Anyway, I often thought as my jobs would be gone overseas all of a sudden, wouldn't it help the businesses here alot if there was taxes on all these imported products ? Or even is there ?
It seems to me if the playing field was more leveled for our own industries they would of stayed here and it would not have gotten to this huge lack of productivity !
Without being a productive country we have fallen into needing imports in a way that is almost scary.
What if all the coutries that send us the things we depend on said no you cant have anymore ! Yikes I think, we would be in big trouble.
A long time ago someone somewhere should have thought about us taking care of us.
Who should take care of you? America is a productive country, we consume most of what we produce in the USA and a lot of what other countries produce on top it.
If China ever said they will stop selling us computers and TV's then what would happen? We would produce them in the USA and people would buy them. But that's never going to happen.
Tariffs only serve to "protect" the profits short term or certain manufacturers. All they do is move money from one group - consumers - to another group - manufacturers. A tariff is not making the playing field level it makes it unlevel.
Let's use the very real "playing field" analogy and apply it to pool just to keep it relevant to the main forum.
You and I are playing one pocket and you are a road player who is much stronger than me. The pool table we are playing on is tight and level. First you beat me badly and I ask for weight but it's not enough and you continue to beat me. So I decide that I want the pool room step in and protect me and the "local money". So tell the pool room owner to put some pins under the rail to make the balls veer away from the opponent's pocket. He overcomes this and I have the table made slightly unlevel, he overcomes this and I have my pocket enlarged slightly. I keep doing these things to try and make a game that allows me to compete "equally" when the real problem is that I won't invest in getting better so that I don't need to have people helping me and getting ridiculous weight to make an even game.
Because the whole idea of continually trying to build in an edge is a never ending endeavor. You ask for more weight, he adjust the game, you put pins in the cloth, he adapts and overcomes - all the while you are making him stronger. You might win with such a gaffe in the short term but at the end of the day he will come back and beat your gaffe and bust you.
The other alternative is to play cheap straight up and learn. Improve your game and let him teach you to get better. Protect yourself by increasing your own skill and not relying on handicaps (subsidies) and other tricks to win.
Lastly, who do you think pays for Tariffs? The consumer pays for them.
If I have a pool cue and it cost $20 to import it and the goverment slaps a 100% tariff on it then now that cue costs $40 to import. If we were to go with say a 5x cost model to ascertain the price of the cue then that cue would be $200 retail. Say that this is meant to help the US manufacturers compete in the $100-$150 retail range. So if the cue were $20 with no tariff then it would be priced at $100 retail. With a tariff then it goes to anywhere between one and two hundred.
So let's set it at Retail $200 and import cost $40.
Compared to a USA Made comparable cue at $150 retail.
So on the face of it the USA Made cue is the better deal right? Made in the USA and $150 as opposed to Made in China and $200. Tariff works right?
Not so fast..........
Remember that the importer is still paying $40 for this cue - ($20 of which is the 100% tariff)
So the USA manufacturer has to sell his cues to wholesale and retail outlets in order to get them distributed. Let's just take the retail store to keep the example simple and equate the importer and the USA manufacturer.
USA Manufacturer has their cue priced at $150 and sells it to the retail store for $75. So there is a potential profit of $75 IF the cue sells at full retail.
Importer has their cue priced at $200 and sells their cue to the retail store for $75 also giving the retailer a potential profit of $125. And the retailer can offer a larger discount and still make more money.
From a retail standpoint the imported cue is still more attractive. Assuming that the quality is comparable enough that the average consumer would consider them to be in the same class.
At the end of the day the extra cost for the tariff is passed on to the consumers either way. Only the government collects more money which is indirectly paid by the taxpayers.
Without the 100% $20 tariff on the $20 cue the same cue is priced at $100 and the consumer keeps more money in their pocket to spend as they wish.
Since the importer is unlikely to be able to buy the USA Manufacturer's $150 cues at $40 the cost of the imported cue will still be more attractive to them even with a 100% tariff.
The manufacturer in the foreign country isn't paying the tariff. He says to the importer, "I want $20 for my cue". He doesn't care if the US Government imposes a tariff or not.
But then here is another kicker in this tale.
What do you do when the foreign manufacturer and the importer agree that the price of the cue is not $20 but instead $5 and the other $15 is to be paid to another company for the design fees. So in the end the foreign manufacturer is getting his $20 per cue and the importer is bringing in cues that have an "invoice" cost of $5. Tack on that 100% tariff and now the cue costs just $25 to import instead of $40.
But but but that's illegal and immoral you say! Foul.
Well guess what? Commerce is fluid. You are against price fixing right? In other words you don't want all the cue sellers to get together and fix the prices of cues at a minimum of $300 do you? Well then don't allow the government to step in and start attempting to fix or influence prices either. Because that leads to business coming up with creative accounting ways to keep their costs from being artificially inflated.
How many people have ever fudged on their income taxes? Think about it, when you do something to reduce the amount of tax you SHOULD pay then you are doing the same thing that a corporation is doing to reduce the amount of money they pay on top of their normal production costs.
The point is that the more rules and tariffs are imposed the more cost it adds which are then either worked around to keep cost down or passed onto the consumer.
In no case does it stop the flow of goods.
Here is what's really happening.
Currently China has about 300 million people in the so-called middle class. As defined by the ability to buy a house and a car. The Chinese are turning into world-class consumers. Wages are rising rapidly, the standard of living is rising rapidly. Soon it will not be a low-wage country anymore. This is the direct result of being opened to the western markets.
As Chris pointed out the Chinese don't want want Chinese made goods. Not because the Chinese don't make good products. They do. And they make a lot of crap as well no doubt. But the REASON that they don't want domestic goods is that there is prestige involved with buying goods made somewhere else. There is also a perception that that the quality is "better" on average.
So this market is HUNGRY for Western goods. One way to turn it off is for the USA to adopt a protectionist standpoint and make China into some evil entity. The last thing you want is 300 million Chinese deciding that they really don't want Made in USA goods.
We are on a globe like it or not. We can't build a fence around the equator or any other place and pretend that the rest of the world doesn't exist.
We need them and they need us. We are all people.
Companies come and go. Viking's demise is part of a business cycle. Who knows, if they had done just one or two things differently then perhaps they would be strong and healthy now. You find such examples throughout history of companies that created their own downfall and others that created their own success.
Apple was on the brink of extinction 10 years ago.
It's all part of the ebb and flow of life.