China Can't Win Trade War With USA

[Flopper]

Despite claims to the contrary, we are in the initial stages of a trade war with China. But this is something that China simply can't win. In order to win a trade war, you have to either be even with the other country, or have a trade deficit with them. The one thing you can't have is a trade surplus.

So...

You seem to contradict yourself here...

I agree on everything you said except that we are "in the initial stages of a trade war".

China has already acquiesced when they announced the relaxing of tariffs on cars.

China's Xi Jinping says tariffs on car imports will be cut this year

Why would China engage in a war you acknowledge they can't win?

I don't think they will but one of the big ones is Intellectual Capital transfer; the Chinese will do all they can to stop the US enforcing Intellectual Property rules. I suspect the yanks will win that part too....but it may be bloody.

Greg

I don't see much the Chinese government can do that they have not already done. Most of the IP theft is being done with the full knowledge of the owners of the IP. Companies that are eager to do business in China share IP with their Chinese business partners because it is required in their agreements. But often it is a necessary part of doing business. IP theft in China has been going on for at least 30 years. Most businesses recognize that it is a cost of doing business in China.

IP theft in music and video industry has gotten a lot better over the last 5 years. However, preventing IP theft between business partners is far more difficult. The attitude of much of China is that if don't want to do business our way, then stay home.

In technology we use to restrict Chinese manufacturing to components with major assembly in the US. The Chinese did such a good job at such a low cost, US businesses turnover more and more their manufacturing over to the Chinese. In doing so they had to turn over trade secrets.

 

[Toddsterpatriot]

GoToPa1, annual trade deficits are always net detrimental to their nation's GDP; (this is fact rather than opinion).
I do not suppose you can find any credible economist that would state otherwise and I don't suppose any credible economists would argue with those contending whatever reduces GDP also generally drags upon that nation's numbers of jobs.

China has a positive balance of global trade; (i.e. it's a surplus rather than a trade deficit nation). I regret that the USA, (unlike China), doesn't prefer to import raw materials or tools that support to their own processing or manufacturing of finished products (when domestic sources are not economically feasible), and the proportion of our consumption that we do produce is not much larger. I regret our annual balances of global trade are negative.

Many years ago Newt Gingrich wrote of the USA exporting scrap cloth, and metal to Japan while they ship finished manufactured products to us. I agree with him and many of within otherwise differing political parties that regret USA being economically evolving as a colony to greater producing nations.

The question is not if we, the USA can regain our prior overwhelming status as the world's greatest producer of products, but rather should we continue to be a trade deficit nation in comparative declining rank among other nations' median standards of life? Some of the nations' behind us are decreasing the gap of our lead and the nations ahead of us are increasing their leads; (i.e. we ain't doing as well as we voters choose to believe).

I'm among the proponents of the policy described by Wikipedia's “Import Certificates” article. It is superior to tariffs and to pure free trade policies.

Respectfully, Supposn

annual trade deficits are always net detrimental to their nation's GDP;

So what?

 

[gtopa1]

China uses OUR iron ore AND coal to produce their steel. Plus we have our own steel which has been given strategic status; we could not possibly concern ourselves in any trade war thingy or remotely compensate China wrt losing the US market. We have laws against trade dumping.

Greg

GoToPa1, I had always supposed that the modern industrial nation of China, (a great land mass of raw materials), would not generally import USA iron ore across the entire Pacific Ocean. But Wikipedia reports 54% Iron ore was additionally separated and shipped to California as a greater concentration of 65% iron ore. There it was further concentrated into iron ore pellets and shipped to China.
Since 2014, this is, (as I had always supposed), no longer practiced; the Utah mines are effectively no longer operating.
[Refer to “Utah”
within https://en.wikipedia.org/wiki/Iron_mining_in_the_United_States#cite_note-5 ].

Respectfully, Supposn

lol. I meant AS WELL as others.........my bad.

Greg

 

[gtopa1]

Despite claims to the contrary, we are in the initial stages of a trade war with China. But this is something that China simply can't win. In order to win a trade war, you have to either be even with the other country, or have a trade deficit with them. The one thing you can't have is a trade surplus.

So...

You seem to contradict yourself here...

I agree on everything you said except that we are "in the initial stages of a trade war".

China has already acquiesced when they announced the relaxing of tariffs on cars.

China's Xi Jinping says tariffs on car imports will be cut this year

Why would China engage in a war you acknowledge they can't win?

I don't think they will but one of the big ones is Intellectual Capital transfer; the Chinese will do all they can to stop the US enforcing Intellectual Property rules. I suspect the yanks will win that part too....but it may be bloody.

Greg

I don't see much the Chinese government can do that they have not already done. Most of the IP theft is being done with the full knowledge of the owners of the IP. Companies that are eager to do business in China share IP with their Chinese business partners because it is required in their agreements. But often it is a necessary part of doing business. IP theft in China has been going on for at least 30 years. Most businesses recognize that it is a cost of doing business in China.

IP theft in music and video industry has gotten a lot better over the last 5 years. However, preventing IP theft between business partners is far more difficult. The attitude of much of China is that if don't want to do business our way, then stay home.

In technology we use to restrict Chinese manufacturing to components with major assembly in the US. The Chinese did such a good job at such a low cost, US businesses turnover more and more their manufacturing over to the Chinese. In doing so they had to turn over trade secrets.

Yes; they HAVE been doing it for thirty years and more. Probably since about 1976 on an industrial scale. Before then they were quite the Stalinist acolyte....and most inferior due to their ideology.

Opinion | Mao's Great Leap to Famine

Until about 1976 they were indeed...NUTS!!!

Greg

 

[gtopa1]

Despite claims to the contrary, we are in the initial stages of a trade war with China. But this is something that China simply can't win. In order to win a trade war, you have to either be even with the other country, or have a trade deficit with them. The one thing you can't have is a trade surplus.

So...

You seem to contradict yourself here...

I agree on everything you said except that we are "in the initial stages of a trade war".

China has already acquiesced when they announced the relaxing of tariffs on cars.

China's Xi Jinping says tariffs on car imports will be cut this year

Why would China engage in a war you acknowledge they can't win?

I don't think they will but one of the big ones is Intellectual Capital transfer; the Chinese will do all they can to stop the US enforcing Intellectual Property rules. I suspect the yanks will win that part too....but it may be bloody.

Greg

I don't see much the Chinese government can do that they have not already done. Most of the IP theft is being done with the full knowledge of the owners of the IP. Companies that are eager to do business in China share IP with their Chinese business partners because it is required in their agreements. But often it is a necessary part of doing business. IP theft in China has been going on for at least 30 years. Most businesses recognize that it is a cost of doing business in China.

IP theft in music and video industry has gotten a lot better over the last 5 years. However, preventing IP theft between business partners is far more difficult. The attitude of much of China is that if don't want to do business our way, then stay home.

In technology we use to restrict Chinese manufacturing to components with major assembly in the US. The Chinese did such a good job at such a low cost, US businesses turnover more and more their manufacturing over to the Chinese. In doing so they had to turn over trade secrets.

You mean IP rights?

Seems the President wants to change that. Nothing wrong with selling IP; the markets still needs to be fair.

Greg

 

[Flopper]

Despite claims to the contrary, we are in the initial stages of a trade war with China. But this is something that China simply can't win. In order to win a trade war, you have to either be even with the other country, or have a trade deficit with them. The one thing you can't have is a trade surplus.

So...

You seem to contradict yourself here...

I agree on everything you said except that we are "in the initial stages of a trade war".

China has already acquiesced when they announced the relaxing of tariffs on cars.

China's Xi Jinping says tariffs on car imports will be cut this year

Why would China engage in a war you acknowledge they can't win?

I don't think they will but one of the big ones is Intellectual Capital transfer; the Chinese will do all they can to stop the US enforcing Intellectual Property rules. I suspect the yanks will win that part too....but it may be bloody.

Greg

I don't see much the Chinese government can do that they have not already done. Most of the IP theft is being done with the full knowledge of the owners of the IP. Companies that are eager to do business in China share IP with their Chinese business partners because it is required in their agreements. But often it is a necessary part of doing business. IP theft in China has been going on for at least 30 years. Most businesses recognize that it is a cost of doing business in China.

IP theft in music and video industry has gotten a lot better over the last 5 years. However, preventing IP theft between business partners is far more difficult. The attitude of much of China is that if don't want to do business our way, then stay home.

In technology we use to restrict Chinese manufacturing to components with major assembly in the US. The Chinese did such a good job at such a low cost, US businesses turnover more and more their manufacturing over to the Chinese. In doing so they had to turn over trade secrets.

You mean IP rights?

Seems the President wants to change that. Nothing wrong with selling IP; the markets still needs to be fair.

Greg

If you're going to do business in China; that is you want to manufacture in China and market your products in China, then you're going have to share intellectual properties. Most of the IP theft is not really theft. American companies share IP with partners in China because the government requires that in many industries foreign companies must partner with Chinese businesses if they want to do business in China. That partnership invariable results in sharing of IP.

Intellectual property theft is yesterday's issue in part because of past technology transfer and in part because of heavy, sustained government investment in science and research, China has developed its own innovative capabilities. Creating new IP in the United States is far more important than keeping IP from China.

 

[Andylusion]

No, we are not at war with China. Congress has given presidents the power to impose tariffs for reasons of war and national security. A number of presidents have used that power even though there was no real danger to national security. Trump is just following suit.

Is there any real danger to the US in what China is doing? To answer that let's look at Trump's beef with China.

First, there's currency manipulation. Donald Trump named China a currency manipulator in his first days in the White House. There’s only one problem; it’s not true anymore. China, the world’s second-biggest economy behind the United States, hasn’t been pushing down its currency to benefit Chinese exporters in years. And even if it were, the law targeting manipulators requires the U.S. spend a year negotiating a solution before it can retaliate. The fact is, for the past couple of years China has been intervening in markets to prop up its currency, the yuan, not push it lower.

Donald Trump has attacked China over and over in regard to theft of intellectual property rights which has been going on for 3 decades. It certainly not any more of a danger to the security of the US now than it was 10 or 20 years ago. In fact it's probably a lot less due to new in Chinese regulation in 2015 to protect intellectual property rights of both national and international businesses which went into effect last year.

Although Trump is right to pursue a solution; slapping tariffs on a $100 billion worth of Chinese exports until China cries “uncle” and agrees to enforce IP protections will never work. It actually has a far higher likelihood of backfiring than succeeding. No country likes to be told what to do, and they especially don't like to be told in public and that goes double for the Chinese. IP has been a source of embarrassment for the government for years. They have dug their heels in denying it exist for years when faced with threats from the US. This has led to new regulations that most business in China believe will work.

Trump wants to fight tough as usually when what is needed is fighting smart by doing what actually works. IP in the video markets in China is half what it was 10 years ago because US companies have worked with Chinese companies and the government through the state dept to negotiation contracts with distributors in exchange for protection of property rights.

So, yes what Trump is doing is complete bull shit. Currency manipulation is no longer a problem and China is solving the IP problem but needs smart negotiations on the part of the US not strong arm tactics. What Trump is really doing is trying to appeal to his base who hate the fact that China can produce cheaper quality goods which has hurt US manufacturing. These people don't give a damn about IP and I doubt they understand currency manipulation. They just want see the Donald give China a knockout punch.

Many words. None on target. The tariffs have to do with China's exports to the US, and the connection to US businesses having moved there, and are the exporters.

The tariffs make it uneconomical for them to continue in China, and exporting to the US. Their solution ? Move back to the US. Trump's campaign pledge. And he's delivering. Ho hum.

So what about that link I requested ?

He hasn't deliveries anything due to tariffs. They haven't even gone into effect and may not. However, I noticed his approval ratings in 3 red states are down after China took aim at pork and soybean imports from the US, Idaho and Tennessee were down 6 points and Iowa down 9 points.

You honesty think companies are going to move back to the US because of temporary tariffs that could disappear overnight. That's nuts.

No company is going to move to the US over a tariff, even if it was not temporary.

If the US engages in a real trade war, then other countries are going to tariff products coming from the US.

The US might be the single large market, as a country. But from the perspective of the world, the US is only one part of the world.

Apple computer makes more money outside the US, than inside the US.

So lets just think about that rationally.....

Apple can build Iphones inside the US, and not be able to export them because of a trade war where all the other countries have put in heavy tariffs on US goods....

Or they can make Iphones outside the US and sell to the entire world, and the rich people of the US willing to pay the tariff can buy those phones here.

Where would Apple build their Iphones? In the US, so they can only be sold in the US market, or outside the US to sell to the 8 Billion people of the rest of the world?

Obviously, Apple will make their phones outside the US. It's a larger market. They already make more money outside the US, than inside.

Anything that is very labor intensive and is easily transported will be built outside the US. The cost of labor in the US relative to most of the world is high and that's not likely to change anytime soon. Tariffs are always counterproductive. They drive up prices, provide government support for companies that operate inefficiently, and instead of a country producing the products it produces best, it produces in accordance with goverment policy.

That's not even entirely true.

My last big job, was working for a company that built printers, specifically ticketing and label printers.

238ML THERMAL KIOSK PRINTER - Microcom

These printers are hand built. And I mean literally built by hand. I know, I built them. I made the wires for them. I made the sensors, the circuits, the connectors, the print heads, the plugs, everything. Literally every single part of that printer, and a dozen other models, I built by hand.

And.... they are easily transportable, and heavy labor intensive.

All built and made in the US. Specifically in Lewis Center Ohio.

So it isn't entirely automatic that anything that is labor intensive, and easily transportable, will be built outside the US.

In fact, this very company went through the nightmare of having a product built in China. There was a specific printer model they wanted built, that no matter how they looked at it, wouldn't be profitable to have built in the US. They simply couldn't make the number work. So they decided to try and have it built in China.

The result was not all that great. First, you have a problem with translating designs. Then you have a problem with suppliers. Then you have to fly there in person, to set everything up. Then you have mistakes, and errors, that have to dealt with. Then if you end up with bad product, it isn't worth it to ship the product back. You end up either eating the loss, or trying to fix the products here in the US, which defeated the purpose of having them built there. And lastly, there was a huge lag time. You put in an order, and by the time the order is transmitted there, sent to the factory, transported to the ship, sailed across, then trucked across the US, it can take days, if not a week of time.

Customers don't like that. They want it in a few days.

My CEO literally HATED having it outsourced to China. It just wasn't cost effective to make the product here.

This is where taxes, and regulations, and health care mandates, really make the difference between a product built in the US, verses out of the country. It's not the cost of labor. Not really.

 

[Flopper]

No, we are not at war with China. Congress has given presidents the power to impose tariffs for reasons of war and national security. A number of presidents have used that power even though there was no real danger to national security. Trump is just following suit.

Is there any real danger to the US in what China is doing? To answer that let's look at Trump's beef with China.

First, there's currency manipulation. Donald Trump named China a currency manipulator in his first days in the White House. There’s only one problem; it’s not true anymore. China, the world’s second-biggest economy behind the United States, hasn’t been pushing down its currency to benefit Chinese exporters in years. And even if it were, the law targeting manipulators requires the U.S. spend a year negotiating a solution before it can retaliate. The fact is, for the past couple of years China has been intervening in markets to prop up its currency, the yuan, not push it lower.

Donald Trump has attacked China over and over in regard to theft of intellectual property rights which has been going on for 3 decades. It certainly not any more of a danger to the security of the US now than it was 10 or 20 years ago. In fact it's probably a lot less due to new in Chinese regulation in 2015 to protect intellectual property rights of both national and international businesses which went into effect last year.

Although Trump is right to pursue a solution; slapping tariffs on a $100 billion worth of Chinese exports until China cries “uncle” and agrees to enforce IP protections will never work. It actually has a far higher likelihood of backfiring than succeeding. No country likes to be told what to do, and they especially don't like to be told in public and that goes double for the Chinese. IP has been a source of embarrassment for the government for years. They have dug their heels in denying it exist for years when faced with threats from the US. This has led to new regulations that most business in China believe will work.

Trump wants to fight tough as usually when what is needed is fighting smart by doing what actually works. IP in the video markets in China is half what it was 10 years ago because US companies have worked with Chinese companies and the government through the state dept to negotiation contracts with distributors in exchange for protection of property rights.

So, yes what Trump is doing is complete bull shit. Currency manipulation is no longer a problem and China is solving the IP problem but needs smart negotiations on the part of the US not strong arm tactics. What Trump is really doing is trying to appeal to his base who hate the fact that China can produce cheaper quality goods which has hurt US manufacturing. These people don't give a damn about IP and I doubt they understand currency manipulation. They just want see the Donald give China a knockout punch.

Many words. None on target. The tariffs have to do with China's exports to the US, and the connection to US businesses having moved there, and are the exporters.

The tariffs make it uneconomical for them to continue in China, and exporting to the US. Their solution ? Move back to the US. Trump's campaign pledge. And he's delivering. Ho hum.

So what about that link I requested ?

He hasn't deliveries anything due to tariffs. They haven't even gone into effect and may not. However, I noticed his approval ratings in 3 red states are down after China took aim at pork and soybean imports from the US, Idaho and Tennessee were down 6 points and Iowa down 9 points.

You honesty think companies are going to move back to the US because of temporary tariffs that could disappear overnight. That's nuts.

No company is going to move to the US over a tariff, even if it was not temporary.

If the US engages in a real trade war, then other countries are going to tariff products coming from the US.

The US might be the single large market, as a country. But from the perspective of the world, the US is only one part of the world.

Apple computer makes more money outside the US, than inside the US.

So lets just think about that rationally.....

Apple can build Iphones inside the US, and not be able to export them because of a trade war where all the other countries have put in heavy tariffs on US goods....

Or they can make Iphones outside the US and sell to the entire world, and the rich people of the US willing to pay the tariff can buy those phones here.

Where would Apple build their Iphones? In the US, so they can only be sold in the US market, or outside the US to sell to the 8 Billion people of the rest of the world?

Obviously, Apple will make their phones outside the US. It's a larger market. They already make more money outside the US, than inside.

Anything that is very labor intensive and is easily transported will be built outside the US. The cost of labor in the US relative to most of the world is high and that's not likely to change anytime soon. Tariffs are always counterproductive. They drive up prices, provide government support for companies that operate inefficiently, and instead of a country producing the products it produces best, it produces in accordance with goverment policy.

That's not even entirely true.

My last big job, was working for a company that built printers, specifically ticketing and label printers.

238ML THERMAL KIOSK PRINTER - Microcom

These printers are hand built. And I mean literally built by hand. I know, I built them. I made the wires for them. I made the sensors, the circuits, the connectors, the print heads, the plugs, everything. Literally every single part of that printer, and a dozen other models, I built by hand.

And.... they are easily transportable, and heavy labor intensive.

All built and made in the US. Specifically in Lewis Center Ohio.

So it isn't entirely automatic that anything that is labor intensive, and easily transportable, will be built outside the US.

In fact, this very company went through the nightmare of having a product built in China. There was a specific printer model they wanted built, that no matter how they looked at it, wouldn't be profitable to have built in the US. They simply couldn't make the number work. So they decided to try and have it built in China.

The result was not all that great. First, you have a problem with translating designs. Then you have a problem with suppliers. Then you have to fly there in person, to set everything up. Then you have mistakes, and errors, that have to dealt with. Then if you end up with bad product, it isn't worth it to ship the product back. You end up either eating the loss, or trying to fix the products here in the US, which defeated the purpose of having them built there. And lastly, there was a huge lag time. You put in an order, and by the time the order is transmitted there, sent to the factory, transported to the ship, sailed across, then trucked across the US, it can take days, if not a week of time.

Customers don't like that. They want it in a few days.

My CEO literally HATED having it outsourced to China. It just wasn't cost effective to make the product here.

This is where taxes, and regulations, and health care mandates, really make the difference between a product built in the US, verses out of the country. It's not the cost of labor. Not really.

I may be wrong but it appears that this printer would not be produced in large lots, say 20,000 a month. So when you start adding up the costs of translating designs, trips to China, correction of errors, and hundreds of other one time costs that you haven't mentioned, it probably is a lot cheaper to build in the US. Anytime you manufacture outside of the US, you have a lot of startup costs, communication problems, headaches with government requirements, customs, shipping, ect. Now if you were order 200,000 units at say 10,000 a month the cost figure/unit might look a lot different.

The cost of manufacturing an iPhone in China that retails for $640 was approximately is $200. That was because, they were shipping 78 million a quarter. If the quantity was dropped to 10,000 units the cost would have been over $300 a unit. Quantity makes the difference.

Thousands of fabricators of parts in the US are able to do their own manufacturing because the quantities are not large enough to farm it out overseas. The secret of successful in manufacturing today is to do what you can do best.

 

[protectionist]

So...You seem to contradict yourself here...
I agree on everything you said except that we are "in the initial stages of a trade war".
China has already acquiesced when they announced the relaxing of tariffs on cars.
China's Xi Jinping says tariffs on car imports will be cut this year

Why would China engage in a war you acknowledge they can't win?

Because 4 US presidents have allowed them to engage in a trade war with us, for almost 30 years. That the US hasn't fought back, and has given China unrestricted access to our MARKET all these years, does not diminish anything.

China has WON the trade war -until 2018. Trump has changed that now. That's part of why we elected him.

 

[Flopper]

So...You seem to contradict yourself here...
I agree on everything you said except that we are "in the initial stages of a trade war".
China has already acquiesced when they announced the relaxing of tariffs on cars.
China's Xi Jinping says tariffs on car imports will be cut this year

Why would China engage in a war you acknowledge they can't win?

Because 4 US presidents have allowed them to engage in a trade war with us, for almost 30 years. That the US hasn't fought back, and has given China unrestricted access to our MARKET all these years, does not diminish anything.

China has WON the trade war -until 2018. Trump has changed that now. That's part of why we elected him.

I would say it's been pretty profitable for each side. Today, more than 800,000 American jobs depend on producing goods and services sold to China. Americans, are also the biggest beneficiaries of Chinese labor and consumerism. American corporations have enjoyed record profits since the financial crisis of 2008 because they discovered that China was where they could not only keep expenses low, but also generate rapidly growing revenue.

 

[Andylusion]

Many words. None on target. The tariffs have to do with China's exports to the US, and the connection to US businesses having moved there, and are the exporters.

The tariffs make it uneconomical for them to continue in China, and exporting to the US. Their solution ? Move back to the US. Trump's campaign pledge. And he's delivering. Ho hum.

So what about that link I requested ?

He hasn't deliveries anything due to tariffs. They haven't even gone into effect and may not. However, I noticed his approval ratings in 3 red states are down after China took aim at pork and soybean imports from the US, Idaho and Tennessee were down 6 points and Iowa down 9 points.

You honesty think companies are going to move back to the US because of temporary tariffs that could disappear overnight. That's nuts.

No company is going to move to the US over a tariff, even if it was not temporary.

If the US engages in a real trade war, then other countries are going to tariff products coming from the US.

The US might be the single large market, as a country. But from the perspective of the world, the US is only one part of the world.

Apple computer makes more money outside the US, than inside the US.

So lets just think about that rationally.....

Apple can build Iphones inside the US, and not be able to export them because of a trade war where all the other countries have put in heavy tariffs on US goods....

Or they can make Iphones outside the US and sell to the entire world, and the rich people of the US willing to pay the tariff can buy those phones here.

Where would Apple build their Iphones? In the US, so they can only be sold in the US market, or outside the US to sell to the 8 Billion people of the rest of the world?

Obviously, Apple will make their phones outside the US. It's a larger market. They already make more money outside the US, than inside.

Anything that is very labor intensive and is easily transported will be built outside the US. The cost of labor in the US relative to most of the world is high and that's not likely to change anytime soon. Tariffs are always counterproductive. They drive up prices, provide government support for companies that operate inefficiently, and instead of a country producing the products it produces best, it produces in accordance with goverment policy.

That's not even entirely true.

My last big job, was working for a company that built printers, specifically ticketing and label printers.

238ML THERMAL KIOSK PRINTER - Microcom

These printers are hand built. And I mean literally built by hand. I know, I built them. I made the wires for them. I made the sensors, the circuits, the connectors, the print heads, the plugs, everything. Literally every single part of that printer, and a dozen other models, I built by hand.

And.... they are easily transportable, and heavy labor intensive.

All built and made in the US. Specifically in Lewis Center Ohio.

So it isn't entirely automatic that anything that is labor intensive, and easily transportable, will be built outside the US.

In fact, this very company went through the nightmare of having a product built in China. There was a specific printer model they wanted built, that no matter how they looked at it, wouldn't be profitable to have built in the US. They simply couldn't make the number work. So they decided to try and have it built in China.

The result was not all that great. First, you have a problem with translating designs. Then you have a problem with suppliers. Then you have to fly there in person, to set everything up. Then you have mistakes, and errors, that have to dealt with. Then if you end up with bad product, it isn't worth it to ship the product back. You end up either eating the loss, or trying to fix the products here in the US, which defeated the purpose of having them built there. And lastly, there was a huge lag time. You put in an order, and by the time the order is transmitted there, sent to the factory, transported to the ship, sailed across, then trucked across the US, it can take days, if not a week of time.

Customers don't like that. They want it in a few days.

My CEO literally HATED having it outsourced to China. It just wasn't cost effective to make the product here.

This is where taxes, and regulations, and health care mandates, really make the difference between a product built in the US, verses out of the country. It's not the cost of labor. Not really.

I may be wrong but it appears that this printer would not be produced in large lots, say 20,000 a month. So when you start adding up the costs of translating designs, trips to China, correction of errors, and hundreds of other one time costs that you haven't mentioned, it probably is a lot cheaper to build in the US. Anytime you manufacture outside of the US, you have a lot of startup costs, communication problems, headaches with government requirements, customs, shipping, ect. Now if you were order 200,000 units at say 10,000 a month the cost figure/unit might look a lot different.

The cost of manufacturing an iPhone in China that retails for $640 was approximately is $200. That was because, they were shipping 78 million a quarter. If the quantity was dropped to 10,000 units the cost would have been over $300 a unit. Quantity makes the difference.

Thousands of fabricators of parts in the US are able to do their own manufacturing because the quantities are not large enough to farm it out overseas. The secret of successful in manufacturing today is to do what you can do best.

Yeah, I agree that all the numbers of product purchase, change the equation as well.

My only point was, there seems to be an automatic assumption that if the labor is cheaper that production will move to where the cheaper labor is.

That *can be* true, but it isn't automatic.

Truth is, I have had dozens of manufacturing jobs in the US, that if that automatic assumption was true, none of them would be in the US.

I worked at a company that built computers. We pushed out 120 machines a day, per production line, and there were two production lines.

Now originally, they had the computers built in Asia, I don't know where, but they were all outsourced and imported into the US.

Here's the problem they ran into. You have 3 models of computers A,B,C.

For whatever reason, model A starts selling hard. And you can't predict when a big sales rush is going to happen, unless you have a price cut or special sale. Sometimes things start selling really hard without warning.

Well you send an order to Asia, and they don't show up for 4 weeks. You run out of stock in 2 weeks, and then you lose customers. Customers don't wait, they move on.

So then they started having larger stocks. The problem then became that a new product hits the market, and Model A is obsolete, and everyone is buying Model B's now. So you have a huge supply of Model As showing up at the stores that were ordered a month before, but no one is buying them, because everyone is buying model Bs. And at the same time, now your model B stock is running down, and the shipments showing up are still Model As.

Then you have model Cs, which turns out one of the components was recalled, or has a defect, and thus we can't sell them. But we also can't send them back to Asia to have the parts upgraded, because the cost of shipping back, and then fixed, and then shipping them back to the US, would exceed the entire of value of the unit retail. So we end up scrapping them.

So even though it was in fact significantly cheaper to build in these computers in Asia, in reality when you consider all of the other money losing problems, is starts to make less and less sense to outsource.

Now again, yeah maybe if it was 20,000 a month instead of 5,000 a month, maybe the numbers would change again.

But I have built in the US, cell phones, computers, printers, lighting systems, LED displays, power supplies systems, electro-motive systems, electronic controllers, and many more than I can remember. All manufactured here in the US.

Just because labor is cheaper elsewhere, does not mean automatically companies want to outsource to save a few bucks.

Most would much rather keep operations in the US. Again, my CEO only outsourced because he had no other option. The customer wanted X product at Z price, and there was no way to do it profitably in the US, so it was either not do the product at all, or do it over seas.

This is why I keep saying the solution to more US manufacturing, is to reduce taxes and regulations on domestic business. That's how you make it more affordable to produce things in the US. Not protectionism. That will never fix anything.

 

[Flopper]

He hasn't deliveries anything due to tariffs. They haven't even gone into effect and may not. However, I noticed his approval ratings in 3 red states are down after China took aim at pork and soybean imports from the US, Idaho and Tennessee were down 6 points and Iowa down 9 points.

You honesty think companies are going to move back to the US because of temporary tariffs that could disappear overnight. That's nuts.

No company is going to move to the US over a tariff, even if it was not temporary.

If the US engages in a real trade war, then other countries are going to tariff products coming from the US.

The US might be the single large market, as a country. But from the perspective of the world, the US is only one part of the world.

Apple computer makes more money outside the US, than inside the US.

So lets just think about that rationally.....

Apple can build Iphones inside the US, and not be able to export them because of a trade war where all the other countries have put in heavy tariffs on US goods....

Or they can make Iphones outside the US and sell to the entire world, and the rich people of the US willing to pay the tariff can buy those phones here.

Where would Apple build their Iphones? In the US, so they can only be sold in the US market, or outside the US to sell to the 8 Billion people of the rest of the world?

Obviously, Apple will make their phones outside the US. It's a larger market. They already make more money outside the US, than inside.

Anything that is very labor intensive and is easily transported will be built outside the US. The cost of labor in the US relative to most of the world is high and that's not likely to change anytime soon. Tariffs are always counterproductive. They drive up prices, provide government support for companies that operate inefficiently, and instead of a country producing the products it produces best, it produces in accordance with goverment policy.

That's not even entirely true.

My last big job, was working for a company that built printers, specifically ticketing and label printers.

238ML THERMAL KIOSK PRINTER - Microcom

These printers are hand built. And I mean literally built by hand. I know, I built them. I made the wires for them. I made the sensors, the circuits, the connectors, the print heads, the plugs, everything. Literally every single part of that printer, and a dozen other models, I built by hand.

And.... they are easily transportable, and heavy labor intensive.

All built and made in the US. Specifically in Lewis Center Ohio.

So it isn't entirely automatic that anything that is labor intensive, and easily transportable, will be built outside the US.

In fact, this very company went through the nightmare of having a product built in China. There was a specific printer model they wanted built, that no matter how they looked at it, wouldn't be profitable to have built in the US. They simply couldn't make the number work. So they decided to try and have it built in China.

The result was not all that great. First, you have a problem with translating designs. Then you have a problem with suppliers. Then you have to fly there in person, to set everything up. Then you have mistakes, and errors, that have to dealt with. Then if you end up with bad product, it isn't worth it to ship the product back. You end up either eating the loss, or trying to fix the products here in the US, which defeated the purpose of having them built there. And lastly, there was a huge lag time. You put in an order, and by the time the order is transmitted there, sent to the factory, transported to the ship, sailed across, then trucked across the US, it can take days, if not a week of time.

Customers don't like that. They want it in a few days.

My CEO literally HATED having it outsourced to China. It just wasn't cost effective to make the product here.

This is where taxes, and regulations, and health care mandates, really make the difference between a product built in the US, verses out of the country. It's not the cost of labor. Not really.

I may be wrong but it appears that this printer would not be produced in large lots, say 20,000 a month. So when you start adding up the costs of translating designs, trips to China, correction of errors, and hundreds of other one time costs that you haven't mentioned, it probably is a lot cheaper to build in the US. Anytime you manufacture outside of the US, you have a lot of startup costs, communication problems, headaches with government requirements, customs, shipping, ect. Now if you were order 200,000 units at say 10,000 a month the cost figure/unit might look a lot different.

The cost of manufacturing an iPhone in China that retails for $640 was approximately is $200. That was because, they were shipping 78 million a quarter. If the quantity was dropped to 10,000 units the cost would have been over $300 a unit. Quantity makes the difference.

Thousands of fabricators of parts in the US are able to do their own manufacturing because the quantities are not large enough to farm it out overseas. The secret of successful in manufacturing today is to do what you can do best.

Yeah, I agree that all the numbers of product purchase, change the equation as well.

My only point was, there seems to be an automatic assumption that if the labor is cheaper that production will move to where the cheaper labor is.

That *can be* true, but it isn't automatic.

Truth is, I have had dozens of manufacturing jobs in the US, that if that automatic assumption was true, none of them would be in the US.

I worked at a company that built computers. We pushed out 120 machines a day, per production line, and there were two production lines.

Now originally, they had the computers built in Asia, I don't know where, but they were all outsourced and imported into the US.

Here's the problem they ran into. You have 3 models of computers A,B,C.

For whatever reason, model A starts selling hard. And you can't predict when a big sales rush is going to happen, unless you have a price cut or special sale. Sometimes things start selling really hard without warning.

Well you send an order to Asia, and they don't show up for 4 weeks. You run out of stock in 2 weeks, and then you lose customers. Customers don't wait, they move on.

So then they started having larger stocks. The problem then became that a new product hits the market, and Model A is obsolete, and everyone is buying Model B's now. So you have a huge supply of Model As showing up at the stores that were ordered a month before, but no one is buying them, because everyone is buying model Bs. And at the same time, now your model B stock is running down, and the shipments showing up are still Model As.

Then you have model Cs, which turns out one of the components was recalled, or has a defect, and thus we can't sell them. But we also can't send them back to Asia to have the parts upgraded, because the cost of shipping back, and then fixed, and then shipping them back to the US, would exceed the entire of value of the unit retail. So we end up scrapping them.

So even though it was in fact significantly cheaper to build in these computers in Asia, in reality when you consider all of the other money losing problems, is starts to make less and less sense to outsource.

Now again, yeah maybe if it was 20,000 a month instead of 5,000 a month, maybe the numbers would change again.

But I have built in the US, cell phones, computers, printers, lighting systems, LED displays, power supplies systems, electro-motive systems, electronic controllers, and many more than I can remember. All manufactured here in the US.

Just because labor is cheaper elsewhere, does not mean automatically companies want to outsource to save a few bucks.

Most would much rather keep operations in the US. Again, my CEO only outsourced because he had no other option. The customer wanted X product at Z price, and there was no way to do it profitably in the US, so it was either not do the product at all, or do it over seas.

This is why I keep saying the solution to more US manufacturing, is to reduce taxes and regulations on domestic business. That's how you make it more affordable to produce things in the US. Not protectionism. That will never fix anything.

I agree with most of what you're saying. Manufacturing abroad without considering all the costs is foolish.

The future of American manufacturing lies in small/medium size manufacturers that takes advantage of american ingenuity and it's skilled workforce, and highly automated large scale manufacturing. Trying to bring back large scale labor intensive manufacturing is a losing battle that the US should not pursue.

There's a company my grandson bought a computer from that I think has a winning business plan. Instead of trying to compete with big volume producers, they cater to customers who want high quality hardware that can be customized to the user specification. The plant is small, has maybe 20 or 30 workers. The way it works is the customer configures a computer either online or over the phone; he selects from a list of motherboards, processors, memory, video adapters, and software suites.
Everything else is standard. When a credit card payment is made a work order is printed along with a shipping label and handed over to manufacturing. The time from order completion to the shipping dock is typically 1 hour which includes about 30 mins labor. The customer usually received the computer within 48 hours. The retail price is about 30% higher than the big box stores for a machine of the same power. The primary market is gamers, techies, and people that want control of the computer they are buying. The customer get's high quality hardware with good documentation, that can be repaired, upgraded, or modified by the customer. The customer gets only licence software he specifies with no gimics, ads, trials, or come-ons. This is an example of a simple profitable small manufacturing company.

Today there are over 200,000 small manufacturing companies all over the country producing tens of thousands of products. They are doing things China can't do; provide high quality products to meet individual customer requirements with fast delivery and American customer support.

Someone once said, a nation should do only what it does best. In the US, that is not high volume labor intensive manufacturing. You can't beat China at that own game but you certain can win by capitalizing on American strength which is a highly skilled work force, innovative product design and marketing, fast time to market, flexibility in manufacturing, superior customer support, superior infrastructure, and a financial structure that encourages growth and innovation.

 

[Andylusion]

No company is going to move to the US over a tariff, even if it was not temporary.

If the US engages in a real trade war, then other countries are going to tariff products coming from the US.

The US might be the single large market, as a country. But from the perspective of the world, the US is only one part of the world.

Apple computer makes more money outside the US, than inside the US.

So lets just think about that rationally.....

Apple can build Iphones inside the US, and not be able to export them because of a trade war where all the other countries have put in heavy tariffs on US goods....

Or they can make Iphones outside the US and sell to the entire world, and the rich people of the US willing to pay the tariff can buy those phones here.

Where would Apple build their Iphones? In the US, so they can only be sold in the US market, or outside the US to sell to the 8 Billion people of the rest of the world?

Obviously, Apple will make their phones outside the US. It's a larger market. They already make more money outside the US, than inside.

Anything that is very labor intensive and is easily transported will be built outside the US. The cost of labor in the US relative to most of the world is high and that's not likely to change anytime soon. Tariffs are always counterproductive. They drive up prices, provide government support for companies that operate inefficiently, and instead of a country producing the products it produces best, it produces in accordance with goverment policy.

That's not even entirely true.

My last big job, was working for a company that built printers, specifically ticketing and label printers.

238ML THERMAL KIOSK PRINTER - Microcom

These printers are hand built. And I mean literally built by hand. I know, I built them. I made the wires for them. I made the sensors, the circuits, the connectors, the print heads, the plugs, everything. Literally every single part of that printer, and a dozen other models, I built by hand.

And.... they are easily transportable, and heavy labor intensive.

All built and made in the US. Specifically in Lewis Center Ohio.

So it isn't entirely automatic that anything that is labor intensive, and easily transportable, will be built outside the US.

In fact, this very company went through the nightmare of having a product built in China. There was a specific printer model they wanted built, that no matter how they looked at it, wouldn't be profitable to have built in the US. They simply couldn't make the number work. So they decided to try and have it built in China.

The result was not all that great. First, you have a problem with translating designs. Then you have a problem with suppliers. Then you have to fly there in person, to set everything up. Then you have mistakes, and errors, that have to dealt with. Then if you end up with bad product, it isn't worth it to ship the product back. You end up either eating the loss, or trying to fix the products here in the US, which defeated the purpose of having them built there. And lastly, there was a huge lag time. You put in an order, and by the time the order is transmitted there, sent to the factory, transported to the ship, sailed across, then trucked across the US, it can take days, if not a week of time.

Customers don't like that. They want it in a few days.

My CEO literally HATED having it outsourced to China. It just wasn't cost effective to make the product here.

This is where taxes, and regulations, and health care mandates, really make the difference between a product built in the US, verses out of the country. It's not the cost of labor. Not really.

I may be wrong but it appears that this printer would not be produced in large lots, say 20,000 a month. So when you start adding up the costs of translating designs, trips to China, correction of errors, and hundreds of other one time costs that you haven't mentioned, it probably is a lot cheaper to build in the US. Anytime you manufacture outside of the US, you have a lot of startup costs, communication problems, headaches with government requirements, customs, shipping, ect. Now if you were order 200,000 units at say 10,000 a month the cost figure/unit might look a lot different.

The cost of manufacturing an iPhone in China that retails for $640 was approximately is $200. That was because, they were shipping 78 million a quarter. If the quantity was dropped to 10,000 units the cost would have been over $300 a unit. Quantity makes the difference.

Thousands of fabricators of parts in the US are able to do their own manufacturing because the quantities are not large enough to farm it out overseas. The secret of successful in manufacturing today is to do what you can do best.

Yeah, I agree that all the numbers of product purchase, change the equation as well.

My only point was, there seems to be an automatic assumption that if the labor is cheaper that production will move to where the cheaper labor is.

That *can be* true, but it isn't automatic.

Truth is, I have had dozens of manufacturing jobs in the US, that if that automatic assumption was true, none of them would be in the US.

I worked at a company that built computers. We pushed out 120 machines a day, per production line, and there were two production lines.

Now originally, they had the computers built in Asia, I don't know where, but they were all outsourced and imported into the US.

Here's the problem they ran into. You have 3 models of computers A,B,C.

For whatever reason, model A starts selling hard. And you can't predict when a big sales rush is going to happen, unless you have a price cut or special sale. Sometimes things start selling really hard without warning.

Well you send an order to Asia, and they don't show up for 4 weeks. You run out of stock in 2 weeks, and then you lose customers. Customers don't wait, they move on.

So then they started having larger stocks. The problem then became that a new product hits the market, and Model A is obsolete, and everyone is buying Model B's now. So you have a huge supply of Model As showing up at the stores that were ordered a month before, but no one is buying them, because everyone is buying model Bs. And at the same time, now your model B stock is running down, and the shipments showing up are still Model As.

Then you have model Cs, which turns out one of the components was recalled, or has a defect, and thus we can't sell them. But we also can't send them back to Asia to have the parts upgraded, because the cost of shipping back, and then fixed, and then shipping them back to the US, would exceed the entire of value of the unit retail. So we end up scrapping them.

So even though it was in fact significantly cheaper to build in these computers in Asia, in reality when you consider all of the other money losing problems, is starts to make less and less sense to outsource.

Now again, yeah maybe if it was 20,000 a month instead of 5,000 a month, maybe the numbers would change again.

But I have built in the US, cell phones, computers, printers, lighting systems, LED displays, power supplies systems, electro-motive systems, electronic controllers, and many more than I can remember. All manufactured here in the US.

Just because labor is cheaper elsewhere, does not mean automatically companies want to outsource to save a few bucks.

Most would much rather keep operations in the US. Again, my CEO only outsourced because he had no other option. The customer wanted X product at Z price, and there was no way to do it profitably in the US, so it was either not do the product at all, or do it over seas.

This is why I keep saying the solution to more US manufacturing, is to reduce taxes and regulations on domestic business. That's how you make it more affordable to produce things in the US. Not protectionism. That will never fix anything.

I agree with most of what you're saying. Manufacturing abroad without considering all the costs is foolish.

The future of American manufacturing lies in small/medium size manufacturers that takes advantage of american ingenuity and it's skilled workforce, and highly automated large scale manufacturing. Trying to bring back large scale labor intensive manufacturing is a losing battle that the US should not pursue.

There's a company my grandson bought a computer from that I think has a winning business plan. Instead of trying to compete with big volume producers, they cater to customers who want high quality hardware that can be customized to the user specification. The plant is small, has maybe 20 or 30 workers. The way it works is the customer configures a computer either online or over the phone; he selects from a list of motherboards, processors, memory, video adapters, and software suites.
Everything else is standard. When a credit card payment is made a work order is printed along with a shipping label and handed over to manufacturing. The time from order completion to the shipping dock is typically 1 hour which includes about 30 mins labor. The customer usually received the computer within 48 hours. The retail price is about 30% higher than the big box stores for a machine of the same power. The primary market is gamers, techies, and people that want control of the computer they are buying. The customer get's high quality hardware with good documentation, that can be repaired, upgraded, or modified by the customer. The customer gets only licence software he specifies with no gimics, ads, trials, or come-ons. This is an example of a simple profitable small manufacturing company.

Today there are over 200,000 small manufacturing companies all over the country producing tens of thousands of products. They are doing things China can't do; provide high quality products to meet individual customer requirements with fast delivery and American customer support.

Someone once said, a nation should do only what it does best. In the US, that is not high volume labor intensive manufacturing. You can't beat China at that own game but you certain can win by capitalizing on American strength which is a highly skilled work force, innovative product design and marketing, fast time to market, flexibility in manufacturing, superior customer support, superior infrastructure, and a financial structure that encourages growth and innovation.

Right, and China's game isn't even all that winning of a game.

One of the ironies of the whole China debate is that, when you really think about it, if we simply leverage the advantage China is giving us, we can easily succeed.

Think about it.... China right now is subsidizing their steel industry, primarily because of the government run steel companies. Government routinely use their power to benefit themselves, and who benefits more than the politicians from subsidizing their own government run companies.

But think about how that works. They are taxing their people.... their citizens, so that we in the US can buy Chinese steel at a low price.

That means we can produce steel products at a lower cost. In fact, a lower cost than even the Chinese can.

We and produce steel products at a lower price than Chinese companies themselves can.

Yeah, subsidizing steel is a great boon for the government run steel companies in China. But it kinda sucks for the companies that need steel in China.

If China and the US, both sell a product made from steel, to say India. It's cheaper for them to buy from the US, than from China, because Chinese companies don't get subsidized steel..... US companies do.(or any country that buys subsidized steel from China).

And again, the Chinese tax payers are the ones footing the bill to pay for other countries like the U.S. to get that cheap steel.

This is why the markets have been up and done constantly, over Trump trying to put in place tariffs. Tariffs won't help us. It will only hurt us.

Instead of complaining about Chinese subsidies, we should be leveraging those subsidies to our advantage.

 

[cnm]

No worries, Trump's got this...

China Shunning U.S. Soybeans on Trade Tensions, Bunge CEO Says
https://www.bloomberg.com
Updated on May 3, 2018
The world’s biggest oilseed processor just confirmed one of the soybean market’s biggest fears: China has essentially stopped buying U.S. supplies amid the brewing trade war.​

 

[Camp]

No worries, Trump's got this...

China Shunning U.S. Soybeans on Trade Tensions, Bunge CEO Says
https://www.bloomberg.com
Updated on May 3, 2018
The world’s biggest oilseed processor just confirmed one of the soybean market’s biggest fears: China has essentially stopped buying U.S. supplies amid the brewing trade war.​

Brazil is very happy to sell their soy beans to China.

 

[Toddsterpatriot]

No worries, Trump's got this...

China Shunning U.S. Soybeans on Trade Tensions, Bunge CEO Says
https://www.bloomberg.com
Updated on May 3, 2018
The world’s biggest oilseed processor just confirmed one of the soybean market’s biggest fears: China has essentially stopped buying U.S. supplies amid the brewing trade war.​

Brazil is very happy to sell their soy beans to China.

Brazil has a bunch of extra soybeans sitting around?

 

[Camp]

No worries, Trump's got this...

China Shunning U.S. Soybeans on Trade Tensions, Bunge CEO Says
https://www.bloomberg.com
Updated on May 3, 2018
The world’s biggest oilseed processor just confirmed one of the soybean market’s biggest fears: China has essentially stopped buying U.S. supplies amid the brewing trade war.​

Brazil is very happy to sell their soy beans to China.

Brazil has a bunch of extra soybeans sitting around?

They can easily replace the lose of US soy beans and China has given them advance orders. That means they have time to increase production to meet Chin's advance orders. US producers will have to find news markets and or reduce production.

 

[cnm]

Brazil has a bunch of extra soybeans sitting around?

And is selling them to China. I suppose you didn't read the link.

 

[cnm]

I bet Brazil will be able to buy US soybeans cheap, they will be a glut on the market.

 

[Toddsterpatriot]

I bet Brazil will be able to buy US soybeans cheap, they will be a glut on the market.

As long as Americans can sell them........