does this mean the price we have to pay for bikes made in China is going up again?

I find it interesting to see a President not knuckle down to a foreign power. The next 2 quarters will be a real test of statesmanship for both countries. Can Trump hold his resolve? I think he will.

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"The great pleasure in life is doing what people say you cannot do."

Kinda weird that the president is bragging on twitter for increasing the taxes people in the US pay for goods. Also, is he claiming increasing taxes is good for the economy?

does this mean the price we have to pay for bikes made in China is going up again?//

You mean the bikes and wetsuits that used to be made in China, now made in Vietnam, and by the same Chinese companies that just moved their production over there?? It is going to be a game of whack-a-mole, tax china, they pop up in Vietnam, tax them, it will be somewhere else with cheap labor. Of course Trump is too stupid to see this, and of course if he did, he wouldn't really care. He is happy if he gets to crow about something, whether it is a win for us or not. I put a short on the market a few days ago, so I hope Kay is right and I can cash it out soon..

This morning Dow futures were up nearly 1% (over 200 points). They now show down over 350 points, so a 550+ poi t swing. Thanks President Dumbass.

Did you miss the part where I said it was Chinese companies still making all this stuff?? Ok, the locals get a job and get their $10 a day, but all that money is still going back to Chinese companies. And in the end, they may even make more money this way, Chinese labor has been getting more expensive since they now have an actual middle class.

As to their thievery, yes something has to be done. Lets try and use a scalpel instead of a sledgehammer though..

Really? They were open this morning? Must have changed trading hours on me this weekend.

Pro tip...Dow is for retail muppets

Pro tip. Know that futures open Sunday night... They are called pre-market for a reason.

Oh, and I guess me and my 2 comma balance are Muppets. Thanks Kermit.

Weird flex, but Ok.

Can anyone that has money in the market, except shorts, complain about the trajectory since Trump has taken office? Say what you want about Everything else he has done, but complaining about a 550 point swing in pre-market DOW (which windy correctly pointed out is Fool’s gold) while reaping its rewards is a bit rich, no?

Didn't you mean to say "since Obama took office"?

I haven’t said many positive things about Trump so you nailed this one.

Did I complain about the point swing? No. I prefer to buy my etfs and mutual funds on a discount. He is Pres. Dumbass for intersecting pointless commentary via twitter. It merely intersects unnecessary volatility into the market.

A) that's chump change from a trading perspective (not a personal dig on you, that's a good healthy balance to have, but being worth X doesn't make you knowledgeable or not a muppet) [this preceding parenthetical brought to you by the windy initiative to be nicer]
B) you didn't know the reference
C) you are retail
D) you referenced the dow

I just want to thank Trump for giving me such a quick out of my short on the S&P. I sold this morning when it was down 33, and it looks like the usual tweet overreaction, now coming back a bit off the lows of the day. Back to 100% out of the market, I still just dont trust this guy, or this market..

I presume it will go back to its grinding up for awhile, will be looking for another short oppertunity once we have some more up days to possible records...

I wonder if he's dusting off those tweets about breaking 25,000 again.

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I'm beginning to think that we are much more fucked than I thought.

Dow 30
26,069.77

This isn't about money. It's about power and the endgame is to use a sledgehammer (e.g. completely disengage from trade). Everything leading up to that point is just political theater.

You don't think we should tax imports? Great. I agree and so do most mainstream economists. However, the onus here is really on China. The chart below doesn't even come close to estimating the "effective" tariff rate when you take into account non-tariff barriers imposed by China. Even if you did account for that, it wouldn't come close to accounting for IP theft and forced technology transfer. The onus here is really on China, not the U.S.

...not that it matters. There won't be a deal.

Worth reading in it's entirety:

Reuters Exclusive: China backtracked on almost all aspects of U.S. trade deal

Shit, I took off my short too soon. I should have had more faith in the Don.. Big crash thus far today, but at least I dont have any money in the market at the moment. And I'm not buying back in just yet either, I trust our president to keep up the good work he is doing, and I will get my eventual buying opportunity, perhaps 15% from where we are now...

Crash? Doth protest too much

I can't understand why investors are concerned. I mean China is paying billions in tariffs to the US, amIrite? Stocks should be up bigly.

Well if it closes at the low this morning later today, it would be one of the worst days during the trump reign, no??? But crash was used out of context for the market, I agree. But the day is not over...(-;

I think during trumps tenor as president there have been like 5 of the biggest 10 single drops of dow POINTS (not percentage) of all time. I think the same number is the same for gains (that coincide with the drops).

What is going to be VERY interesting is if anyone can figure out who is actually making money of these things.

Someone smart has to have found some correlation on these things.

I'd be much more concerned about oil and the nonsense in the Persian Gulf, just saying.

I mean China is paying billions in tariffs to the US, amIrite?

Yes and according to Trump, the tariffs that China pays directly to the U.S can be used to pay down debt...

I think Trump should do everyone a favour and just stop tweeting about anything to do with economics...and umm foreign policy, or healthcare. But if the government needs to build a hotel or casino and don't mind more debt, he's your man.

Which is absolutely pointless.

Or the tariffs don't take effect until June. If you're going to be chicken little at least be accurate.

Yes and according to Trump, the tariffs that China pays directly to the U.S can be used to pay down debt...



He also thinks an increase in the value of the market, directly decreases the deficit.

Worthy of it's own thread.

Why aren't more Americans concerned about the retaliatory tariffs that the US WILL BE PAYING DIRECTLY TO CHINA?!?!?!?

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How does Danny Hart sit down with balls that big?

I'm just quoting Trump. Are you saying China isn't paying billions in tariffs?

Is this a serious question? My sarcasm meter has been acting up lately so i am a little off.

No, not serious.

I'd be much more concerned about oil and the nonsense in the Persian Gulf, just saying. //

I'm guessing that is being factored into todays drop in the market. Perhaps not fully yet, but I just looked and the S&P is now down 70pts, so perhaps the oil situation is bleeding into the tariffs Trump is tweeting about...Of course oil will go up, but the cost of just about everything will go up too with it. Maybe time to get some oil stocks??

This morning Trump tweeted:

“China should not retaliate -- will only get worse!”

2 hours later China announced new tariffs on US products.

Today we'll get details on US plans to impose a 25% tariff on all remaining imports from China - an additional $300bn worth of goods.

("Trade wars are good and easy to win!")

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How does Danny Hart sit down with balls that big?

Here is an analysis of the tariffs' effects so far, by the center-right, libertarian-leaning magazine Reason:

https://reason.com/...in-2018-trade-recap/

They conclude:

"In the end, America may very well "win" the trade war—or, more likely, it may "lose" less badly than other countries. Still, it's plain to see that it hasn't been good, and it won't be easy to recover."

Meanwhile the USMCA now looks unlikely to be ratified...

On a related note, how pissed are you if you got in the Uber IPO a couple days ago? They couldn't have timed a worse entry into the market. I was not inclined to be even slightly interested in this offering, but companies like this have a big following that is loyal to them, like Tesla, until they aren't..

Lyft has been in the same boat since it debuted, guess a 10 year horizon on any of these guys actually making money is a pill to hard to swallow, unlike the Amazon model...

Why aren't more Americans concerned about the retaliatory tariffs that the US WILL BE PAYING DIRECTLY TO CHINA?!?!?!?

Because close to half of them believe Trump's explanations of how tariffs work...

That’s what I am talking about. If you are stupid enough to think that China is paying into the coffers of the US shouldn’t you be concerned that the US is paying into China’s coffers?

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How does Danny Hart sit down with balls that big?

No dummy. Because our tariffs are bigger than theirs, they are paying more!

In all seriousness, if Bernie was president and threatening to take $15bn of tariff funds to buy US crops and ship them to impoverished countries as humanitarian aid, the Trumpsters here would be having a shitfit.

Where are all the free market libertarians?

I'm saying no one is paying tariffs yet

Where are all the free market libertarians?


They're not in the vast majority of the Republican Party that supports Trump so they would be in the Libertarian party, the slim minority of Republicans who don't support Trump and likely some in the Democratic party.

The only thing that's for sure is that we, the average American, are going to lose. Our portfolios got a 3% haircut today. Loss. If and when the tariffs go into effect, we pay those as increased cost of goods. Loss. I don't know, I think the whole thing is lose-lose. Nobody has blinked yet, and we have to hope one of them does.

The goods that China will/may tariff are net-sum-zero in nature. Tariff U.S oil? Fine, China will buy somebody else's supply and that somebody else will U.S oil. Same goes for most ag commodities but the hitch with ag commodities is that there's a 1-2 year lag for supplier rotation. This works through drawing down on domestic ag inventories. E.g. let's say that China has 1,000,000 bushels of soy in storage and they normally buy 1,000,000 bushels of soy per year from the U.S. China says "screw you U.S." and buys soy from Brazil instead. However they won't buy 1,000,000 bushels because there won't be that much excess supply available. China might buy 400,000 bushels from Brazil, 200,000 bushels from the U.S, and draw down their own inventories by 400,000 bushels. The next year, China outbids the Philippines or Indonesia for the soy from Brazil which forces the Philippines or Indonesia to buy their Soy from the U.S. (presumably at a lower price than the Brazilian soy) but, again, this isn't all done in a lump some, there will be a draw down in their own inventories.

After 2-3 years, the trading patterns reconfigure themselves and importing countries begin rebuilding their inventories.

The problem here in the U.S. is that it's the straw that broke the U.S. Agricultural Camel's back and that camel was well down the road heading toward the oasis of the never-ending commodity super cycle (don't worry, a bunch of people followed the U.S. down that same road). The operating environment for decades has been toward consolidation and "mega-farms" for lack of a better word. Then came the proto-monopolies of Potash, Monsanto, and John Deere. The final stake in the coffin came with the last round of land acquisitions circa 2011 where $10,000/acre became the norm for land in places like Iowa and Indiana (which is CRAZY expensive). So even though the U.S. boasts some of the best croplands and *THE* lowest transportation costs in the world, farmers managed to back themselves into a corner on cost structure right as it became apparent that demand wouldn't grow forever. China's retaliatory tariffs kind of just brought this to a head quicker than it otherwise would have.

You might want to do some research.... (wow)

The proposed tariffs don't hit to June 1... if you are talking just tariff in general then yes there are some in place.

US importers have already been paying tariffs on Chinese goods (at 10% on about USD250bn worth of Chinese goods - USD50bn since last July/August, and USD200bn since 24 September 2018). These are being raised to 25% on 1 June. In addition, Trump is threatening to impose 25% tariffs on the remaining USD300bn worth of Chinese goods imported by US firms.

So far, the goods targeted are higher up the supply chain, in order to lessen the effect on US consumers. But 25% tariffs on those goods would have a deeper effect, and according to Bloomberg Economics, would knock 0.9ppts off US GDP. Further, if Trump applied 25% tariffs to all Chinese goods imported to the US, they estimate it would knock 1.5 ppts off US GDP growth.

US farmers are already feeling the retaliatory effects by China. China has diverted much of their buying to Brazil and other sources, and soy prices fell dramatically because of all the excess US supply on the market. Soy prices collapsed from 1050 to 850 last summer, and in the past month have fallen sharply again from 900 to 790. Hence why Trump is now tweeting about buying US agricultural goods with the tariffs (that US companies are actually paying), and then shipping the products to poor countries as humanitarian aid. It's a desperate attempt to win support from the farmers.

No, I'm talking about the tariffs Trump has already imposed on Chinese goods imported to the US at 10%, which will go up to 25% on 1 June. See above post.

Sorry I thought it was implied I meant the new tariffs. But yes, good analysis.

The price of agricultural land in the midwest soared north of $10,000/acre circa 2011-2012. Farmers anchored their expectations around that time when a "perfect storm" created a global supply shortage. As such, farmers right now still have their expectations anchored in that time frame. It's a pretty common cognitive mistake to make regardless of the product, asset, or line of work.

Something I don’t get is what is the end goal for trump? Vs end goal for China?

Trump I think can potentially win his trade war but that will have to come after he wins re-election. But what even is winning the trade war. Returning to what was previously in place with potentially minor concessions on China’s part, which could have been taken care of with other trade deals.

China doesn’t seem to have to do much for the next two years. Because if trump loses, the next president can just renegotiate.

As someone already said, I don't think anyone "wins" this trade war. Someone might lose less badly, but nobody is going to win.

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How does Danny Hart sit down with balls that big?

Trump is the vessel but at the end of the day this is national security policy. China f**ked the U.S. good and hard on trade for years and nobody said a word. What changed? China started mass producing nuclear submarines, started developing aircraft carriers and other means of force projection, and literally announced that it wanted to become *the* global hegemony.

China is now a radioactive political hot potato in the U.S. It doesn’t matter who or what party sits in office. Truth be told, a deal might be less likely with a Democrat in office because of the issue of 1,000,000+ minority Muslims in concentra.... ahem... “re-education” camps. A Democrat wouldn’t be able to make a deal without addressing that issue and China would see that as an intrusion into domestic affairs.

Victory for the U.S. is to decouple from China, spark a massive wave of corporate bankruptcies in China (they have an internal dollar funding crisis), and pivot manufacturing away from China to SE Asia and Mexico. A pivot of manufacturing away from China to SE Asia will act to “contain” China by simultaneously depriving China of income, enriching said SE Asian nations, and improving relations between said SE Asian nations and the U.S. That last point is key. So long as the U.S. has a significant military presence in SE Asia China will not be capable of projecting force abroad.

I know very little about trade arrangements. But wasnt the TPP supposed to curtail china (while boosting japan/SE asia)?

That was the original goal but we lost control of TPP pretty quickly and, frankly, it morphed into a monster that would have required the U.S. to give up sovereignty on a host of issues. From the perspective of the U.S, unilateral trade deals are most advantageous and, frankly, it’s probably the best way to actually get deals done.

 

Dear Mr. President...

Wow! Therein the source of all our ills. 175 footwear manufacturers. Or more accurately foot wear branders.

Well it's just one consumer products industry that would be impacted if 25% tariffs were applied to the remaining USD300bn worth of imported goods from China. Not to say it would be a disaster for the US economy, but it would certainly negatively impact US growth in a more meaningful way than the current tariffs are.

sorry should have pinked it. Continuing in pink, Glad to see my Buster Brown's and Tom Mcann's were not on the list. I did note my old Chuck's Converse brand made it as well as my Sperry topsiders.

Trade wars are a bitch! But then I am just not buying much shit so I am not quite feeling it.

Guess we could have a resurgence in the cobbler industry. Hard to outsource that.

so now we're barefoot and pregnant

Don't have time to dig it up as I'm at a conference but I posted a chart a few days ago that showed the top 10 export categories from China and the top 10 export categories from Mexico and the change in the absolute value of those categories over time. I *think* that footwear would fall under the broader category of "apparel" which has been about flat from China for the last five or six years but growth of "apparel" imports from Mexico has absolutely exploded over the same period of time.

Will consumers pay some of the tariff? Yes. All 25%? Hell no. In product categories where Chinese producers face competition from abroad (Mexico is a prime example because of proximity, preferential access, and labor costs) the manufacturers will have to absorb a good chunk of the tariffs or face a loss of market share. You also have to remember that in an given product category it's extremely rare for China to completely dominate the category as a source of production or completely dominate the value chain (that is to say China looms large but they're not the whole market). tl;dr;dwt: a 25% tariff isn't going to lead to a 25% increase in prices or necessarily a permanent price increase.

Most of these apparel "branders" are bitching because they know that they might have to choose a market, U.S. or China, rather than have access to both. Most of these "branders" should have seen the writing on the wall in 2013 when a quarrel between Japan and China over the Senkaku islands flared up and Japanese companies had to decamp manufacturing en-mass from China. If you were the CEO/COO/etc. of a company like Adidas and you didn't notice that incident and act accordingly to diversify your supply chain (especially considering the labor price pressures were already there)... well, that's really poor leadership.

Don’t disagree, and imports from China represent only a small portion of the US economy. But if Trump imposes 25% tariffs on the remaining USD300bn worth of goods from China not currently tariffed (which include a lot more consumer goods), it will have a not insignificant effect on the US economy. I’ve seen estimates starting at 0.3ppts of GDP (on top of the effects of the existing tariffs).

Eh... don't put too much weight in those estimates. In many cases those are my piers making the estimates. I know how they think and I know how their models are built :)

Somewhere in the 0.25-0.5% of GDP is probably a reasonable estimate. Anyone calling for >0.5% (and I even saw one estimate calling for 1.5%) of GDP is biasing and loading their models intentionally. Also, let's be honest: measuring something like GDP is a bit of a crapshoot. The BLS et al do a pretty good job of being consistent with their methodology and objective when they update it but the idea that we can actually measure the economy with that sort of precision is kind of absurd and I think that's where things get misleading. We're not talking about a fuel gauge or a speedometer or interferometer here. GDP is an estimate and first revisions are commonly in the 0.5% range and then third revisions sometimes bring the total revision to 0.75% or more (IIRC I've seen as high as 1.75% for a quarter).

...so what we are measuring is noisy. The likely impact of the tariffs on the entire economy of the U.S. is well within our error of measurement. Which isn't to say there isn't an impact but it is rather small and three years from now we might not be able to actually say we can see a clear a definitive effect in the data. Not quite on point but relevant: the problem everyone knows about economic models is that they cannot predict the future. The problem not everyone knows about economic models is that they cannot predict the past.

As an aside, many domestic services have seen inflation rates far above the inflation rates for finished goods (foreign or domestic.... and aside to the aside: for a long time our primary import from China was, basically, deflation). If people want to get pissed off about inflation they should be pissed about the cost of medical care or education which are about as far removed from the Chinese tariffs as one could get.

This is a total joke for a category that is tremendously overpriced to begin with. How many of us (ex Triathletes) remember 10 years ago when we could get running shoes for $70 and last years model for $40. Now those same shoes (think Gel Kayano) are $120 for last years model and $150 for the current model. Shoe companies are a joke and a rip off. They make the shoes in China for next to nothing and charge way too much.

I hope they feel the pain that I feel every time I need new shoes.... (Can you tell that I think they already have the necessary margins to absorb this.....

They may try, but the fact is they are complaining because they know they will lose business and customers if they jack up the prices anymore. They are already at a tipping point. As mentioned they are getting great margins right now. So they only ones that would really feel the pain are the stockholders.

Was this the moment US-China trade talks fell apart?

(Open link in a private window to see full story)

https://www.scmp.com/...ade-talks-fell-apart

Whatever the truth of who is to blame, it doesn't bode well for a swift end to the stand off.

EU is also resisting any efforts to limit auto imports to the US. Can't see a deal there in the next six months.