. The iPhone is a classic example.

  4. #94
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    Quote Originally Posted by DOR View Post
    "Trade."
    It's called "trade."
    No modifiers required.

    But, when the US and Japan compete to sell shampoo in China, Proctor & Gamble cleans up (so to speak).
    And, when KFC and Jollie Bee compete to offer fast food in China, KFC takes the cake (").
    Are you speaking in riddles?

  5. #95
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    Quote Originally Posted by DOR View Post
    China's tariff list
    Nuts (including coconuts) and their byproducts: 22 items
    Fruit, dried, frozen and fresh: 55 items
    Wine: 6 items
    Ginseng: 3 items
    Steel: 33 items
    Pork: 7 items
    and, scrap aluminum.

    https://qz.com/1242652/china-tariffs...lass-of-goods/


    = = = = =

    Gunboat,

    If General Motors China wants to sell a car in the US, you can bet your bottom dollar that the car will meet every US safety and environmental standard.

    And, if Huawei wants to sell kitchen appliances in the US, there aren't going to be any safety or environmental issues. If there are problems, the same fate will befall Huawei as would a Made in America product: ban, recall, fines, compensation and a whole slew of bad press.
    What you say is true but you are talking about 'Standards'. ie A car seat belt must meet standards for strength, wear tolerance and must be anchored a certain way. That's easy to achieve.

    The problem is western government regulations are both more numerous and rigidly enforced. It's not just meeting the regulation but also HOW you meet it. It adds significant costs across the board as they cover every aspect of manufacturing.
    This level of regulation doesn't exist in China. Period.

  6. #96
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Gun Boat View Post
    What you say is true but you are talking about 'Standards'. ie A car seat belt must meet standards for strength, wear tolerance and must be anchored a certain way. That's easy to achieve.

    The problem is western government regulations are both more numerous and rigidly enforced. It's not just meeting the regulation but also HOW you meet it. It adds significant costs across the board as they cover every aspect of manufacturing.
    This level of regulation doesn't exist in China. Period.
    Easy to achieve? Maybe for you it is, but there are a lot of factories out there that can only compete on price. Their quality sucks.

    Remember back in the 1970s when China tried to reverse engineer a 707? Got it all taken apart and put back together again, but it wouldn't fly ...
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  7. #97
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    Quote Originally Posted by DOR View Post
    Easy to achieve? Maybe for you it is, but there are a lot of factories out there that can only compete on price. Their quality sucks.

    Remember back in the 1970s when China tried to reverse engineer a 707? Got it all taken apart and put back together again, but it wouldn't fly ...
    From a manufacturing engineering stand point standards are easy to achieve. Easy because you design your product to meet them, test that your prototype does and you're set.

    China didn't reverse engineer a 707 and then reassemble it and then try to fly it. They built an aircraft based on the 707 called the Shanghai Y-10. They studied a crashed 707 and used engines that were spares for China's small 707 fleet. It took them so long to complete the design of the aircraft that by the time the prototype was ready the 707 design was already 30 years old. The prototype flew once I think and proved to be underwhelming.

  8. #98
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    Quote Originally Posted by Gun Boat View Post
    From a manufacturing engineering stand point standards are easy to achieve. Easy because you design your product to meet them, test that your prototype does and you're set.

    China didn't reverse engineer a 707 and then reassemble it and then try to fly it. They built an aircraft based on the 707 called the Shanghai Y-10. They studied a crashed 707 and used engines that were spares for China's small 707 fleet. It took them so long to complete the design of the aircraft that by the time the prototype was ready the 707 design was already 30 years old. The prototype flew once I think and proved to be underwhelming.
    Gun Boat, how do you know though. I know my brain has been conditioned to be credulous to information that suggest Chinese products are poorly regulated. That is my default position, but I don't actually have any facts to back it up. Do you?

  9. #99
    Senior Contributor anil's Avatar
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    Quote Originally Posted by DOR View Post
    Yep, gonna ignore it.
    First, it doesn't exist today.
    Second, it never existed.
    Third, no one has ever proposed it.
    They each(china and US) have a few common states with which they have a FTA. All china has to do is route goods through that third state.

    https://en.m.wikipedia.org/wiki/List...ade_agreements

    This isn't a far fetched idea. For eg: India has an FTA with ASEAN states and the chinese have managed to flood the indian market with no brand LCD tv's that sell on roadside shops. These TVs are diverted to india through thailand, vietnam, singapore and malaysia.

    The chinese operate in realtime.

  10. #100
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Gun Boat View Post
    From a manufacturing engineering stand point standards are easy to achieve. Easy because you design your product to meet them, test that your prototype does and you're set.

    China didn't reverse engineer a 707 and then reassemble it and then try to fly it. They built an aircraft based on the 707 called the Shanghai Y-10. They studied a crashed 707 and used engines that were spares for China's small 707 fleet. It took them so long to complete the design of the aircraft that by the time the prototype was ready the 707 design was already 30 years old. The prototype flew once I think and proved to be underwhelming.
    The reverse engineered 707 example is on page 86 (third page of the pdf file), first paragraph. Not exactly as I remembered it …
    https://www.princeton.edu/~ota/disk2/1987/8729/8729.PDF
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  11. #101
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by anil View Post
    They each(china and US) have a few common states with which they have a FTA. All china has to do is route goods through that third state.

    https://en.m.wikipedia.org/wiki/List...ade_agreements

    This isn't a far fetched idea. For eg: India has an FTA with ASEAN states and the chinese have managed to flood the indian market with no brand LCD tv's that sell on roadside shops. These TVs are diverted to india through thailand, vietnam, singapore and malaysia.

    The chinese operate in realtime.
    Not quite.
    There are clear definitions of what constitutes a product in a trade agreement. Most have a minimal local content rule. That's a long ways from having a free trade agreement (and, there are almost zero examples of actual free trade agreements anywhere in the world).
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  12. #102
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    Stupid protectionsim, Phase II

    Items on the expanded list of US products facing higher Chinese import tariffs:

    Soybean, corn, cotton, wheat, beef, cranberries, orange juice (20 items)
    Whiskey, tobacco (13 items)
    Off-road vehicles, passenger cars, trucks (28 items)
    Chemicals, lubricants, adhesives (18 items)
    Plastic items (23 items)
    Aircraft 15-45 metric tons (e.g., Boeing 737s)
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  13. #103
    Former Staff Senior Contributor Ironduke's Avatar
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    More here: https://www.politico.com/story/2018/...economy-502446

    Kudlow tries to tame Trump’s trade war

    On Day Three of Larry Kudlow’s first week at the White House, the president’s new economic adviser did exactly what he was hired to do: go on TV to calm the stock market over something his boss said.

    Kudlow, a former CNBC contributor and Wall Street economist who now oversees the National Economic Council, is a self-avowed advocate of free trade—but he found himself on Wednesday defending President Donald Trump’s proposed tariffs on Chinese goods.

    Kudlow’s performance on Wednesday set the stage for him to play the role in the coming months of the White House’s top economic salesman, forcing him to “jump right into the frying pan,” one longtime ally said.

    The administration’s recent moves on trade have spooked the stock market and scared American companies that produce goods China now intends to tax at a higher rate. Only hours after the U.S. released a list of Chinese products it intends to target, China moved to impose tariffs on roughly $50 billion in U.S. exports of soybeans, cars and other products, raising the prospect of a trade war.

    With markets slipping early in the day, Kudlow went on Fox Business Network’s Varney & Co., to say the trade plans were just “the first proposals” — a not-so-coded message to his former Wall Street colleagues.

    “In the United States at least, we’re putting it out for comment, it’s going to take a couple months. I doubt if there will be any concrete action for several months,” he said, before pivoting to his support for the president. “Trump’s putting his cards on the table. He’s standing up for this country, but he’s also standing up for better world trade.”

    Kudlow said in an interview with POLITICO on Wednesday that he views his role in part as reframing Trump’s actions on tariffs as part of a strategic move to create trade with China that eventually leads to faster growth and higher wages in the U.S. “I like to say that there is a pot of gold at the end of this rainbow,” Kudlow said, adding that so far Trump has liked his efforts to rebrand the trade moves in ways that are more palatable to free-traders and Wall Street.

  14. #104
    Senior Contributor anil's Avatar
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    Quote Originally Posted by DOR View Post
    Not quite.
    There are clear definitions of what constitutes a product in a trade agreement. Most have a minimal local content rule. That's a long ways from having a free trade agreement (and, there are almost zero examples of actual free trade agreements anywhere in the world).
    A few years ago, the indian govt decided to impose custom duties on all indian purchases from chinese ecommerce sites like aliexpress, banggood, dealextreme etc. Within a matter of few weeks, the chinese businesses started routing 3/4th of their shipments to india through ASEAN states since india has an FTA with them and no custom duty is imposed. This strategy is now reproduced with toys, consumer electronics, industrial tools etc.

    l'm familiar with trade in practical terms. I can't argue about FTA's in theory.

  15. #105
    Former Staff Senior Contributor Ironduke's Avatar
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    http://www.bbc.com/news/business-43664243

    Trump threatens further $100bn in tariffs against China

    US President Donald Trump has instructed officials to consider a further $100bn (71.3bn) of tariffs against China, in an escalation of a tense trade stand-off.

    These would be in addition to the $50bn worth of US tariffs already proposed on hundreds of Chinese imports.

    China's Ministry of Commerce responded, saying China would "not hesitate to pay any price" to defend its interests.

    Tit-for-tat trade moves have unsettled global markets in recent weeks.

    The latest US proposal came after China threatened tariffs on 106 key US products.

    In response to Mr Trump's latest announcement, Foreign Minister Wang Yi said: "China and the US as two world powers should treat each other on a basis of equality and with respect.

    "By waving a big stick of trade sanctions against China, the US has picked a wrong target."

    Ministry of Commerce Spokesman Gao Feng said: "We do not want to fight, but we are not afraid to fight a trade war."

    He said that if the US side ignores opposition from China and the international community and insists on "unilateralist and protectionist acts," then China will "not hesitate to pay any price, and will definitely strike back resolutely... [to] defend the interests of the country and its people."

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