Looks like Elon agrees with Trump on Tariffs

[eye.surgeon]

Any thoughts on Elon's tweets to Pres Trump requesting tariffs on China? Seems like he agrees that asymmetric trade and the resultant trade deficits need to be countered by the administration, and that Elon's request fell on deaf ears in the previous administration.

 

[azred]

Tariffs on steel and aluminum are absurd. Musk is talking about an entirely different matter.

 

[Doug_G]

Probably Trump figures he needs China to help influence North Korea.

So instead he will go after his best friends and allies.

China does have a lot of nasty non-tarrif trade barriers. For example, China makes foreign companies team up with local companies and give them majority control. So they just take your intellectual property and screw you over.

 

[Derek Kessler]

Alternate take: He's being a practical businessman. His cars are more expensive in China then they have to be. Chinese cars come to the US and can undercut on cost. It's definitely in his best interests to have competitors with higher costs than his products.

 

[bkp_duke]

I agree with Musk, and with Trump (to a degree).

From a realistic standpoint, China abuses their quasi-free-market economy status to subsidize their products to undercut foreign competitors. Pretty easy to do when you pay your workers $1/h. This is well-established, and is not open for debate (even the far far far left will admit this - and it can be confirmed with multiple sources).

For 20 years, previous administrations have tried to "play nice" and find ways to motivate China to not dump products at or below their already reduced "cost". This policy has flat out failed to yield results, and it's disappointing that it has been tried for so long with negative results.

Additionally, as Musk points out, China tariffs imports from the US heavily, while we do not do the same (his example was autos - they tariff our cars 25%, we tariff theirs 2.5% - but this applies to a whole host of products, not just cars).


I can respect the position the administration has taken, as a businessman. If you have bent over backwards and don't see anything being reciprocated, it's time to take another approach. In this case, we have SIGNIFICANT leverage with China because we buy so much @#$% from them. Much much more than we sell to them.

The tariffs, in a nutshell, are completely fair, and needed to send a wake-up call to foreign powers that we won't just roll over anymore on unfair trade practices.

 

[Doug_G]

Yes, but Canada has not been engaged in unfair trade practices, no matter what Trump says. Oh sure there are a few minor irritants, but those go both ways. The USA has a small trade surplus with Canada in fact. Yet he hammers on us all the time, and is trying to use the steel and aluminum tarrifs as a bludgeon to get a “better” NAFTA deal. Better being unfair to Canada.

 

[Big Dog]

^^fortunately, the Canadians are just REALLY nice people (perhaps, with the exception of a hockey rink).

 

[bkp_duke]

Yes, but Canada has not been engaged in unfair trade practices, no matter what Trump says. Oh sure there are a few minor irritants, but those go both ways. The USA has a small trade surplus with Canada in fact. Yet he hammers on us all the time, and is trying to use the steel and aluminum tarrifs as a bludgeon to get a “better” NAFTA deal. Better being unfair to Canada.

You must have missed the news flash. Canada and Mexico are exempt from the steel and aluminum Tariffs.

 

[Uncle Paul]

China has an agenda. China finances and supports a steel mill. Designed with the latest state of the art technology the stole from their German "business partners" Employ the rabble. Sell your steel the US at far below even your costs of production. Drive the US factories out of business, and put those former employees on government handouts. The now out of business steel company used to be the company that paid all those workers, plus provided the tax moneys to cover the government hand outs. Now they are a drag on the US economy.
Now China has the upper hand. You will pay what they demand for their junky steel, and if you do not treat them nice they will cut off your supplies.

 

[bkp_duke]

Exactly. Strikes me as hypocritical that every other country can put themselves and their people first (as they should), but when the US does that we are chastised and burned in effigy for it.

Treat us fair, we'll treat you fair. Try to walk on us, and you should expect to be stepped upon.

 

[Cosmacelf]

So, yes, Elon does agree with Trump. Nice to see that Elon doesn’t get blinded by ideological thinking.

Unfortunately, China has a lot of good cards to play in this game and they know it. Everyone wants access to the world’s biggest by far market. China is determined to extract the most out foreigners who want to tap this market.

Eventually China will operate like a more normal country, even to the point of reigning in IP theft, but only when it benefits them. When China starts creating lots and lots of IP itself, all of a sudden it will care about it, but not until then. That could take decades.

In the meanwhile, it’ll be interesting to see if Trump can change things a bit. It isn’t all bad now, at least we are getting the benefit of cheap manufactured goods.

 

[FlyF4]

Oh gosh, I hope this won't get into another D and R fight, but it usually does, so I don't comment on one side or the other, except to say, I wish there were a "Political Crap to Fight About" forum so I can ignore it

 

[Doug_G]

You must have missed the news flash. Canada and Mexico are exempt from the steel and aluminum Tariffs.

Temporarily exempted. Trump still wants to use the threat of tariffs as a club, to beat us into giving the USA an unfair advantage in the NAFTA negotiations.

USA has always had the advantage over Canada in these things, because they're the 10,000,000 pound gorilla. Any claim that Canada somehow abuses the US due to a favourable NAFTA deal are absolute nonsense.

 

[bkp_duke]

Temporarily exempted. Trump still wants to use the threat of tariffs as a club, to beat us into giving the USA an unfair advantage in the NAFTA negotiations.

USA has always had the advantage over Canada in these things, because they're the 10,000,000 pound gorilla. Any claim that Canada somehow abuses the US due to a favourable NAFTA deal are absolute nonsense.

Unfair advantage? Please provide specific examples (not editorialization) of exactly what is unfair.

The US has always benefited the LEAST from NAFTA compared to Canada, and a greater extent Mexico.

And I disagree with that last statement - Canada has always had SIGNIFICANT negotiating power for NAFTA because of your oil tar sands (one of the primary exports the US was interested in).

 

[Doug_G]

Unfair advantage? Please provide specific examples (not editorialization) of exactly what is unfair.

The US has always benefited the LEAST from NAFTA compared to Canada, and a greater extent Mexico.

Are you kidding me? What planet are you on? The USA and Canada have pretty balanced trade. Right now the USA has a small trade surplus with Canada - we have the deficit.

The USA never hesitates to slap duties on Canada. They often get overturned because they're not appropriate. The recent Boeing / Bombardier fiasco is a case in point, the USA slapped a 300% (!!!) duty on Bombardier planes, when Boeing didn't even have a product that competed in that segment. It was overturned at a US trade tribunal.

And I disagree with that last statement - Canada has always had SIGNIFICANT negotiating power for NAFTA because of your oil tar sands (one of the primary exports the US was interested in).

That's nonsense. If the USA wants to buy our oil, they're gonna buy our oil. What are we gonna do, say we're not going to sell you oil??? Impossible. Alberta would pretty much explode.

Importing is never difficult, unless your own country makes it so. Trade deals are about fairness for exporters. And by the way, Canada is your biggest customer for exports. We buy lots of American stuff, which creates millions of American jobs. Why are you guys so keen to piss off your best friends and customers?

 

[bkp_duke]

I have relatives in Canada, I'm not keen to piss them off.

But if you cannot recognize the obvious signals of negotiation, then you need to retake Econ 101. Everyone got so used to pansy ass negotiators like Obama, Bush 1 and 2, and Clinton that when someone with real negotiating skills (like him or not, that's what he is good at) comes in and puts some pressure on those on the opposite side of the table, you would think their HEADS would EXPLODE.

Best analysis of NAFTA repercussions I have seen to date:
NAFTA's Winners And Losers

Essentially:
1) Canada-US trade was minimally impacted because there was a already a free trade agreement from 1988 in place between the two.
2) US manufacturing sector was DECIMATED from this deal. US exports to Mexico dropped like a stone during this time-period. Then of course, there is the whole immigration debate (not touching that in this post).
3) Mexico's manufacturing sector grew proportionally to the US losses, driven primarily by substantially cheaper wages. All was not roses for Mexico, which experienced significant currency devaluation which pushed down the rate of GDP growth.

Overall, NAFTA was not, per-se, a completely negative impact entity on the region. GDP for Canada and the US grew at similar levels and total trade increased by 4-fold. Mexico gained a much stronger manufacturing sector, but at the cost of lagging wage growth for it's citizens.

 

[bkp_duke]

Are you kidding me? What planet are you on? The USA and Canada have pretty balanced trade. Right now the USA has a small trade surplus with Canada - we have the deficit.

For the record, currently the US has the deficit in US-Canada Trade
Foreign Trade - U.S. Trade with .

YTD 26.3 Billion in Imports from Canada
YTD 22.6 Billion in Exports to Canada

Just to set the record straight.

 

[deonb]

I have relatives in Canada, I'm not keen to piss them off.

But if you cannot recognize the obvious signals of negotiation, then you need to retake Econ 101.

I think the main problem is actually with people taking Econ 101 and not enough people taking Econ 701.

Trade deals are hard and nuanced. No, it's not in fact, easy to "win" a trade war, since if it was, everybody else would always win it, which would make it by definition... not easy to win.

 

[bkp_duke]

I think the main problem is actually with people taking Econ 101 and not enough people taking Econ 701.

Trade deals are hard and nuanced. No, it's not in fact, easy to "win" a trade war, since if it was, everybody else would always win it, which would make it by definition... not easy to win.

I concur.

I think what is going on, my 0.02 here, is that there are 2 aspects to this "trade war".

1) this is CLASSIC Trump negotiating tactics - take a HARD line and be willing to back it up to get the deal you want. Similar approach to what is going on with North Korea. It's just how the man works if you have taken any time to study his past dealings. He starts with a position that is SO far abreast of what he really wants, that those on the opposite side of the table consider absurd, that when a deal is finally signed that is far more midline, both sides think they got something they wanted. He knows if you start your negotiating position with what you ACTUALLY want, you have no room to give anything up.
2) The actual tariffs signed are impacting MOSTLY to just one country: China. For the time being, Canada and Mexico are exempted, and we don't get that much steel and aluminum from Europe. China has leveraged it's communist suppression of labor and wages to unfairly undercut everyone on prices. This sends a CLEAR SIGNAL to them that we are not going to tolerate this, and are willing to draw a line in the sand and back it up.

 

[Doug_G]

For the record, currently the US has the deficit in US-Canada Trade
Foreign Trade - U.S. Trade with .

YTD 26.3 Billion in Imports from Canada
YTD 22.6 Billion in Exports to Canada

Just to set the record straight.

And to set that record straight:

U.S. claims on trade deficit with Canada inflated by misleading numbers

U.S. Trade Representative Robert Lighthizer has been including goods that pass through Canada but don't originate here as Canadian exports in his export calculations, artificially inflating the United States' trade deficit in goods with Canada.

That explains why the trade deficit figure cited last week by Lighthizer is so out of line with reality, Canadian government sources say.

Basically, the USTR is counting the same goods twice. For example, a Chinese washing machine that passes through the port of Vancouver on its way to the United States is being counted in both the U.S. trade deficit with China and in the U.S. goods deficit with Canada.

More importantly:

Freeland cited the numbers for goods and services combined, which produce a relatively small U.S. surplus. For goods only, the U.S. Department of Commerce and the government of Canada both recorded a small Canadian surplus. Neither side's numbers come close to those cited by Lighthizer.

Any trade imbalance either way is a few percent, and negligible compared to the vast economic damage that would be done by impeding trade between the two countries. In many ways our economies are fully integrated with each other.

You can argue about the numbers until you are blue in the face, but the reality is that Canada-US trade is very close to balanced, and extremely important to the US economy:

Canada | United States Trade Representative

• Canada was the United States' 1st largest goods export market in 2016.
• Canada was the United States' 3rd largest supplier of goods imports in 2016.

We're your #1 best customer. Generally speaking it's not a good idea to beat up on your best customer.