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TRADE THREAD- President Trump signs Phase One of China agreement, China promises to double its purchases in 2020 (2 Viewers)

Mile High said:
Jack Ma, founder and chairman of Chinese retail giant Alibaba, says the company no longer plans to create 1 million jobs in the United States in the wake of the ongoing trade conflictbetween the U.S. and China.

https://www.google.com/amp/s/www.cnbc.com/amp/2018/09/19/jack-ma-alibaba-is-no-longer-planning-to-create-1-million-us-jobs.html
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I might vote for Trump in 2020 if this harebrained trade war causes Wish to go under such that they can't pay the Lakers for the promotional logos on their jerseys anymore. Just kidding. Sort of. Make the Wish logos go away please.

 
I'm a fan of pressure on China, both for more open markets and to get China out of the state-sponsored counterfeit game.

I'm not sure if tariffs are the best way to do this, but I don't love the European model of kicking the can down the road. Striking when the economy is hot makes more sense to me than when the economy has cooled off.

A lot of this will come down to if companies insist on making margin on duties. In my work in the import field (commodity base metal and wooden products and consumer electronics), first cost/import price is about 25% of what you see at retail. Currently almost everything I'm dealing with comes in under Chapter 85 in subheadings not subject to a 10% increase.
For a Bluetooth headphone that retails at $200.00, you're talking about $4 or so in extra duty @ 10% and $10 @ 25%. That's not enough to cause major disruptions, unless the importer, the distributor and the retailer are all trying to make 30-50 points on that $10. 

 
Mile High said:
Jack Ma, founder and chairman of Chinese retail giant Alibaba, says the company no longer plans to create 1 million jobs in the United States in the wake of the ongoing trade conflictbetween the U.S. and China.

https://www.google.com/amp/s/www.cnbc.com/amp/2018/09/19/jack-ma-alibaba-is-no-longer-planning-to-create-1-million-us-jobs.html
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Art of the Deal 

Also, it's ####### scary to me that people don't know history and what happens long term if the US "wins" the trade war.  Idiots. 

 
Gopher State said:
Amazing stock market continues to roar with all this trade war noise.  I guess the markets don’t think it is a big deal, 
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The markets understand the impacts aren't going to be immediate.  All you need to know is they are already talking about recession which was on exactly NO ONE'S radar 9 months ago.  All predictions were 4-5 years out at that time.

 
jonessed said:
They are paid by the importer, but they may switch sources, eat it, or pass it on to the consumer.  It’s likely going to be paid by everybody involved to some degree.
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I can speak to my industry that was one of the first to experience tariffs -- the price to the consumer for both imported and domestic steel went up ~25% as soon as the tariffs were announced. 

 
msommer said:
And the Chinese add more tariffs as well, $60 bn worth. 

So much for being scared of DJT
Click to expand...
The Chinese figured him out very early on: serve him some tea from a gold teapot from the 1400s that "noone else" has ever drank from and lavish some platitudes upon him and he'll bend down and kiss your scepter.

Paper tiger all the way. The only people scared of DJT are America's allies.

 
Gopher State said:
Amazing stock market continues to roar with all this trade war noise.  I guess the markets don’t think it is a big deal, 
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Why would they?  The stock market doesn't care about the pain of the average American, just $$$

But how has the stock market done since the they started?

 
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Ignoramus said:
I can speak to my industry that was one of the first to experience tariffs -- the price to the consumer for both imported and domestic steel went up ~25% as soon as the tariffs were announced. 
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Can you give more info regarding timing and changes to wholesale and retail price point?

My very cursory search shows China making up 3% of steel imports into NAFTA countries.
https://enforcement.trade.gov/steel/license/documents/execsumm.pdf

I'm amazed that an increase to such a small market segment would drive price up by so much.

ETA: I forgot that the steel tariffs were so broad. Not quite analogous to the instant case, but definitely shows the issues with widespread protectionism. Would be curious to know the impact on wholesale and retail still.

 
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Ignoramus said:
The Chinese figured him out very early on: serve him some tea from a gold teapot from the 1400s that "noone else" has ever drank from and lavish some platitudes upon him and he'll bend down and kiss your scepter.

Paper tiger all the way. The only people scared of DJT are America's allies.
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Push is going to come to shove at some point. Good NYT piece on this:
https://www.nytimes.com/2018/09/18/business/china-trade-war-retaliate.html

China can do a lot of damage to the American farmer and a fair amount to other industries. At the same time, I tend to think China needs us more than the other way around. China also has to worry about too much devaluation. Both countries can paint themselves into corners and for the average American who has gotten used to sub-$1000 65" TVs and LOLSurprises, there could be some pain. But there are a lot of industries that can source away from China pretty quick. 

If we're levying tariffs on all products, it could complete the clothing shift to SE Asia. Commodity metal and wood products could quickly follow. Indian ceramic exports would expand rapidly. 

China runs out of stick before the USA does. However, Chinese people are much more accustomed to the beating than the American population.

 
Hawkeye21 said:
Isn’t the market right where it was at the beginning of the year?
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I don't know the raw numbers between Jan and now, but I do know that for 2018 the Chicago Board Options Exchange Volatility Index (which is a very common data point we use to judge volatility in the markets) has returned to levels on par with the financial crisis.  This is one of the data points we use in 401K management.  I find that absolutely amazing.

 
Gawain said:
But there are a lot of industries that can source away from China pretty quick. 
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But there are many that cannot. See the huge number of requests for exemptions to the tariffs (and few are approved).

I can say that my company cannot pivot away from China so easily. While we have company owned factories in the US, Mexico, Czech Republic, UK, Taiwan and some others, the largest factory is in China. Furthermore, there is little duplication of product lines on multiple factories. Our Chinese factory doesn't specialize like the other factories, who generally do only one product line. Rather, they are set up to do many lines simultaneously and export technically complex subassemblies to other factories.

We are not walking away from billions of dollars in products, so the customer will end up eating it at the register (and our competitors that aren't so invested in China will gain share when our prices rise more than theirs).

 
The Z Machine said:
But there are many that cannot. See the huge number of requests for exemptions to the tariffs (and few are approved).

I can say that my company cannot pivot away from China so easily. While we have company owned factories in the US, Mexico, Czech Republic, UK, Taiwan and some others, the largest factory is in China. Furthermore, there is little duplication of product lines on multiple factories. Our Chinese factory doesn't specialize like the other factories, who generally do only one product line. Rather, they are set up to do many lines simultaneously and export technically complex subassemblies to other factories.

We are not walking away from billions of dollars in products, so the customer will end up eating it at the register (and our competitors that aren't so invested in China will gain share when our prices rise more than theirs).
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I've been more Operations/Production than Sourcing for most of my career, but perhaps it's time to transition.
I don't know what industry you are in and don't know enough outside of what I've worked with to speak definitively one way or the other.

I do know that if Trump used the next two months to pass through a law that put 100% duty on all Chinese imports for the remainder of his presidency there would be many companies that found work-arounds quickly. It's all a question of the stick. With current markups from landed cost to retail cost, I don't think 10% is enough to make many folks do more than complain.

 
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Gawain said:
Can you give more info regarding timing and changes to wholesale and retail price point?

My very cursory search shows China making up 3% of steel imports into NAFTA countries.
https://enforcement.trade.gov/steel/license/documents/execsumm.pdf

I'm amazed that an increase to such a small market segment would drive price up by so much.

ETA: I forgot that the steel tariffs were so broad. Not quite analogous to the instant case, but definitely shows the issues with widespread protectionism. Would be curious to know the impact on wholesale and retail still.
Click to expand...
The "consumer" for the market segment I am involved with (steel pipe) is companies that  transmit natural gas to homes for cooking and heating or to refineries for gas for automobiles or other chemicals. It's not Joe Smith walking in and buying but a Chevron or ExxonMobil or Marathon that buys.

Prices across the board shot up immediately. There have been several planned projects halted due to increase in materials.

 
Gawain said:
Push is going to come to shove at some point. Good NYT piece on this:
https://www.nytimes.com/2018/09/18/business/china-trade-war-retaliate.html

China can do a lot of damage to the American farmer and a fair amount to other industries. At the same time, I tend to think China needs us more than the other way around. China also has to worry about too much devaluation. Both countries can paint themselves into corners and for the average American who has gotten used to sub-$1000 65" TVs and LOLSurprises, there could be some pain. But there are a lot of industries that can source away from China pretty quick. 

If we're levying tariffs on all products, it could complete the clothing shift to SE Asia. Commodity metal and wood products could quickly follow. Indian ceramic exports would expand rapidly. 

China runs out of stick before the USA does. However, Chinese people are much more accustomed to the beating than the American population.
Click to expand...
I agree. Curious to see when Walmart has to raise prices and what the impact will be on the American consumer. 

 
Ignoramus said:
The "consumer" for the market segment I am involved with (steel pipe) is companies that  transmit natural gas to homes for cooking and heating or to refineries for gas for automobiles or other chemicals. It's not Joe Smith walking in and buying but a Chevron or ExxonMobil or Marathon that buys.

Prices across the board shot up immediately. There have been several planned projects halted due to increase in materials.
Click to expand...
How are prices now compared to 2011? At least in your industry it's probably not too often that a factory tries to pass ABS plated crap as the real deal.

Do you think these projects aren't feasible ever at current price points or that plans were put on hold due to the likelihood of a decrease after resolution of the tarrif tête-à-tête? 

Ignoramus said:
I agree. Curious to see when Walmart has to raise prices and what the impact will be on the American consumer. 
Click to expand...
For the frugal American, there shouldn't be a ton of effects. Food stuffs are generally USA produced. Bimbo can still bring in loaves by the truckload. 
Christmas time could be interesting. Does Foxconn have production facilities outside of mainland China to source USA demand and shift non-USA production to mainland China? Does it even matter because USA electronic manufacturers are so tied into their production facilities in China?

Our Black Friday/Holiday promotions are shipping now. Forecasts were based on pricing that wouldn't allow for a 10% tariff bite. We're not going to be able to pass that cost along, as pricing is already locked in. It would have to be 1/2Q of 2019 and try to eat the tariff hit until then. 

 
Ilov80s said:
Lots of negativity here in Detroit on the tariffs. Automakers are preparing for a downturn and it is being suggested if you are in the market for a new vehicle, move quickly. 
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Does everyone agree with this? Was planning on buying a new Honda Accord next summer.  Should I move it up to now?

 
pokin said:
Ilov80s said:
Lots of negativity here in Detroit on the tariffs. Automakers are preparing for a downturn and it is being suggested if you are in the market for a new vehicle, move quickly. 
Click to expand...
Does everyone agree with this? Was planning on buying a new Honda Accord next summer.  Should I move it up to now?
Click to expand...
Not sure

On one hand, the tariffs may be higher then, resulting in a higher sticker price

On the other hand, if no one is buying you  may be able to get a good deal out of the dealers desperation

 
pokin said:
Does everyone agree with this? Was planning on buying a new Honda Accord next summer.  Should I move it up to now?
Click to expand...
I don't know about everyone. That was the opinion of a couple different Detroit writers who cover the auto beat so they are well sourced. Now maybe it's the auto companies trying to drum up sales, but I think it's clear Trump's economic polices are not good for the auto industry. 

 
Mile High said:
Jack Ma, founder and chairman of Chinese retail giant Alibaba, says the company no longer plans to create 1 million jobs in the United States in the wake of the ongoing trade conflictbetween the U.S. and China.

https://www.google.com/amp/s/www.cnbc.com/amp/2018/09/19/jack-ma-alibaba-is-no-longer-planning-to-create-1-million-us-jobs.html
Click to expand...


Ilov80s said:
Chinese tech billionaire Jack Ma's promise to create 1 million new US jobs is the latest casualty of the trade war.

https://money.cnn.com/2018/09/19/technology/alibaba-trade-war-jobs/index.html
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Let's take a minute to remember what those promised jobs were:
 

The Chinese e-commerce giant said the positions would be generated through Alibaba adding 1-million small-and medium-sized US businesses to its platforms, estimating that each one will hire a new person as a result of the added commerce.
Click to expand...
https://www.businesslive.co.za/bd/world/asia/2017-01-10-chinas-jack-ma-promises-trump-alibaba-will-create-1-million-us-jobs/

A nebulous promise based on an unrealistic expectation. Alibaba would expect to pull marketshare from Amazon and eBay and Jet.com and a host of other ecommerce sites. Jobs would exist from more products sold or higher margin. Not from just an additional sales channel.

ETA: If we're talking about e-commerce sites and the profits generated by them, I'd prefer those profits to stay with an American HQ company, such as Amazon than a Chinese company, such as Alibaba.

 
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Gawain said:
Let's take a minute to remember what those promised jobs were:
 

https://www.businesslive.co.za/bd/world/asia/2017-01-10-chinas-jack-ma-promises-trump-alibaba-will-create-1-million-us-jobs/

A nebulous promise based on an unrealistic expectation. Alibaba would expect to pull marketshare from Amazon and eBay and Jet.com and a host of other ecommerce sites. Jobs would exist from more products sold or higher margin. Not from just an additional sales channel.

ETA: If we're talking about e-commerce sites and the profits generated by them, I'd prefer those profits to stay with an American HQ company, such as Amazon than a Chinese company, such as Alibaba.
Click to expand...
Good point. Althought Trump loved the idea at the time and thought it was a big plus for the US economy:

"Jack and I are going to do some great things together," Trump said in the lobby of the Trump Tower in New York. After the meeting, Alibaba tweeted that it "wants to create US jobs by helping US small businesses and farmers sell to China’s 300-million-strong middle-class."
Click to expand...

 
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Ilov80s said:
Good point. Althought Trump loved the idea at the time and thought it was a big plus for the US economy:
Click to expand...
The promise was as dumb then as it is now.
The idea that 1 million businesses are going to hire an additional American to deal with selling on TMall or Alibaba is silly.

The company I work for sells on TMall. Our China office handles it. 

 
Gawain said:
How are prices now compared to 2011? At least in your industry it's probably not too often that a factory tries to pass ABS plated crap as the real deal.

Do you think these projects aren't feasible ever at current price points or that plans were put on hold due to the likelihood of a decrease after resolution of the tarrif tête-à-tête? 
Click to expand...
I cannot say off the top of my head will have to do some research on price history. Pricing in the pipe world generally trends with the price of oil (higher oil price = more companies trying to bring oil to market = more pipelines needed).

The project on hold are not due to the speculation that the price of steel will eventually drop -- they are on hold due to economies at current oil prices.

 
The Commish said:
The markets understand the impacts aren't going to be immediate.  All you need to know is they are already talking about recession which was on exactly NO ONE'S radar 9 months ago.  All predictions were 4-5 years out at that time.
Click to expand...
The markets understand that the trade wars will be resolved in the next 12 months.  Somebody has used the recession word for the past 8+years of the bull run, nothing new.  Market up 200 today, maybe we need to start a trade war with another country,

 
Mile High said:
Jack Ma, founder and chairman of Chinese retail giant Alibaba, says the company no longer plans to create 1 million jobs in the United States in the wake of the ongoing trade conflictbetween the U.S. and China.

https://www.google.com/amp/s/www.cnbc.com/amp/2018/09/19/jack-ma-alibaba-is-no-longer-planning-to-create-1-million-us-jobs.html
Click to expand...
Who cares. We don't have a million available workers to fill those jobs. Trump is crushing China with tariffs.  Our markets are at new highs. Thiers is down 20%. That's a hint. When this gets resolved and the Chinese come groveling to Trump, 'Pleas Mr. Trump, quit punishing us with your powerful tariffs, we give up already', then go long emerging markets.

 
lod001 said:
Who cares. We don't have a million available workers to fill those jobs. Trump is crushing China with tariffs.  Our markets are at new highs. Thiers is down 20%. That's a hint. When this gets resolved and the Chinese come groveling to Trump, 'Pleas Mr. Trump, quit punishing us with your powerful tariffs, we give up already', then go long emerging markets.
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I'm going out on a limb here and assuming you have a list of the jobs that they'd be creating, yes?

 
The Commish said:
I'm going out on a limb here and assuming you have a list of the jobs that they'd be creating, yes?
Click to expand...
What?

Dude, there are over 5 million open jobs currently that can't be filled simply because there is no one qualified to do the work. All that is left not holding a job in the USA is the dumb and the drug addicted. This article from May touts 6.6 mil. 

https://www.washingtonpost.com/news/wonk/wp/2018/05/08/the-u-s-now-has-a-record-6-6-million-job-openings/?noredirect=on&utm_term=.d0ffa42843ca

When the dems were in control they were great jobs and the reps said they were low paying. Now the reps are in control and they are great jobs and the dems say they are crumbs. Since I reside between both, I know they are a mix of all skill levels. The fact remains, there are over 5 million and climbing.

 
lod001 said:
Who cares. We don't have a million available workers to fill those jobs. Trump is crushing China with tariffs.  Our markets are at new highs. Thiers is down 20%. That's a hint. When this gets resolved and the Chinese come groveling to Trump, 'Pleas Mr. Trump, quit punishing us with your powerful tariffs, we give up already', then go long emerging markets.
Click to expand...
We don't have the people to fill most of the jobs Trump promises.  

 
lod001 said:
Who cares. We don't have a million available workers to fill those jobs. Trump is crushing China with tariffs.  Our markets are at new highs. Thiers is down 20%. That's a hint. When this gets resolved and the Chinese come groveling to Trump, 'Pleas Mr. Trump, quit punishing us with your powerful tariffs, we give up already', then go long emerging markets.
Click to expand...
There is a very long institutional history in China of acquiescing to government demands. There's not so much of it in the USA. 

The Z Machine said:
I put very low odds on China groveling to Trump. They'd take a 6 year economic downturn over losing face like that.
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Agreed. The Chinese government can't roll over. A mutual understanding and status quo ante can definitely occur, but I think we may be waiting another two years for that.
Copyright/IP protection and stronger anti-counterfeiting laws are really what the world needs out of this dispute. The USA needs a trade imbalance as reserve currency. 
https://www.aier.org/article/real-reason-trade-deficit
 

By making international trade the culprit behind the American deficits, the U.S. government commits the error of blaming something extremely beneficial for a malaise that has different roots. The causal logic is the opposite of what the government claims. The position of the dollar as the main international reserve currency is the source of the financial inflows. These inflows, in turn, make it possible for the American economy to afford to have a low national savings rate because the inflow of foreign savings closes the gaps between domestic savings, on the one hand, and private investment and public spending, on the other.
Click to expand...

 
lod001 said:
What?

Dude, there are over 5 million open jobs currently that can't be filled simply because there is no one qualified to do the work. All that is left not holding a job in the USA is the dumb and the drug addicted. This article from May touts 6.6 mil. 

https://www.washingtonpost.com/news/wonk/wp/2018/05/08/the-u-s-now-has-a-record-6-6-million-job-openings/?noredirect=on&utm_term=.d0ffa42843ca

When the dems were in control they were great jobs and the reps said they were low paying. Now the reps are in control and they are great jobs and the dems say they are crumbs. Since I reside between both, I know they are a mix of all skill levels. The fact remains, there are over 5 million and climbing.
Click to expand...
Don't really like getting in the way of a good rant (been saying that a lot around here lately) but you didn't answer my question.  I was asking what the jobs were this company was bringing here.  You made the statement that we didn't have people to fill them which tells me you know what the jobs are.  Otherwise you're just blowing smoke up your own ###.  There's no question we have a ton of jobs that can't be filled because we don't have the skill set.  It's been an issue for a while that our government continues to fail at.  We aren't supporting the individuals they way we need to in order to compete in the global economy.  That much is clear and really not arguable.  I don't really give a #### which "side" says what in this regard.  They are failing the individuals in this country.

However, the bold is categorically false and a really stupid thing to say.  Back to my question though.  I take it the lack of an answer to it initially means you don't have any idea of what the jobs were that were supposed to come with this company.  True?

 
Mile High said:
Then what is the point in bringing jobs back from other countries if there is no one to fill them?
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That's a good question and it could very well cause a problem here. I've been saying it for years that the IQ of this planet is dropping and that, regardless of fake stats, is undeniable. I've been asking others that have been working for 10-20-30 years and they all come to the exact same conclusion that the # of people that are completely clueless is increasing faster that the bubonic plague. Just ask someone. 'Does it seem like everyone is getting dumber'. The answer is a laugh and 'oh eff yeah'. maybe it's technology passing most humans by but its happening.

 
toshiba said:
Why would they?  The stock market doesn't care about the pain of the average American, just $$$

But how has the stock market done since the they started?
Click to expand...
The market Dow is up about 3300 points since April 2; about the time the trade wars really being talked about.  The market should set a new record high today.  The us economy is growing at about 4 percent rate, if the average American is in pain their not showing it with their pocket books/spending.

 
lod001 said:
Who cares. We don't have a million available workers to fill those jobs. Trump is crushing China with tariffs.  Our markets are at new highs. Thiers is down 20%. That's a hint. When this gets resolved and the Chinese come groveling to Trump, 'Pleas Mr. Trump, quit punishing us with your powerful tariffs, we give up already', then go long emerging markets.
Click to expand...
At some point you will realize he is punishing Americans right now eithnthe tariffs.

 
Gopher State said:
The market Dow is up about 3300 points since April 2; about the time the trade wars really being talked about.  The market should set a new record high today.  The us economy is growing at about 4 percent rate, if the average American is in pain their not showing it with their pocket books/spending.
Click to expand...
That's good news but is the market actually doing anything for the average American's income?  People's 401k accounts are looking good but that really only helps the people who are going to take money out of it soon.  For the average, middle aged American, how is this helping them?  Unless their wages are going up or expenses going done I don't think it really affect them at the moment.

 
Hawkeye21 said:
That's good news but is the market actually doing anything for the average American's income?  People's 401k accounts are looking good but that really only helps the people who are going to take money out of it soon.  For the average, middle aged American, how is this helping them?  Unless their wages are going up or expenses going done I don't think it really affect them at the moment.
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Same could be said about jobs moving to China. It's didn't help the average worker, even if you want to argue that tv's are cheaper. When you're fry cook at McDonald's there's only so much you can buy regardless of the price. 

 
Gopher State said:
toshiba said:
Why would they?  The stock market doesn't care about the pain of the average American, just $$$

But how has the stock market done since the they started?
Click to expand...
The market Dow is up about 3300 points since April 2; about the time the trade wars really being talked about.  The market should set a new record high today.  The us economy is growing at about 4 percent rate, if the average American is in pain their not showing it with their pocket books/spending.
Click to expand...
Are we sure they’re not spending the same amount of money, just on fewer goods?

 
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