Can We Talk About Tariffs?

[PaulG + 21]

2 hours ago, spiritdawg said:

 

Others that stand to gain are high-end brands that ship expensive cars to China, such as BMW(BMWYY) and Mercedes-Benz (DMLRY), Russo said.

Maybe not I've read somewhere that 30 % off all SUV's that both BMW and Mercedes make in their US plants are exported to china, these SUV's are now 25 % more expensive , Audi not so much. So again as as been mentioned above little nuances. A bit like it never entered his head that HD would more production to avoid EU tariffs

Edited July 2, 2018 by PaulG
add more text

[Epic + 390]

When talking tariffs, please don't forget the 800lb gorilla in the room: China.  Yes, the US has issues with Canada and the EU, and they have issues with the US, but I think the real problem is China.  Last year, the US spent half of a trillion dollars on R&D (yes, that is Trillion with a 'T').  The data I found for China is a few years old, but they spent a billion yuan on R&D (=$150 million USD...with an 'M').  Yet, China is still able to out-produce the US with a trade deficit of $375 billion USD!  Why?  It is because they simply steal the US R&D.  One of the ways they do it is by forcing US companies to partner with Chinese companies who control 51% of the joint venture.  Then they have the US companies train their workers, give them the US tech, all at the expense of the US companies.  Finally, once they have everything they need, they kick out the US companies and then directly compete against the US companies using the absolute advantage of lower-cost inputs that China has (China does not put the same regulatory requirements on its companies as the US, leading to lower cost that the US companies cannot compete against).  This equates to a transfer of wealth from the US to China the likes of which have never been seen before in the history of the world. 

As a result of these very clever (but very foul) acts performed by China, there are only two options: the US finds a way to stop China from stealing from the world, or else everyone in the world needs to take up Mandarin.  Remember, the Chinese don't just steal from the US, they steal from everyone.  Trump's tariffs are not the best way to stop China's war against the world because a lot of less-guilty groups end up in the crossfire (Canada and the EU, for instance), but the US Congress has far too many idiots voting to be able to enact a decent fix to this, and so it falls on the POTUS, for better or worse.

Yes, I do believe this is a war of China vs. the entire world, and it is a war that China started.  However, most of the world is too busy to see it, and interestingly enough, Canada and the EU have failed to realize that the US is actually on their side in this war!  China is waging war against everyone, and only the US is fighting back.  Remember, at the G7 Summit, Trump first suggested free trade, zero tariffs, and zero subsidies as the ideal solution, but neither Canada nor any member from the EU even considered that as an option.  It was Canada and the EU that preferred the trade war. 

Well, now they have it.  

The intelligent thing for Canada and the EU to do is to make whatever deal with the US that the US wants, as this united front between the US, the EU and Canada would help force China into submission while also helping to avoid a worldwide recession.  Not only this, but in the long run it would also protect both Canadian and EU companies by allowing those companies to safely expand into China since the risk of theft would, theoretically, be neutralized by the new deal the Chinese sign to avoid the trade war.  However, the Canadian and European politicians are just as stupid as the US ones, and so we all fight each other instead of uniting against a common threat. 

Meanwhile, the Chinese laugh all the way to the bank.  

[Dan Warnick + 6,100]

1 hour ago, Epic said:

When talking tariffs, please don't forget the 800lb gorilla in the room: China.  Yes, the US has issues with Canada and the EU, and they have issues with the US, but I think the real problem is China.  Last year, the US spent half of a trillion dollars on R&D (yes, that is Trillion with a 'T').  The data I found for China is a few years old, but they spent a billion yuan on R&D (=$150 million USD...with an 'M').  Yet, China is still able to out-produce the US with a trade deficit of $375 billion USD!  Why?  It is because they simply steal the US R&D.  One of the ways they do it is by forcing US companies to partner with Chinese companies who control 51% of the joint venture.  Then they have the US companies train their workers, give them the US tech, all at the expense of the US companies.  Finally, once they have everything they need, they kick out the US companies and then directly compete against the US companies using the absolute advantage of lower-cost inputs that China has (China does not put the same regulatory requirements on its companies as the US, leading to lower cost that the US companies cannot compete against).  This equates to a transfer of wealth from the US to China the likes of which have never been seen before in the history of the world. 

As a result of these very clever (but very foul) acts performed by China, there are only two options: the US finds a way to stop China from stealing from the world, or else everyone in the world needs to take up Mandarin.  Remember, the Chinese don't just steal from the US, they steal from everyone.  Trump's tariffs are not the best way to stop China's war against the world because a lot of less-guilty groups end up in the crossfire (Canada and the EU, for instance), but the US Congress has far too many idiots voting to be able to enact a decent fix to this, and so it falls on the POTUS, for better or worse.

Yes, I do believe this is a war of China vs. the entire world, and it is a war that China started.  However, most of the world is too busy to see it, and interestingly enough, Canada and the EU have failed to realize that the US is actually on their side in this war!  China is waging war against everyone, and only the US is fighting back.  Remember, at the G7 Summit, Trump first suggested free trade, zero tariffs, and zero subsidies as the ideal solution, but neither Canada nor any member from the EU even considered that as an option.  It was Canada and the EU that preferred the trade war. 

Well, now they have it.  

The intelligent thing for Canada and the EU to do is to make whatever deal with the US that the US wants, as this united front between the US, the EU and Canada would help force China into submission while also helping to avoid a worldwide recession.  Not only this, but in the long run it would also protect both Canadian and EU companies by allowing those companies to safely expand into China since the risk of theft would, theoretically, be neutralized by the new deal the Chinese sign to avoid the trade war.  However, the Canadian and European politicians are just as stupid as the US ones, and so we all fight each other instead of uniting against a common threat. 

Meanwhile, the Chinese laugh all the way to the bank.  

I lived and worked in China from 1990-1999.  I was employed by a U.S. aircraft engine manufacturer and was voted for and held a post as a Governor on the American Chamber of Commerce for a number of those years.  Other members of the AmCham were also aviation company local leaders, oil men, microchip producers, etc.  We knew then what your post describes, accurately I might add, and it was devastating to companies even in those early days. 

It was like a scratched record, over and over again: 1) a new company team would show up from the West and begin negotiations with their Chinese counterparts, 2) agreements were quickly signed and a joint venture formed, 3) "initial" investments were transferred to the Chinese partners (read Chinese government, since all companies back then were government companies), 4) the foreign company would come back to visit their partners to check on progress, 5) the Chinese partners would inform them that the "initial" investment had been spent paying down debt (the Chinese partners would even take the foreign partners on tours of the original facilities, in their brand new Mercedes Benz fleet, yes, fleet, to see that no progress had yet been made), 6) the foreign partners were informed that this was due to a lack of sufficient foreign capital and technology, 7) the foreign partners, realizing they were in too deep at this point to back out, would this time transfer more funds AND technology, but demand that their own representatives be allowed on-site on a permanent rotating basis, 8.) production would kick off, 9) delays, delays, delays, no sales, no sales, no sales, 10) "irregularities" with the accounting would be discovered, 11) the foreign partners would be arbitrarily found to be in violation of the joint venture contracts, 12) the foreign partners would claim, accurately in most cases, that they had certainly not violated any agreement, then 13) THE WHOPPER!  The foreign partners would find that they had agreed to arbitration, if they had included it in their contracts at all, IN CHINESE COURTS!  The Chinese courts had no laws on the books to deal with these partnerships and therefore simply sided with the Chinese partners.  14) the foreign partners went home, in many cases, 1,000s of cases, to declare bankruptcy because they had willingly/ignorantly handed over their technology and markets to a partner that was just waiting for them to exit so that they could take over.

Very shrewd/astute/smart/maybe cold hearted, but the Chinese knew what they were doing and it was "just business".  We couldn't fault them.  Within their system they were doing nothing wrong!  What we couldn't believe was that the foreign companies did almost no due diligence at all before entering into these JV partnerships and then seemingly willingly handing over their money, blueprints and technology!  Everybody did due diligence before the Japanese era of JV creation, but nobody seemed to feel it necessary with the Chinese!  We guessed that it was because of World War II and how the Chinese seemed like such nice honest people that everyone felt just needed a hand up and they would turn into our greatest partners and even allies.

EDIT/ADD:  I forgot to mention that a big "blinder" to the foreign companies was the fact that they were going to be "selling their products to 1.3 billion Chinese!  Oh, my, if we can get just 10% of that market we will make a fortune!"

Absolutely amazing the ignorance of the foreign businesses and indeed (not Chinese) governments.  I could go on, but the results are clearly evident in the world today.

Edited July 3, 2018 by Dan Warnick

[Guillaume Albasini + 851]

China won this war because the Chinese had a long term strategy and the foreign companies were just on a short term profit chase.

Once upon a time most firms were family run companies with a long term strategy. The son taking over as head of the company from his father and investing in the company growth to give a healthier and stronger company to his own son some decades later. But this time is over. Now the mean CEO of a company has only a short span vision, his goal being to maximize short term return on investment for the shareholders. He knows than in a couple of years he will be gone with a golden parachute and a pile of shares. The shareholders were then happy to see the CEO shifting the factories to China a way to quickly reduce salary costs and in the same time make them dream of the billions of bucks the chinese market could bring to the company.

The long term strategy is gone opening the door to a bunch a short term silly strategies for short term greed and long term hurdles.

 

[Dan Warnick + 6,100]

58 minutes ago, Guillaume Albasini said:

China won this war because the Chinese had a long term strategy and the foreign companies were just on a short term profit chase.

Once upon a time most firms were family run companies with a long term strategy. The son taking over as head of the company from his father and investing in the company growth to give a healthier and stronger company to his own son some decades later. But this time is over. Now the mean CEO of a company has only a short span vision, his goal being to maximize short term return on investment for the shareholders. He knows than in a couple of years he will be gone with a golden parachute and a pile of shares. The shareholders were then happy to see the CEO shifting the factories to China a way to quickly reduce salary costs and in the same time make them dream of the billions of bucks the chinese market could bring to the company.

The long term strategy is gone opening the door to a bunch a short term silly strategies for short term greed and long term hurdles.

 

Correct.  In some cases we were told by the visiting foreign partners that they had sold the partnership to their employees back home by getting the employees to buy shares in the company, thus guaranteeing everyone in the company vast riches once the JV took off.  Fools, every one of them.

Edited July 3, 2018 by Dan Warnick
Additional detail added.

[Tom Kirkman + 8,860]

On 7/1/2018 at 8:15 AM, Jan van Eck said:

I expect twenty upvotes for having held class, gotta keep up my contest with Tom Kirkman.  The computer has whacked me for over 50 points, so I am losing ground fast! The Hunchback of Notre Dame is inside the Leaderboard computer, and it doesn't like me, so I face its wrath.....

Here ya go Jan, I gave you another upvote.

[Jan van Eck + 7,558]

10 minutes ago, Tom Kirkman said:

Here ya go Jan, I gave you another upvote.

That's funny!   And I am a totally shameless self-promoter. Still can't catch you, I feel like my doggy chasing her tail!!!!

(Voted you one back, for having a great sense of humor.  Hey, easily worth that one!)

Edited July 5, 2018 by Jan van Eck

[Tom Kirkman + 8,860]

13 minutes ago, Jan van Eck said:

That's funny!   And I am a totally shameless self-promoter. Still can't catch you, I feel like my doggy chasing her tail!!!!

But I actually want someone else to take the top spot on the Leaderboard.

My own game is a bit different than the Leaderboard here (although the Leaderboard game is good feedback for members here).

My own game is to help ensure this Oil Price forum is the most active, best informed, and most read dedicated Oil & Gas forum on the internet.  I'm not Oil Price staff, I don't get paid for this, I just miss the heyday activities of the now defunct Oilpro forum, and I love being able to freely shoot my mouth off about oil & gas (LinkedIn has censored me repeatedly in the past, they seem to be lacking a sense of humor).

This new Oil Price forum is coming along nicely, with a bit more friendly banter back and forth between members as we get more familiar with the regulars here.  You may have seen some of the silly joking wordplay on a few threads between members who have messaged each other behind the scenes.

Go for it Jan.  I certainly can't compete with your debating skills.  And I'll just keep shooting my mouth off as usual about oil & gas.  I'm content just being an encouraging cheerleader for the forum.

[Jan van Eck + 7,558]

1 minute ago, Tom Kirkman said:

But I actually want someone else to take the top spot. 

My own game is a bit different than the Leaderboard here (although the Leaderboard game is good feedback for members here).

My own game is to help ensure this Oil Price forum is the most active, best informed, and most read dedicated Oil & Gas forum on the internet.  I'm not Oil Price staff, I just miss the heyday activities of the now defunct Oilpro forum. 

This new Oil Price forum is coming along nicely, with a bit more friendly banter back and forth between members as we get more familiar with the regulars here.  You may have seen some of the silly joking wordplay on a few threads between members who have messaged each other behind the scenes.

Go for it Jan.  I certainly can't compete with your debating skills.  And I'll just keep shooting my mouth off as usual about oil & gas.  I'm content just being an encouraging cheerleader for the forum.

And Tom, it is up to the Members to vote on what they like written.  So, we shall have our little banter, and see how it plays out.  Anyway, always delighted to hear from you!  Don't be a stranger!  I already know I won't catch you, but I'll give you a run for the money!  Cheers.

PS  The Locals have not fired off any fireworks yet, this now being 8:30 PM on the 4th of July, fireworks being outlawed by local ordinance,  but hey, I expect the usual gunfire will erupt around ten, there are no gun laws in Vermont.  Wide open range up here.  Hopefully the guys won't get too drunk while blazing away. Cheers!

[Tom Kirkman + 8,860]

6 minutes ago, Jan van Eck said:

And Tom, it is up to the Members to vote on what they like written.  So, we shall have our little banter, and see how it plays out.  Anyway, always delighted to hear from you!  Don't be a stranger!  I already know I won't catch you, but I'll give you a run for the money!  Cheers.

You'll get there, don't worry.  As mentioned, I certainly can't compete with your debating skills.

8 minutes ago, Jan van Eck said:

PS  The Locals have not fired off any fireworks yet, this now being 8:30 PM on the 4th of July, fireworks being outlawed by local ordinance,  but hey, I expect the usual gunfire will erupt around ten, there are no gun laws in Vermont.  Wide open range up here.  Hopefully the guys won't get too drunk while blazing away. Cheers!

Public service message:

Don't drink and shoot.

Anyway, have fun watching the fireworks tonight, and Happy 4th of July!

[Tom Kirkman + 8,860]

1 hour ago, Tom Kirkman said:

My own game is to help ensure this Oil Price forum is the most active, best informed, and most read dedicated Oil & Gas forum on the internet.  I'm not Oil Price staff, I don't get paid for this, I just miss the heyday activities of the now defunct Oilpro forum, and I love being able to freely shoot my mouth off about oil & gas (LinkedIn has censored me repeatedly in the past, they seem to be lacking a sense of humor).

Just so you guys know what I'm talking about, when I complained last year about being censored on LinkedIn, I received this message on LinkedIn from someone (who shall remain unnamed) who was trying to be helpful.  Scary stuff, in my opinion...

===========================

"Yeah, I am actually connected with a few of the LI engineers and have discovered quite a bit about how the new system works. If it was "only" algorithms, then I would have less concern. Unfortunately, it is the "LI human filterers" that you have to gain a pattern of trust with (even though most don't even realize these "filterers" are in place); therefore, until you show a pattern of normal behavior and generic posts...at least until they divert their focus to something else... then yes, you do run the risk of content "they" don't agree with getting removed or "disappeared" on you.

The best away around it is to post generic content, positive nonchalant stories and other middle of the road topics; that is, until you build a following. Then, after awhile you can become more "you" and throw in the occasional post that aligns with your passion...stuff that your following will latch on too quickly and garner a lot of views / likes / comments. Doing it this way, the LI police can't react and your stuff stays.
Hope that is helpful."

===========================

Eeeeep!

Thanks for the advice, but no, I don't agree.  I have no desire to post  "generic content, positive nonchalant stories and other middle of the road topics"  I want to be free to shoot my mouth off freely about oil & gas (without being a jerk about it) and I want others to feel similarly uninhibited.

In the About Me section of my profile here on Oil Price, I've offered my own advice:

=======================

*** Important !   I do *not* expect others to agree with my opinions.  I tend to have rather unusual opinions about international Oil & Gas.  I *do* hope that readers will fearlessly voice their own views about international oil & gas.

As a former moderator on the Oilpro forum, (and now a moderator here on the Oil Price Community forum) I *encourage* dissent, and *encourage* Freedom of Speech, and *encourage* others to freely voice their views and convictions about oil & gas. 

A diversity of global views is what makes the world a special place.  Conformity is just a slow, painful death of not speaking your mind.  So SPEAK UP.  Please don't be a jerk about about it, though.  If you want others to consider your views, please be willing to consider the views of others.