Tariffs …. Good or Bad?

[Treetop]

I dont care to get into the weeds, but the two largest economies on earth in all of known history are the two most protected. If you look historically without tariffs the US likely wouldnt have risen against europe as a major producer. My general view is we should use tariffs to level things as some kinda said. Free trade with nations with near equal pay and costs. tariffs for the ones that dont have the same costs. I find it funny most of the countries whining about us considering these things already have them against us on many things.

[68Camaro]

Tariffs aside, it was WW2 that created the economic engine of the US. Excepting the Americas, the world was largely destroyed, and the US stepped in and with the efficiencies created during the war, Bretton Woods, and then the petrodollar, the US dominated; didn't need tariffs.

The engine of China was non existent 30 years ago: it's that new. The US corporations were more than willing to destroy domestic production in order to elevated short term profit margins, and once political impediments were removed, the flood to China started. Which will continue until their production costs go up such that another option makes more sense.

[mtalbot_ca]

Tariffs have two useful related purposes: . . . .

Tarriffs have an additional purpose - to level the playing field.
... Another example would be a company in Canada or Europe that pay lower taxes than in the US because Canada or Europe underfunds their military and free rides on the U.S. Now, these are political arguments, and reasonable people may differ on where things stand. But what is inarguable is that tariffs can serve a third purpose - to balance inequities in trade or regulation.

Being from Canada, I can see your point. Since Canada purchases most of its weapons from the US it makes sense to push for more spending, but the relationship I now better understand seems more complex that I initially thought. For exemple, there is like 160 US refineries that are solely equipped to process Alberta heavy crude. To re-equip the rafineries would cost time and money...This element alone explains the 200+billions trade deficits. Strangely, on consumer good Canada has a trade deficit with the US.

All that aside, I still believe that we (Canada) should spend more on defense/peace-related expenditures. I also believe that we should specialize in one area on another, as having a little bit of everything is not efficient. Environmental and regulatory concerns are valid and the level-playing field needs to be there. I believe that the US has relative issue with all the oil-fracking exploitation, but overall I thought that US-Canada partnership was so far so good.

Cheers.

[Treetop]

Tariffs aside, it was WW2 that created the economic engine of the US. Excepting the Americas, the world was largely destroyed,.

We were already part of the industrial revolution and wouldnt have been competitive without the early tariffs. Later it is true we were the main big player standing.

[Lemon Thrower]

Tariffs have two useful related purposes: . . . .

Tarriffs have an additional purpose - to level the playing field.
... Another example would be a company in Canada or Europe that pay lower taxes than in the US because Canada or Europe underfunds their military and free rides on the U.S. Now, these are political arguments, and reasonable people may differ on where things stand. But what is inarguable is that tariffs can serve a third purpose - to balance inequities in trade or regulation.

Being from Canada, I can see your point. Since Canada purchases most of its weapons from the US it makes sense to push for more spending, but the relationship I now better understand seems more complex that I initially thought. For exemple, there is like 160 US refineries that are solely equipped to process Alberta heavy crude. To re-equip the rafineries would cost time and money...This element alone explains the 200+billions trade deficits. Strangely, on consumer good Canada has a trade deficit with the US.

All that aside, I still believe that we (Canada) should spend more on defense/peace-related expenditures. I also believe that we should specialize in one area on another, as having a little bit of everything is not efficient. Environmental and regulatory concerns are valid and the level-playing field needs to be there. I believe that the US has relative issue with all the oil-fracking exploitation, but overall I thought that US-Canada partnership was so far so good.

Cheers.

You are correct on the refineries but tariffs are not the end game, its getting Canada to police the border for terrorists and fentanyl.

[Doctor Steuss]

From what I can find as far as available stats go, far more drugs, and illegal immigrants enter Canada from the US than the other way around. The amount of both that enter from the north are miniscule compared to what's coming from the South. Kicking our closest ally in the nuts, to do something they're largely already doing for us far better than we're doing for them, seems counterproductive.

The United States is essentially Canada's Mexico when it comes to the flow of drugs and illegal immigrants.

If the end goal is to get them to police the border, I would think simple negotiations would be more effective. So far, we've made markets take a hit, burned good will, and caused Canadians to become super patriotic and united in their boycott for US goods. And for what? To have Canada tell Trump that they'll do a thing that they had already committed to do.

It's like telling your friend to go f*ck off, that you'll never pay them back for a loan they gave you, while leaving the automatic payments set up to repay the loan. The only thing it accomplished is making your friend think you're a nutter.

Tariffs can be a great tool when used surgically with allies, and as a bludgeon with enemies. Unfortunately, the latter seems to be the preferred method here for ally and enemy alike.

[mtalbot_ca]

Sorry to see the tarifs in place. Let’s see what are the felt impacts. I will tell you what I see from my side.

[mtalbot_ca]

Today, american alcohol was removed from all outlets. I saw oranges from Egypt and nectarines from South Africa. First time.

[mtalbot_ca]

For today, I saw little flags on the grocery shelving showing the country of origin (only for fruits and vegetables). Saw grapes from Chili which was unusual.

[68Camaro]

If nothing else this will be temporarily good for the international shippers. No shortage of a lot of items on the world market, if you're willing to pay the shipping. FWIW we see fruits from Peru, Chile, and Argentina a lot here in the winter even in a "nornal" year.

[mtalbot_ca]

News tonight are about the openning of discussions and what worries people more than anything is the unpredictability of the situation.

[mtalbot_ca]

I went to my FORD dealer. It turns out that they are reluctant to sign contracts for cars that are not inventory or cannot be delivered by April. It also meant that my used RANGER (2019) went up in price...not much yet but still....

[68Camaro]

I predict a resolution, just not sure when. If you had the ability to sell now while the prices are high and buy back later after this is over, there might be money to be had, but you would have to have the right personal situation.

Trump as part of this is also purposely punishing the US headquartered automakers because they have offshored so much production. He wants it brought back into the US. A Fox Business host this morning was interviewed and listed off the top domestic manufactured models. Except for Tesla, the big three had no models in the top 10 or so. Then there was the Jeep Gladiator, then it was another list of foreigner based makers who are building in the US. Honda, Toyota, Volkswagen, BMW, Mercedes, etc. Most "US" cars aren't even built in the US anymore.
Not even pickup trucks.

[Doctor Steuss]

I predict a resolution, just not sure when. If you had the ability to sell now while the prices are high and buy back later after this is over, there might be money to be had, but you would have to have the right personal situation.

Trump as part of this is also purposely punishing the US headquartered automakers because they have offshored so much production. He wants it brought back into the US. A Fox Business host this morning was interviewed and listed off the top domestic manufactured models. Except for Tesla, the big three had no models in the top 10 or so. Then there was the Jeep Gladiator, then it was another list of foreigner based makers who are building in the US. Honda, Toyota, Volkswagen, BMW, Mercedes, etc. Most "US" cars aren't even built in the US anymore.
Not even pickup trucks.

For anyone curious (since it sounds like the Fox Business host may have been drawing from the Cars.com "American Made Index"), here's the list:

American Made Link

They do have a lot of disqualifying and other metrics that can substantially influence placement, and this factors in parts percentage and not just final assembly location, but it's interesting to see where stuff falls.

For light-duty trucks, in order (unless my old man eyeballs missed one), it goes the Honda Ridgeline (7), Ram 1500 Classic (19), Toyota Tundra (20), Chevy Colorado (23), GMC Canyon (24), Tundra Hybrid (26), Ram 1500 (43), Ford F-150 Lightning (56), Ford F-150 (58), Nissan Frontier (67), Ford F-150 hybrid (75), Chevy Silverado 1500 (89), and GMC Sierra 1500 (90)

[mtalbot_ca]

From what I understand, Canada will keep all of its counter-tariffs up, the scheduled tariffs on 125B of goods as well (march 25th), until all USA tariffs are gone. No mid-way, no negociation through tariffs. Let's see it that is going to be the case....

For Ontario, 25% export tax for electricity, to be paid by the three US States using it, scheduled on Monday the 10th...that too, let's see if it holds. Quebec is looking to see if it will do the same to Massachussets and New York. I do not like this....

[mtalbot_ca]

In Quebec we are ending the Spring Break period. Traditionnally during this period, many schools organise trips to the US by bus. Many go to New York, Washington DC, Boston and as far as Chicago. This year, the trips went anyway, Only one decided to cancel due to the potential of the trade war.

[coindood]

Mexico has apparently retaliated at bit.

Coworker informed us that it's now $28 per person to cross the border into Mexico. This time of year lots of snowbirds are in AZ and crossing to get cheap meds, low cost dentist and eye doc treatments, etc. Gonna cost more now I guess.

[mtalbot_ca]

China is imposing tariffs on Canada in retaliation to the 100% tariff imposed on electric cars and 25% tariff that we impose on their aluminium. This was I believe in support of US similar measures imposed on China.

In case you did not know, tomorrow Canada will get another prime minister.

[pmbug]

For today, I saw little flags on the grocery shelving showing the country of origin (only for fruits and vegetables). Saw grapes from Chili which was unusual.

Chile is a huge grape (and wine) producer

[mtalbot_ca]

Not much to report today. The 51st State issue is the main topic. I do not know if the Trump Administrstion realizes that technically a former-Canadian could then become president and him or his successor would probably not get re-elected with 50 or so grand electors siding with the opposition.

[mtalbot_ca]

Next battle this week will be steel and aluminium. In Québec we are big exporters of aluminium. Some experts say (Forbes) that a case of beer will increase 2$. From the Québec perspective, it seem that: 1) the aluminum has been stockpiled somewhat on the US side and 2) there is no sourcing replacement available for the US. This means a direct cost to be absorbed by the US industries. As far as I see, Ontario is going ahead with the 25% export tax to the US. I am not sure as to how doing this is replacing the internal revenues with external ones....I understand that the intent is to promote US primary and secondary sectors to redevelop but this will take longer than a presidential-term. Am I missing something?

[mtalbot_ca]

Quebec Premier is floating the idea of an extra 25% export tax on aluminium. Since Quebec supplies 60% of the USA aluminium need, this would be considered if escalation continues.

[mtalbot_ca]

A 25% tariff is scheduled on cars for 2nd of April and a 25% additionnal (50% now) on steel and aluminium from the US. This will get uglier before it gets better. I think we will dip in our savings (or what is left of it).

[68Camaro]

Going back a couple of posts, re "missing something". The coverage of this in many circles is heavily skewed, not sure how it's covered in Canada - I haven't actually checked directly. My personal belief consistent with posts of mine in other threads is that despite Trump's knife twisting and often inciting rhetoric on Canada being the 51st state, he truly doesn't want that at all. It would be distracting and counter productive. But he does delight in using that phrase to tweak the Canadian politicians and media. I suspect (despite that it might end up causing a conservative candidate to lose the next election) he is actually trying to stimulate pro-Canadian patriotism and nationalism, to cause your nation to come back to a position of greater self sufficiency, especially as regards ship building and arctic maritime patrols, and national defense. (Similar to what he is doing the Denmark re Greenland, which imho Trump also doesn't really want - but he does need Denmark to pull their own weight and station some reasonable levels of defense forces there.) He also wants free trade, but in the absence of free trade (which Canada doesn't currently support) he is willing to apply equivalent and escalating reciprocal tariffs until the other party caves and drops all their tariffs to zero.

How is this affecting you personally? It hasn't hit here yet to any discernable level.

Just my 2 cents.

[mtalbot_ca]

...I suspect (despite that it might end up causing a conservative candidate to lose the next election) he is actually trying to stimulate pro-Canadian patriotism and nationalism, to cause your nation to come back to a position of greater self sufficiency, especially as regards ship building and arctic maritime patrols, and national defense. ...

Great point, and I can tell you it is working....but it is going to cost something to someone.

So far for me, my popocorn and peanut butter have increased 15%, but my stocks....

Cheers.