Trade war?

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Re: Trade war?

Post by Anaxagoras » Thu Jul 26, 2018 2:08 am

This was a bad day for Detroit's automakers
Investors punished Ford, General Motors and Fiat Chrysler after all three scaled back their 2018 earnings forecasts due to rising prices for raw materials.
GM said higher-than expected jump in commodity costs and unfavorable exchange rates in Brazil and Argentina will cost it an extra $1 billion this year.
The trade penalties have been mentioned in some form on more than 40 percent of the 146 S&P 500 companies that have already reported second-quarter earnings this season.



Detroit automakers had a really bad day Wednesday as investors hammered Ford, General Motors and Fiat Chrysler after all three scaled back their 2018 earnings forecasts due largely to rising prices for raw materials.

General Motors, the largest U.S. automaker, suffered its worst intraday drop in years, falling more than 8 percent despite beating Wall Street estimates. Rival Fiat Chrysler plunged 16 percent after missing earnings estimates, announcing the sudden death of CEO Sergio Marchionne and reducing earnings guidance for the year. Shares of Ford, which announced earnings after the markets closed, were under pressure all day and fell by more than 4 percent in after-market trading.

GM said a higher-than expected jump in commodity costs and unfavorable exchange rates in Brazil and Argentina will cost it an extra $1 billion this year. Ford’s second-quarter earnings plunged by almost 50 percent and the company lowered its 2018 earnings projections.

Ford’s Chief Financial Officer Bob Shanks said its commodity costs during the quarter were about $300 million higher from last year, attributing about half of that to the U.S. tariffs on steel and aluminum. The tariffs are expected to eat up about $600 million in profit this year, he said.
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Re: Trade war?

Post by Witness » Thu Jul 26, 2018 2:43 am

Anaxagoras wrote:
Thu Jul 26, 2018 2:08 am
This was a bad day for Detroit's automakers
The tariffs are expected to eat up about $600 million in profit this year
Socialist Trump taxing businesses… :P

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Re: Trade war?

Post by Grammatron » Thu Jul 26, 2018 9:18 pm

Europe Averts a Trade War With Trump. But Can It Trust Him?
Even as Mr. Trump cast the meeting on Wednesday as a great success, and offered gratitude to Mr. Juncker, the question is whether the deal represents a meaningful improvement in the severely strained trans-Atlantic alliance, or is simply another example of the unpredictable approach of a president who has spent months mocking and undermining European leaders — even describing the European bloc as a “foe.”

“The question is, how much do you give in to a bully?” asked Maria Demertzis, the deputy director of Bruegel, an economic research institute in Brussels. “This could just be perfunctory, and if it just stops extra tariffs, that’s fine. But you can’t really depend on Trump. His understanding of global trade is bilateral balance, which is as good as arbitrary, given global supply chains. And it depends on what side of the bed he wakes up on tomorrow.”
Just another neutral and unbiased article from NY Times.

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Re: Trade war?

Post by Abdul Alhazred » Thu Jul 26, 2018 11:08 pm

So basically, free trade except for cars?
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Re: Trade war?

Post by Grammatron » Thu Jul 26, 2018 11:30 pm

Abdul Alhazred wrote:
Thu Jul 26, 2018 11:08 pm
So basically, free trade except for cars?
There's nothing "basically" about this IMO.

EU is willing to negotiate because US economy is stronger and those tariffs are worse for EU than USA (not that it's all roses for USA), and ultimately EU and USA working together to force China into a more equal footing is to the benefit of EU and USA.

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Re: Trade war?

Post by Anaxagoras » Thu Jul 26, 2018 11:34 pm

I doubt it. There's always, always, always protectionism for farmers. Every country does it. Trump likes to harp on Canada's tariffs on dairy products. The U.S. does the same thing though. It protects sugar beet farmers from imported sugar. This comes at the expense of industries like candy manufacturers.

For every trade agreement, there's always a few politically connected industries that get exempted.
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Re: Trade war?

Post by WildCat » Mon Aug 27, 2018 5:26 pm

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Re: Trade war?

Post by Witness » Tue Aug 28, 2018 2:05 am

Anaxagoras wrote:
Thu Jul 26, 2018 11:34 pm
There's always, always, always protectionism for farmers. Every country does it.
Just as a remark, and apart from trade.

Running small farms is lots of hard work and doesn't pay much. So if you want to keep a landscape and not see it (re)turn to wilderness, you have to subsidize.

That's what they do in Switzerland, and it's good for tourism. Less so in France where forests are on the rise.

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Re: Trade war?

Post by Grammatron » Tue Aug 28, 2018 2:48 am

Anaxagoras wrote:
Thu Jul 26, 2018 11:34 pm
I doubt it. There's always, always, always protectionism for farmers. Every country does it. Trump likes to harp on Canada's tariffs on dairy products. The U.S. does the same thing though. It protects sugar beet farmers from imported sugar. This comes at the expense of industries like candy manufacturers.

For every trade agreement, there's always a few politically connected industries that get exempted.
Farm subsidies is how a country avoid famine and food shortage.

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Re: Trade war?

Post by Anaxagoras » Tue Aug 28, 2018 4:00 am

Grammatron wrote:
Tue Aug 28, 2018 2:48 am
Anaxagoras wrote:
Thu Jul 26, 2018 11:34 pm
I doubt it. There's always, always, always protectionism for farmers. Every country does it. Trump likes to harp on Canada's tariffs on dairy products. The U.S. does the same thing though. It protects sugar beet farmers from imported sugar. This comes at the expense of industries like candy manufacturers.

For every trade agreement, there's always a few politically connected industries that get exempted.
Farm subsidies is how a country avoid famine and food shortage.
There's certainly some truth to that up to a point. But then, Canada is equally entitled to make that argument with regard to its own dairy industry.
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Re: Trade war?

Post by Grammatron » Tue Aug 28, 2018 6:30 am

Anaxagoras wrote:
Tue Aug 28, 2018 4:00 am
Grammatron wrote:
Tue Aug 28, 2018 2:48 am

Farm subsidies is how a country avoid famine and food shortage.
There's certainly some truth to that up to a point.
Well yeah, but then attempts to find that point arein the infinite between science and politics.
But then, Canada is equally entitled to make that argument with regard to its own dairy industry.
I am not sure any suggesting otherwise. However, USA is equally entitled to protects its own up to a point. Both sides are currently in the process of trying to find a workable agreement. If the deal with Mexico is real it definitely signals that this administration is able to compromise and come to a deal with as side as slandered as Mexico was.

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Re: Trade war?

Post by Doctor X » Tue Aug 28, 2018 7:40 am

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Re: Trade war?

Post by Anaxagoras » Sat Sep 08, 2018 2:27 pm

China’s Trade Surplus With U.S. Hits New Record
U.S.-China trade gap widens to $31.05 billion
Sept. 8, 2018 5:09 a.m. ET

BEIJING—China’s trade surplus with the U.S. hit another record monthly high in August as the world’s second-largest economy faced the threat of more tariffs from the Trump administration.

China’s trade surplus with the U.S. widened to $31.05 billion last month from $28.09 billion in July, while its total trade surplus narrowed, data from the General Administration of Customs showed Saturday.
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Re: Trade war?

Post by sparks » Sat Sep 08, 2018 3:43 pm

"If the deal with Mexico is real it definitely signals that this administration is able to compromise and come to a deal with as side as slandered as Mexico was."

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Re: Trade war?

Post by WildCat » Sun Sep 09, 2018 12:08 am

Anaxagoras wrote:
Sat Sep 08, 2018 2:27 pm
China’s Trade Surplus With U.S. Hits New Record
U.S.-China trade gap widens to $31.05 billion
Sept. 8, 2018 5:09 a.m. ET

BEIJING—China’s trade surplus with the U.S. hit another record monthly high in August as the world’s second-largest economy faced the threat of more tariffs from the Trump administration.

China’s trade surplus with the U.S. widened to $31.05 billion last month from $28.09 billion in July, while its total trade surplus narrowed, data from the General Administration of Customs showed Saturday.
There was a lot of goods leaving China ahead of the tariffs.
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Re: Trade war?

Post by Anaxagoras » Tue Sep 11, 2018 1:09 am

Trump tweets Focus Active 'can now be BUILT IN THE U.S.A.' Ford disagrees.
Ford won't be moving production of a hatchback wagon to the United States from China — despite President Donald Trump's claim Sunday that his taxes on Chinese imports mean the Focus Active can be built in America.

Citing Trump's new tariffs, Ford on Aug. 31 said it was dropping plans to ship the Focus Active from China to America.

Trump took to Twitter Sunday to declare victory and write: "This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs!"

But in a statement Sunday, Ford said "it would not be profitable to build the Focus Active in the U.S." given forecast yearly sales below 50,000.

For now, that means Ford simply won't sell the vehicle in the United States. Kristin Dziczek of the Center for Automotive Research said that Ford can make Focuses "in many other plants around the world, so if they decided to continue to sell a Focus variant in the U.S. market, there are several options other than building it in the United States."

In April, Ford announced plans to stop making cars in the United States — except for the iconic Mustang — and to focus on more profitable SUVs. It stopped making Focus sedans at a Wayne, Michigan, plant in May. The plan, said industry analyst Ed Kim of AutoPacific, was to pare down the Focus lineup to Active wagons and import them from China. "Without the tariffs, the business case was pretty solid for that model in the U.S. market," Kim said.

The tariffs changed everything. The United States on July 6 began imposing a 25 percent tax on $34 billion in Chinese imports, including motor vehicles. Last month, it added tariffs to another $16 billion in Chinese goods and is readying taxes on another $200 billion worth. China is retaliating with its own tariffs on U.S. products.
I guess Americans just don't buy many compact-size economy cars these days, and there's not much profit margin in selling them. Pickup trucks and SUVs are where the profits are.
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Re: Trade war?

Post by Doctor X » Tue Sep 11, 2018 9:59 am

Compact-size economy cars are for those who lose world wars, Anax.

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Re: Trade war?

Post by WildCat » Sat Sep 22, 2018 2:20 pm

Interesting article:
Late Monday, President Donald Trump announced tariffs on “roughly $200 billion of imports from China.” These tariffs are on top of the ones imposed this summer on $50 billion of products from that country.

The new round of tariffs go into effect September 24 at the 10 percent rate. The rate jumps to 25 percent on January 1, 2019.

The latest round of tariffs took observers by surprise. Many thought Trump would not impose the second round of tariffs until after a Chinese delegation concluded negotiations in Washington, scheduled for September 27 and 28, or until after the November midterm elections, especially because Beijing recently issued threats.

Monday, therefore, was a great day for the United States. After the Chinese had threatened, Trump called their bluff. Now, all their next moves hurt them more than they hurt America.

There must be consternation in Beijing because the Chinese have not seen, since Nixon, an American leader who has opposed them across the board. To prevent a new round of tariffs, an unnamed “senior official who advises the leadership on foreign policy matters” over the weekend dropped hints that, if the White House went ahead with the tariffs, China would not send representatives to Washington for the planned late-September meeting.

Furthermore, Chinese officials like Lou Jiwei, the head of China’s social security fund, also threatened not to sell components to American manufacturing companies in the country. Lou’s threat echoed that of Chinese officials who specifically suggested Beijing would not permit component sales to those manufacturing for Apple.

The threats against Apple this month followed China’s extortionate demands on the company in August.

In the past, threats like these would work against American presidents. For four decades, Washington policymakers thought the United States should support China’s Communist Party.

Trump, however, has a different perspective. His concern about China’s trade predation has been the one constant theme of decades of his thinking, so Beijing’s two threats did not work this time.

Trump had every reason to ignore them. First, he has consistently believed that Beijing needed America far more than America needed China, largely because China is the country running large trade surpluses. Last year, China’s merchandise trade surplus against the United States hit a record $375.6 billion. As Trump knows, trade-surplus countries get mauled in “trade wars.” Therefore, Beijing, not Washington, is the party that needs to talk to reduce tension.

Second, the various threats to not sell components to American manufacturers is extremely short-sighted. China prospered in the four decades of its so-called reform era—Beijing will mark the fortieth anniversary of the beginning of that historic period this December—in large part because it convinced companies to manufacture in the country. In short, China made itself an indispensable member of global supply chains.

Yet the Chinese could not help themselves. In disputes with Tokyo and Seoul both last decade and this one, Beijing retaliated against Japanese and South Korean companies, often whipping up street protests against them. That has encouraged those countries to move operations out of China and down to Southeast Asia.

American companies look like they will be the next to move out, as Xi Jinping, the willful Chinese ruler, threatened to “punch back” in June. This summer, Chinese officials, worried that companies would leave China, have denied any intention to punish American businesses—the South China Morning Post that month reported Chinese officials said retaliating against foreign companies had “never been on the cards”—but by now it’s clear that retaliation is indeed policy. U.S. companies are not, for instance, getting licenses from Beijing and are the objects of minor harassment.

Showing fangs, Xi is going to have an increasingly hard time convincing companies from, say, Europe, to put themselves in the position of future hostages.

Despite all the triumphalist talk in the Chinese capital, China needs foreign technology and knowhow and perhaps even foreign money. For one thing, economic indicators for August came in below already low expectations with one notable exception. Inflation exceeded forecasts.

A few years ago, China suffered from persistent deflation. Now, it is beginning to have the opposite problem. Yet despite inflation, Beijing has been printing money at a rapid clip, thereby aggravating the problem. In a six-day period this week and last, the People’s Bank of China, the central bank, injected the renminbi equivalent of almost $90 billion into the economy.

More money, of course, means more inflation. Chinese leaders know the dangers of more inflation. There are two particular concerns. First, runaway inflation caused unrest that preceding the regime-shaking events during the spring of 1989, when Chinese protested in Beijing and 371 other cities.

Second, debasing the local currency, the eventual result of inflation, can trigger capital flight. Bloomberg estimates that net capital outflow in 2015 amounted to $1.0 trillion. In 2016, that amount increased, perhaps to $1.1 trillion. In 2017, outflow declined sharply, but only because Beijing imposed even more draconian capital controls, many of them unannounced.
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Re: Trade war?

Post by Witness » Sun Sep 23, 2018 12:31 am

China said to call off trade talks as tariff war escalates: WSJ
  • China was set to send two separate delegations to Washington, but both have been canceled, the Wall Street Journal reported on Friday.
  • The talks have been in play for weeks, but President Donald Trump's new raft of tariffs has undermined efforts to dial back tensions.
https://www.cnbc.com/2018/09/21/china-s ... s-wsj.html

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Re: Trade war?

Post by Abdul Alhazred » Sun Sep 23, 2018 1:11 am

All I see here are two tough negotiators and no trade war.
Not yet anyway.
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