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Conventional Wisdom On Tariffs Shattered: Import Prices Decline, Year Over Year.

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posted on Jun, 16 2019 @ 05:42 PM
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Well, like the title says, wall street was wrong. Democrats and Republicans were wrong. I was wrong. We are now over a year into president Trump's tariffs. Yet, year over year, the price of imports has declined. Take a look for yourself.


Yep. Prices are down 1.4% on imports. Contrast this with 2017, before the tariffs, that year our import prices rose 4.5%.

Goods from China, the country taking the brunt of our tariffs, were a major player in this decrease.



The price index for imports from China edged down 0.1 percent in May following a 0.2-percent drop the previous month. Import prices from China have not recorded a monthly advance since the index rose 0.1 percent in May 2018


This is mostly due to a strong dollar. The dollar has been advancing as more money pours into it for investment. Seems the protectionist policies of the trump administration don't have a downside.

China is in a very tough spot right now, a spot they're not familiar with. They're holding a losing hand. Trump gave them an ultimatum, show up to G20 ready to negotiate (which will be seen as weakness), or prepare for pain (increased tariffs). The backdrop for china is that the chinese economy is tumbling down and they're heading into a summit where they can put a stop to it, but to do so they will have to appear to bow to the US. The backdrop for trump and the US is that our economy is soaring, our import prices are dropping, and there's no need for trump to make an unfavorable deal.

The G20 is going to be lit.
edit on 16-6-2019 by Dfairlite because: (no reason given)




posted on Jun, 16 2019 @ 05:54 PM
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WHAT !!

Prices down because of Tariffs ??

💥🤣💥



posted on Jun, 16 2019 @ 05:54 PM
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a reply to: Dfairlite

Don't feel bad.. I was quite wrong as well.

I had figured a little short term pain for a long term gain was acceptable...

With what you just posted what is really happening is most acceptable.

S&F and I hope the G20 gets some things resolved.




posted on Jun, 16 2019 @ 06:24 PM
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Both country has enough land mass to support itself. Nothing going to happen until someone decides to use naval blockade. US ehm.. Wait for hurricane season. Its not over yet.
edit on 16-6-2019 by makemap because: (no reason given)



posted on Jun, 16 2019 @ 06:26 PM
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Laissez-faire, my derrière .


Good post op .



posted on Jun, 16 2019 @ 06:36 PM
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Just FYI, those numbers don’t include tariffs.

www.bls.gov...


Do Import/Export Price Indexes include import duties?
Answer: An import duty is a tax or tariff collected on imports, typically by a country's Customs agency. U.S import duties would be placed on imports coming into the United States whereas other countries' import duties would be placed on exports from the United States. The prices for the items used to calculate Import/Export Price Indexes exclude duties. One of the primary purposes of the indexes is to deflate the foreign trade component of national accounts which specifically exclude taxes when measuring Gross Domestic Product (GDP) accounts.



posted on Jun, 16 2019 @ 06:49 PM
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originally posted by: nataylor
Just FYI, those numbers don’t include tariffs.

www.bls.gov...


Do Import/Export Price Indexes include import duties?
Answer: An import duty is a tax or tariff collected on imports, typically by a country's Customs agency. U.S import duties would be placed on imports coming into the United States whereas other countries' import duties would be placed on exports from the United States. The prices for the items used to calculate Import/Export Price Indexes exclude duties. One of the primary purposes of the indexes is to deflate the foreign trade component of national accounts which specifically exclude taxes when measuring Gross Domestic Product (GDP) accounts.


While this is true, that's really besides the point. Remember, the theory went: Tariff's were going to make us go elsewhere for our goods, places that cost more than china (because a 5% price increase by buying from malaysia is preferrable to a 10% price increase due to tariffs). The fact that import costs have declined would motion towards tariffs having zero affect on prices overall, at the consumer end. But what the data I posted shows, is that wherever we are going for goods, they're costing less than they were a year ago.

ETA: The strong dollar is mostly responsible for this, so while it may have normally (pre-tariff) cost more to go to malaysia than china, due to the dollar increasing in value, it's actually costing less.

ETA2:
Inflation should show the effect of tariffs (if we were just buying from china because nowhere was economical enough to counteract the tariffs), but it too is down. In 2017 we had an inflation rate of 2.1%. In 2018 we had an inflation rate of 1.9% So far this year we are around 1.6%. All while wages are up.
edit on 16-6-2019 by Dfairlite because: (no reason given)



posted on Jun, 16 2019 @ 07:07 PM
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originally posted by: Dfairlite

But what the data I posted shows, is that wherever we are going for goods, they're costing less than they were a year ago.


Well, no. The actual total costs being paid by importers is higher, since it includes the cost of goods plus the costs of the tariffs.

Also, they break out the numbers by locality of origin here: www.bls.gov...

If you’re looking for goods from, say, Canada, the index is up 5.6%.

Similarly, breakouts by North American Industry Classification System sectors here: www.bls.gov...

If you’re importing goods from the paper manufacturing sector, you’re paying 3.4% more (plus whatever the tariffs are).



posted on Jun, 16 2019 @ 07:10 PM
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a reply to: nataylor



Well, no. The actual total costs being paid by importers is higher, since it includes the cost of goods plus the costs of the tariffs.


Then explain inflation dropping.

Yes, some places/industries are up others are down. Overall, they are down.



posted on Jun, 16 2019 @ 08:04 PM
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originally posted by: Dfairlite

originally posted by: nataylor
Just FYI, those numbers don’t include tariffs.

www.bls.gov...


Do Import/Export Price Indexes include import duties?
Answer: An import duty is a tax or tariff collected on imports, typically by a country's Customs agency. U.S import duties would be placed on imports coming into the United States whereas other countries' import duties would be placed on exports from the United States. The prices for the items used to calculate Import/Export Price Indexes exclude duties. One of the primary purposes of the indexes is to deflate the foreign trade component of national accounts which specifically exclude taxes when measuring Gross Domestic Product (GDP) accounts.


While this is true, that's really besides the point. Remember, the theory went: Tariff's were going to make us go elsewhere for our goods, places that cost more than china.......


I thought the theory was that tariffs were supposed to bring manufacturing jobs back to the US?

If tariffs cause us to go somewhere other than China (like Vietnam or Indonesia) where labor costs are higher than they are in China, we will end up paying more for imported products AND we won't restore manufacturing jobs to the US.

Maybe this is just some more of that 4-dimensional chess that I don't quite understand.



posted on Jun, 16 2019 @ 09:15 PM
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originally posted by: 1947boomer

originally posted by: Dfairlite

originally posted by: nataylor
Just FYI, those numbers don’t include tariffs.

www.bls.gov...


Do Import/Export Price Indexes include import duties?
Answer: An import duty is a tax or tariff collected on imports, typically by a country's Customs agency. U.S import duties would be placed on imports coming into the United States whereas other countries' import duties would be placed on exports from the United States. The prices for the items used to calculate Import/Export Price Indexes exclude duties. One of the primary purposes of the indexes is to deflate the foreign trade component of national accounts which specifically exclude taxes when measuring Gross Domestic Product (GDP) accounts.


While this is true, that's really besides the point. Remember, the theory went: Tariff's were going to make us go elsewhere for our goods, places that cost more than china.......


I thought the theory was that tariffs were supposed to bring manufacturing jobs back to the US?

If tariffs cause us to go somewhere other than China (like Vietnam or Indonesia) where labor costs are higher than they are in China, we will end up paying more for imported products AND we won't restore manufacturing jobs to the US.

Maybe this is just some more of that 4-dimensional chess that I don't quite understand.


~sigh~

If it is cheaper for Harley Davidson to build one of their ever-crappier bikes in the US and sell it here then it does to build them elsewhere and pay a tariff it sell it here, then where will they build?

You are forgetting about the "we built it but who do we sell it to for a profit" part.

On a checkers note and not a 4D chess note, China really needs us as a market because if they don't have us they are screwed.

So if we (short term) force all the businesses out of China to elsewhere, then they will make a fair deal or belly up.

Viet Nam or Indonesia would be a place to park a manufacturing market for a bit, but you wouldn't want to actually stay there as a manufacturer.

Because supply lines.

This isn't really even chess.

It's just common sense.



posted on Jun, 16 2019 @ 10:02 PM
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Trump math?

Lower demand means lower prices.

Did the prices go down for the end user? No.

Did the jobs come here? No.



posted on Jun, 16 2019 @ 10:13 PM
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a reply to: Dfairlite

Are you only considering the government given inflation rate?

Its low because demand is low due to majority of consumers being tapped out.

www.experian.com...

www.barrons.com...

www.marketwatch.com...

Inflation is low because no one is buying. Verifiable facts you wont find on MSM.

Hence the Fed may drop rates more than once this year to give people easier access to credit.



posted on Jun, 17 2019 @ 07:44 AM
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a reply to: toysforadults



Its low because demand is low due to majority of consumers being tapped out. www.experian.com... www.barrons.com... www.marketwatch.com...


Consumer debt is high because interest rates are still extremely low. I rarely carry a balance, but over the last year I have because it's a zero interest card (I have never seen more zero interest offers for long periods of time, 20+ months, in my life). I have the cash to pay it off, but I'll use other people's money when it's free over using my own. When borrowing is cheap, people do it more.



Inflation is low because no one is buying.


That's simply untrue. Earnings growth for the year is on track to increase by about 3.5% Revenues for the 1st quarter were up an average of 4.9%, see here.



Hence the Fed may drop rates more than once this year to give people easier access to credit.


Now, that doesn't really make sense, does it? I mean, just a moment ago you were posting links to how out of hand debt is. Now you're saying we need more of it and aren't getting it because it isn't cheap enough? The fed is going to lower rates because inflation is trending down. Just like they raised rates when inflation was rising. Trump was right when he said they overdid it. They should never do more than two rate raises or cuts in a year, the fact that they did four was absurd. So now we're going to oscillate for a while until equilibrium is reached.

ETA:
Housing has suffered due to the increased interest rates, there's no doubt about that. However, once again that is due to the fed. They were protecting obama and trying to keep the economy afloat for him so they had to keep rates artificially low. This led to fast rising home prices. Then people got priced out of houses by the rapid fire rate increases from 2017 to 2019.
edit on 17-6-2019 by Dfairlite because: (no reason given)



posted on Jun, 17 2019 @ 10:12 AM
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a reply to: Dfairlite

That's great! Prices down mostly because of a strong dollar but also raising goverment revenue and giving Domestic manufacturers a better competitive landscape (once tariffs have been added into the cost of goods.)

In an ideal scenario, tariffs put the market price of goods from other nations on par with the price of comparable domestic goods, raising enough revenue to eliminate income taxes (both individual and corporate.)

Consumers can then choose products they want without unfair macro-economic differences playing a part. Maybe I want a cheaper, lower-quality Chinese flashlight, or maybe I want a more expensive set of German ball-bearing casters for the workbench drawers I'm building. But the cost difference would be based more on the quality of the product, rather than the wages of those making it.

Competition would favor both better quality and more efficient production. It would favor innovation. Done properly, there would be no advantage (or disadvantage) based on what wages are in different nations.

This, of course, would all be a very complex dance, difficult to manage, but anything closer to this ideal would be beneficial - probably to all except for those who benefit from cheap labor (i.e. ownership of manufacturers in countries where wages are extremely low.) Its not that it would cut them out either. They would just have to make their products as desirable as others, and not just because of low costs.



posted on Jun, 17 2019 @ 10:23 AM
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originally posted by: Dfairlite
Consumer debt is high because interest rates are still extremely low. I rarely carry a balance, but over the last year I have because it's a zero interest card (I have never seen more zero interest offers for long periods of time, 20+ months, in my life). I have the cash to pay it off, but I'll use other people's money when it's free over using my own. When borrowing is cheap, people do it more.


Same. I recently redid my kitchen, I had the money set aside but between what I got at Home Depot and the appliance company I barely laid out any cash. The two of them gave me an interest free loan for two years so I could use my money for more profitable investments.



posted on Jun, 17 2019 @ 10:30 AM
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Gas down $.50 a gallon in the last 4 weeks around here. $2.35 This morning.




posted on Jun, 17 2019 @ 10:30 AM
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Gas down $.50 a gallon in the last 4 weeks around here. $2.35 This morning.




posted on Jun, 17 2019 @ 10:31 AM
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Gas down $.50 a gallon in the last 4 weeks around here. $2.35 This morning.




posted on Jun, 17 2019 @ 10:32 AM
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4 That might be a personal record!!!


edit on 17-6-2019 by mikell because: (no reason given)



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