Posted on 09/11/2009 7:17:37 PM PDT by Orange1998
President Barack Obama on Friday slapped punitive tariffs on all car and light truck tires entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health care push at home.
Obama had until Sept. 17 -- next week -- to accept, reject or modify a U.S. International Trade Commission ruling that a rising tide of Chinese tires into the U.S. hurts American producers. A powerful union, United Steelworkers, blames the increase for the loss of thousands of American jobs.
(Excerpt) Read more at finance.yahoo.com ...
http://www.freerepublic.com/focus/f-news/2337861/posts
Exactly 4 seconds after my post # 98, which was posted at 12:24:04 AM!
Eerie!
The last red iron I bought was from Mexico. What is amazing to me is products can be shipped from across the globe and still be cheaper. In America driving across town to save 10 cent a gallon never works out. But you have some people who will do it.
Free trade!?! Since when do we have free trade!?! Didn’t you ever hear the story of soda pop and sugar? And that’s a tiny example! We’re becoming one of the most governed economies in the world. And just name me one thing that got better by being governed more...
“Free trader” speak.
We have a free market.
Nobody else on earth does.
We are chumps.
S-H was only the most famous of the protectionist tarrifs, and one of the last.
But even if it wasn't the cause, it certainly did not help.
I learned them from 20 years working for small businesses or for myself. There's no school to teach you this, other than the school of hard knocks!
Here’s some more anecdotal info: One of the big wigs at my company was telling us that what often happens is that the country folk from China come to work at our plant for 5 years or so, live fairly spartan existence, and save up money to go back to their home turf and start their own businesses.
That is EXACTLY correct. Ask any factory worker what their dream is: to start their own business.
The typical factory worker is female, between 18 and 25. They come to work in the factories, living in company-supplied dorms, eating the 3 free meals a day in the cafeteria, and work as much overtime as possible.
After 5-6 years of dutifully sending 90% of their income home (usually 800-1500 RMB per month), they quit and move home. Get married, have a child or two, and start a business. With a nest egg of 50,000 RMB - a huge amount over here (what an engineer would earn for an entire year).
And then the next cycle continues!
Historically that has not been the case. China is always trying to fly apart. It's not really one nation you know. Anymore than the Russian Empire/Soviet Union/Russian Federation is.Although perhaps they are more so now than anytime in the recent past, like the last millennium or so.
People really don't appreciate this point! China's historically been 100-300 small kingdoms that rarely unite into 2-3 "empires". It's not a homogeneous society, no more so than "Europe".
You can look at a Chinese person and tell if they're from Shandong, Sichuan, Hubei, Zhejiang, or any of the provinces. They have distinctive facial and body features.
Even languages; for example, Mandarin is the official language (when does the US get its own official language?), but each kingdom/area had its own language. Here in Shanghai, I know some Mandarin, but no Shanghaiese. And 100 miles away, in Ningbo, there is Ningboese.
And the languages are such that if I speak Mandarin, you speak Shanghaiese, and the third speaks Ningboese, we cannot communicate; as different as Slovakian, Finnish, and Spanish.
China's much more akin to an EU with a MASSIVELY strong central Government, than a homogeneous country one would normally think (like Japan).
“The new tariffs, on top of an existing 4 percent tariff on all tire imports, take effect Sept. 26”.
Oh c’mon! A free market!?! Try to sell a tongue depressor to some doctors without FDA approval and see what happens. Or better yet, try to build something that emits some sort of carbon gas - you’d be lucky not to end up in jail! And Wall Street? The Feds missed Bernie Madoff but put Martha Stewart in jail. There isn’t even a semblance of a free market here anymore. You can’t even sell an electronic device without passing zillions of EMC emissions tests and if you do, don’t DARE forgot the label with all the symbols that no one looks at.
The Chinese are not going to be pleased. They have already lectured Obama on the U.S. Constitution which they understand better than he does. This tariff will kill jobs in the retail sector to save a few dozen union jobs at a couple US plants. Most of these tires are actually U.S. owned or partly owned Chinese plants. The tariffs will simply cut off sales to the Chinese and move it to other countries within months. He will have to tariff them all. All of them will retaliate.
Good examples.
I’m speaking in a balance of trade way. Our market is open to any and all competitors.
No markets are equally open to our products.
That is why we have lost our industry. We have been gamed. And we have surrendered our might.
Very informative post. I bet many Americans do not know.
Correct. That's some of the price you're saving. Less QC. Unless you demand lab tests of each batch of steel, then you get it - and you pay for it.
How is that different than two suppliers in the US, one with gas-fired furnaces (which are notorious for hot-spots) and the other electric?
I use a LOT of low carbon (1008 and 1010 grade) steel in my work; you need low carbon steel to channel magnetic flux (just 1% carbon will render steel essentially non-magnetic). As I design loudspeaker drivers, I use a LOT of steel.
I've had good and bad results with US steel makers (when I built my own speakers right in Lynnwood, WA) and I've had good and bad results with Chinese suppliers.
Now, I make sure that - regardless of where it comes from - 0.03% of the product is taken at random and tested. My own staff shows up at the factory, pulls samples they want (chosen from random pallets and random boxes), and then tested by my own staff.
Yes, it's extra cost to do this - typically 1-1.5% more cost, but I have good assurance that what I designed is what I am getting.
The people running the tests are Chinese; but they're paid by me, not the factory. And they know if they screw up I will not hesitate to fire them immediately. The Chinese are not stupid - they will answer to who pays the bills!
But in general, if you skimp on costs, you skimp on something. Labor's not the issue; it's mainly business overhead that is the big culprit. So if you are getting a bargain basement price, then you better find out what's wrong.
If you were using the grade 8 bolts in a Cat motor made for the domestic Chinese markets, it doesn't make sense to buy them in the US and ship them to China, so you spend a little more for a reliable source that you can use over here, and then you do as Ronald Reagan cautioned:
"Trust, but verify"
I appreciate where you’re coming from, but you have to look and see the root cause of all this IS gov’t. More regulation will only make it worse.
I have to sign off for the night, though. So I must bid you and all the rest here g’night and dreams a Free Republic.
G’night!
No.....Not really.
All that consumer stuff....er...junk that we import is sold. That adds to GDP.
Consumers probably would not have bought the same sort of stuff in a high end store, but even if they did, it would be imported. We don't make anything! We live in a service economy. The goods sold are largely imported.
China is a export economy created to serve the needs of economies like ours. You affect the mechanism of trade between us, and the GDP's of both are affected.
Buy tires before September 26, 2009.
Really? We do? I can design pacemakers and sell them? I can negotiate for a labor rate that I and my potential employee desire? I can set work hours as I and my employees see fit? I can use whatever doorknobs I want on the bathroom door?
I can negotiate my own benefits package with my employees - including long-term retirement?
I can choose to use my own septic and well water?
I can design a product in Singapore, manufacture it in China, and have my Hong Kong office sell it to the UK and not have to pay US taxes on the profit?
Friend, if you think we have a free market, then you really need to come spend a week in Shanghai. I'll take you to the Fengyang market where you will see such raw, naked capitalism as you have never witnessed.
Nobody else on earth does.
There are 5 countries that even the conservative Heritage Organization states are more economically free than us. And guess what - the top 2 are in Asia! And, the number one best - Hong Kong - is "ChiCom".
China's working towards revamping its own entire economy to mimic Hong Kong. It's becoming much more free and open in terms of how business is done and how transactions are made. I know from personal experience the amount of Government intrusion I have here in China is about 1/10th of that I have in the US.
I have essentially zero forms to fill out here in China; in the US (where I still have to maintain a business presence, legally) I have 4-5 monthly forms to fill out for the Feds, the State, and the City.
If you think the US has a free market, then you need to travel outside the borders a bit and try some other markets because we're a lot more locked down than you think.
On that list from Heritage, I've run businesses in #1, #6, #11, #20, and #132. I can tell you that the US ranks as high as it does because of the freedom of banking and investment, not because of business atmosphere. In Hong Kong, Chile, and China the level of Government intrusion my business operations was (and is) essentially non-existent. Minimal paperwork, no-fuss/no-muss.
Even Belgium was better than the US, and for a socialist country to be easier is simply amazing.
If the US is a free market, then GM is free enterprise at its best.
You know why China is an export economy? It's not because the domestic market doesn't exist (it exists, and is growing massively).
It's because their Government ENCOURAGES exports! Imagine that! And they do it through that evil capitalistic means: economic incentive.
Most of China's taxes come from a B2B tax, like a VAT. If Two Chinese companies transact, there is a 17% tax on that transaction.
However, if a Chinese company sells to a foreign company (say, US or EU), then there is only a 6% tax on the transaction!
China has set its taxation laws to ENCOURAGE production and export of goods. You save 11% right off the top by exporting, rather than selling internally.
It's one of the reasons you can buy a 36" picture tube TV here for $100 (I kid you not; I was looking at one yesterday in the local Suning store for 699 RMB), but a 27" flat screen will run you $400 (2799 RMB). If you can export the product, you darn well do it because you get an extra 11% return on that export!
Only when you cannot reasonably export products do you sell internally and take the higher tax hit...
And it always freaks people out when the latest consumer products are 4X more expensive in China than in the US; no one wants to sell the new stuff here because you can get 11% more money selling it overseas.
What I mean is that imports are subtracted from the GDP.
GDP = Consumption + Investment + Gov’t Spending + (exports - imports).
Reduce imports, if you can buy the same stuff here in the US *even at the same price*, you increase GDP. If the price increases for necessary items made in the US, you’ll see the “consumption” portion go up, which also increases GDP.
As I said, I’m failing to see a problem in this tire trade restriction.
We still make plenty of tires - and plenty of steel. The idea that “we don’t make anything here anymore” is true only for a limited set of consumer schlock crap. We still make (or have the ability) to make plenty of stuff here in the US. We manufacture more stuff than anyone else, as a matter of fact.
The issue with China and our current account deficit, however, threatens the future of the US economy. The situation where consumer spending needs to be subsidized with easy lending kept that way by the Chinese buying our debt at low yields is simply not sustainable, and the longer we put off the reckoning, the worse it is going to be.
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