Trade with China due for a correction.....

Off-topic Chatter
1

We are so utterly dependent on Chinese goods……but are we setting ourselves up for failure?

Dealing with China “might” get much more frustrating in the coming years. We have a new President who feels America is not getting a fair shake in many global markets. Overall I tend to agree….which should not be construed to imply my leanings in any way. It’s just that I feel some large Asian nations have not played fair on International trade. And in some ways, our own political leaders share the blame.

That said, we “could” see new import tariffs if not an all out trade war. Any of which would cut supplies and raise prices.

The way I see it, that pain would hurt in the short term, but probably be good for us all in the long term. Paying more for products made domestically, but some manufacturing returning to the USA, putting people to work, strengthening our manufacturing base and enjoying the quality that goes with it.
Short term pain, long term gain.

I just get the feeling the cheap trade with China is coming to an end. Their own economy is struggling globally, but growing domestically from rising internal consumerism similar in some aspects to the USA of 50 years ago.

What do you think? Way off here? I admit, I only have half my brain left…and it’s full of cobwebs.

2

Glad the rules ask us to stay clear of politics :wink:

Yes all things change and sure China is developing fast (I read somewhere income is 61 times higher on average now then it was 30 years ago.)
The world is bigger then just the US and in Europe taxes are higher and employers have much more obligations then in the US so production here is even more expensive. Outsourcing and not starting something for only our 500M market is thus not to stop soon (though we might see new countries where production takes place)

And don’t forget China has a lot of leverage so any administration will have to deal with that reality.
The U.S. debt to China is $1.0493 trillion, as of November 2016. That’s 27.8 percent of the $3.7707 trillion in Treasury bills, notes, and bonds held by foreign countries. …

3

Oh my!
I missed that. Didn’t mean to break any rules. Just thoughts on our orders from China going forward.

Thanks for your thoughtful reply Miller.

4

In the case of flashlights, it’s simple. With China as a supplier, it’s a relatively affordable hobby that many people can engage in. If China would be shut out, production wouldn’t move to the US because much less people would buy flashlights at about twice the price. So it wouldn’t even be attractive to produce them in the US.

5

I have few questions for those who agrees with international trade limiting but have never met with it.

  1. Have you ever been in countries with such limits?
  2. Have you ever used non-local (local like bread or milk and etc.) complex goods (tools, gadgets) that have 100% origin country self-cost?
  3. Who will work at this manufactures in country with 3% unemployment?
    I can recommend two things to those who dont want to reach degree in economics: to understand what import substitution is, you need to buy Lada and visit N.Korea.
6

Say we are neighbors and I can made a watch (old traditional analog type) in a week and you're a gun maker that can make a gun in week. If we trade a watch for a gun (assuming equalish value) with each other, we both come out ahead as I would spend years trying to make a working gun and you the same trying to make a watch.

7

:+1: :laughing:

8

This thread will quickly get out of hand if we dig into this topic, hence the non political rule.

9

I work for an American company that makes large pieces of industrial equipment for a certain industry. Our largest competitors are German, Austrian and to a lesser extent Swedish. Roughly half of our business is in North America. In order to be competitive we manufacture most of our equipment in China at our shop there. This is what our competition does, if we didn’t do this as well we would be out of business, given the existing rules / duties / tariffs, Our North American customers benefit from the lower cost equipment. They would rather not have “made in China”, but they also want it as inexpensive as we can get. We also have ~200 employees in North America. We have a shop in the USA that we do rebuilds with.

10

No worries it is a very interesting topic!

11

This thread CAN succeed, without any unnecessary political problems, if we each commit to obeying the rules. I don’t personally see any problems yet. I certainly wouldn’t say that the OP was too political. This is a very real issue that we may (or may not) face in the near future. I’m going to agree with those that say that if something causes short term pain, but long term benefit, then it might be worth it. In which case, I’d prefer it to be a bigger chunk of pain spanning a shorter amount of time, versus little bits of pain over a longer period. If it’s gonna happen, let’s get it over with!

Then again, I might be just an idiot… or a masochist… or both. :weary:

12

The only problem I have is with any of these so called “Temporary Taxes/Tariffs” are that they are never temporary.
It has been said there is nothing as permanent as a temporary tax.
I live in the very corrupt state of Pennsylvania.
Seriously, corruption is like a sport here for the sleazy politicians since way before I was born, from both parties.

Good example, Google 1936 Johnstown Flood Tax
Started at 10% then magically got raised to its current 18% on every case of beer, wine etc.
Yep, we are still paying it. 1936!
About every 5 years the media will pretend that there is movement to end the tax but it is always hot air, nothing more.
And they wonder why people near the borders cross over for their beer and cigarettes.

Then there is the Philadelphia “Temporary 1% tax for schools” enacted in 2009, set to expire in 2014 and guess what?
It got extended again, now is being called indefinite, another word for permanent.
http://watchdog.org/93461/philly-schools-to-get-120-million-from-permanent-extension-of-temporary-sales-tax/

I don’t live in Philly but know people who do and it is just another reason to hate the gov’t if you are running low on reasons why :slight_smile:

Anyway, bottom line it is the working man who will always get the short end of the stick in these deals in the long run.
Keep it clean!

13

But its the anti tax party floating these taxes, being as regressive as possible.
Its one thing to pay for spending, its another to do it on the backs of the already hardest hit.

14

Not getting into any party affiliations here at all.

Just saying that there is no such thing as temporary pain when it comes to increased prices via Taxes or Tariffs or VAT’s or whatever they want to call it.
You can dress up a pig, but it’s still a pig.
Hoping for the best.

Why can’t Streamlight ever get with the modern world and release some flashlights with current technology?
I would be all over that. They are right here in PA not that far from me. I would love to support the company.
I actually have conversed with a guy who works at Streamlight and he tells me he has to buy his companies lights from outside sources to get a good deal, they give them squat for discounts.

Later,
Keith

15

Streamlight is behind but catching up. It seems like the U.S. companies got pulled into LED’s kicking and screaming. We issued Streamlights for years at my department. Went from NiCd to Nimh a few years ago and now they caught the Lithium-ion bug. Their Protac series is as good or better than any Chinese light. I say this for the following reasons. If your Chinese light breaks you complain and get a new one or refund. If your Streamlight fails you sue for the dead or injured worker using it. With product safety and reliability especially in the First Responder or industrial fields a bad light can cost you big in the USA. I know our older Streamlights went through abuse that would have killed other lights. Yes, Streamlight is made in China assembled in the USA. But the standards and designs are USA, as they should be. We know our liability laws and do try to make the best. You just have to pay extra. Our manufacturing is slow because it has to perform under strict test.

This is Budgetlight, but I’d pay twice as much for a little improvement. My gear has to work 100% America and Europe gets it. Want most of the time go cheap. All the time pay full price. This I see in the stores. Want something you know you’ll only use a few times like a compressor or shop vac buy cheap Chinese. Need it to work all the time and or going to use it a lot buy American or European. Try finding cheap and German. I’d rather see us make the best once instead of becoming a throw away society. How many of you have boxes of broken flashlights? How many are American or European?

Our trade deficit has a lot to due with this cheap throw away buy another attitude.

16

First off, I’m apolitical, ie, I despise pretty much all politicians uniformly, without regard to party. They’re just flip sides of the same statist coin (“heads I win, tails you lose”), so I don’t see any “saviors” in any political party.

That said, the problem is that pollies don’t act for their so-called constituents, or for their state, or for their country. They’re out for themselves, period. They’re beholden to those who put them in power, and will tax (or untax) those groups who are in their disfavor (or favor).

In China, those in the ruling circle are pretty much in power for life, so there’s no big push to put themselves on sale to the highest bidder, so they do in fact rule for the betterment of their country. Sure, they all live lavish lifestyles, but they don’t throw favor to Hop Sing Pharmaceuticals so that when they retire, they can collect nice fat paychecks from HCP in “advisory positions”.

Here, not so. Mortus Pharma can get legislated protection against lawsuits in case any of their vaccines, like, kill 10,000 kids. Sue them if your kid dies? Nope, the law protects them. So you’re SOL. Then, whoever wrote and pushed the legislation ends up working at Mortus Pharma when his term’s up.

In China, Hell, remember the melamine fiasco (spiked baby formula) and other incidents? CEOs were imprisoned, and in a handful of cases even executed!

—

Another point of interest, all the bluster against China and Russia (currency manipulation, invasion of the Ukraine, etc.) have pushed them into each others’ arms. China especially is building a totally new Silk Road to boost trade, grease the skids bigtime, and boost the economies of China, Russia, and anyone else who wants in.

And the US and a lot of the EU aren’t invited.

The US dollar is going to be displaced as the de facto world’s currency. When national banks have been selling their gold reserves, China has been buying.

Iran had to die because it wanted to topple the petrodollar (goggle “iranian oil bourse”).

All the world had to adopt onerous US-pushed financial regulations (despite any privacy laws in their respective countries!), or else they’d be cut out of the whole worldwide financial network. That’s why most worldwide banks outside the US flat-out refuse to open any accounts for US citizens. Look up articles on Wegelin bank in Switzerland, but try to see through the spin. Ah, here’s a quickie: https://en.wikipedia.org/wiki/Wegelin\_%26_Co. .

Point being, the US (gov’t) has thrown its weight around for a long time, got complacent thinking it can continue to do that in perpetuity, that it was too big to take on, but guess what? China, Russia, India, lots of “enemy states” in the Mideast, no longer want to be pushed around like that. They’re quietly ganging up — I was going to say “in secret”, but they’re quite open about it; it’s just that no one in the US has taken notice! — and are forming their own club.

Kind of like when a school threatens to cancel the prom if the kids won’t behave. Kids can gang up on their own and make their own prom, and the school admin can go pound sand. If enough kids feel similarly, school admin can end up with an empty auditorium!

The new Silk Road is what’s going to create a new economic bloc, if not an economic powerhouse. And the US will end up holding all its dollars that’ll have as much value as Confederate dollars have today. And in their house, in their system, the US dollar will be pecunia non grata.

Man, is that gonna hurt…

17

we already tried that here.
we imported the yugo.
a waste of raw materials and the butt of many jokes.
i understand the lada is similar.
btw cheap chinese lights are the yugo of the flashlight world.

18

Importing bad goods is not a big problem. With open borders they will die in complete with other goods.
But if any country starts limit import with taxes and etc., and set this taxes at the level which forces domestic companies start local manufacturing, this is much worse. Before this market was already balanced. Companies have already produced goods or services that could be done better, with better effitincy or lower self-cost localy. With new manufactor volumes, some of this human resources will defenetly change their type of activity to the new one. This fact can not introduce bad influence on GDP growth.
If we forget all this #### about debt and say that sum of international trading was zero (import amount value=export amount value), we can see that previous fact may bring much more influence that you could think. International trading reduction will beat both zides, neverless was it importing or exporting country. By simple words: earlier both groups tried to find out their comparative advantage, with limiting trades and changing spheres their total effitincy will decrease (see Ricardos example).
Talking about such things, you should not forget main market laws. If you are not going to sell most goods abroad (like China or S.Korea), the only market that can help to find right price and quantity curve is local one. But if import taxes were set as high as it was neccesary to make local manufacturing profitable, one time foreign goods can dissapear. Not all goods, just in specific realm. And from this day, price of this goods is not connected to the worlds markets at all, both in abroad and foreign markets. Get ready to prices raise. This is not all. Market competition gives not only best price. It gives all other factors that can influence on buyers loyalty.

Also, you should not forget that todays manufacturing is very globolized process. Lots of goods exist just because 2 or 3 fabrics provide them worldwide. You can open local factory in every 100-thousand city, but this will enlarge price hundred times and make this product useless.
Short example.
Iphone self-cost is about $250.
Iphone sale cost is about $750.
$250 goes to people that work in Asia.
$500 goes to CA.
Will be people from CA able to make phone assemble better than chinese? Dont think so. Same as chinese are not good in software, intellectual property rights, marketing and etc.

Last thing, that is never mentioned. Any control is not free. New rules or laws, that are setting limits, require big resources. Some EU countries (with ~€20 customs limit) are spending more money on this control, than is holding from this parcels. With billions small parcels from China to the US, checking all them may make busy all residents of any one state.

19

kiriba-ru, I’m not sure I understand everything you’ve said, but I’m pretty sure I agree with what you’re saying. :wink: Basically, that a truly free market (whether local or global) can always figure out how to thrive while also supplying what the customers want. But a regulated market is disconnected from the customers in a way that ultimately makes everybody a loser.

20

Low or non-existent tariffs are only one part of free trade. Uniform environmental and safety regulations are equally important. One reason that Europe and the USA have trouble competing with China is because China does not have the the same health and safety standards that we demand for our workers in the west.

Consider, for instance, energy. Low energy costs are a major factor in almost all sectors of an economy. Cheap energy means cheap steel, cheap factories, cheap products, and, basically, cheap everything. Coal is the most common source used to power factories today.

For most of the past two decades, safety for coal miners in China has been a low priority. Thousands of Chinese miners died each year in mining accidents. Things are improving. Recently, China had a year when only about 900 miners died. Prior to that, the figure typically ranged between 2,000 and 7,000.

Compared to the USA, however, the numbers are still horrifying. In the same year (2014) when China had 900 deaths, Radio Free Asia reported that, "U.S. coal accidents claimed 16 lives last year, according to the Mine Safety and Health Administration. At that rate, China suffered 58 times more deaths to produce four times as much coal." (Emphasis added.)

China still has something like 100 million peasants who live in abject poverty. For each worker who dies, there are eager replacements at hand. Wages are low, and safety costs even lower. It is no wonder that Chinese goods are less expensive than those made in the USA and Europe.