White House announces 25 percent tariff on Chinese tech goods

Ok. So you invest and risk your capital to make your business better and that should somehow benefit people that you pay to do some stuff? People that you need less and less because that's mostly what raising productivity means?

I think the right way is sealing tax system to efficiently gather tax from businesses so that productivity gains can properly benefit everybody and just tax employees less if you want that gains to improve employees wellbeing. Or even subsidise poor people through income tax credit or basic income.

Comparative advantage is the fundamental principal of economics. It is not a myth.

I'm by no means a trump supporter, but let's play devil's advocate here. Suppose that China's leadership had a long term plan to build up their manufacturing base while wrecking ours. So they set up a monetary policy to keep their own wages suppressed and their goods cheap and they heavily subsidize the industries that they want to establish. American corporations go along with this since in the short term it allows them to bust their unions and reduce labor costs. And it's still US companies that own many of the Chinese factories, so from the CEO's point of view they haven't lost anything. Then years later when the job is done and the industries in question have been captured, the Chinese government kindly informs the us companies that they no long own the plants, they have been nationalized. How else could the us respond other than by its own protectionist policies?

Also if anyone wants to know more one of my vendors sent me an official FAQ and their analysis on why they raised prices. The vendor is an industry leader [they build industrial equipment], is not biased, and is reputable on this type of information. I was sent this last month

QUESTION: What is your justification for the cost increase?

With the pending implementation of the steel tariff under section 232, we have been negatively impacted due to price changes from mills. Mills are primarily focusing in on high profit type grades of material such as 304.

QUESTION: Why are the mills' pricing increasing?

First, the 25% tariff is to be applied to certain foreign material. Consequently, this has provided an avenue for North American mills to raise pricing. Next, the restriction of material from foreign countries has created a shortage of material. The announcement of Section 232 has stopped/slowed the flow of foreign steel, causing the shortage.

QUESTION: Are some countries exempt from the steel tariffs?

Yes, however, not completely. For example, Korea has been restricted to 70% of shipments since 2015. Brazil's exemption has not been finalized. The same is true for other countries. Each country needs to negotiate directly with President Trump for all appeals. NAFTA countries (Mexico and Canada) are currently exempt, but will be subject to the new NAFTA rules, currently in negotiations.

QUESTION : What other variables are impacting pricing?

Nickel has adjusted from the $10K range to the $13K range over the last 4 months. Chrome has adjusted from $1.10 to $1.40 during this same period. Scrap/Iron, which makes up 80% of stainless steel, has adjusted from $325/ ton to $385/ton. Other alloys have had significant adjustments as well. For example, hot rolled steel has adjusted $610/ton in November and $856/ton in March.

QUESTION: Are there other material options?

With the reduction of imports, U.S. mills are focused on the highest revenue products. This includes primarily heavy gauge (thicker) 304. Material grade 201 and 430 are more difficult to produce and/or have higher production costs, along with supply shortage. This results in the mills focusing on higher prof it material. We anticipate further price pressure on certa in grades of materials.

QUESTION: Where does [our vendors company] steel come from?

Our steel comes primarily from U.S. and Mexico; however, we do get some steel through other processors who purchase mat erial from targeted countries. We are also impacted by U.S. mills' price increase/surcharges in response to the Section 232. Many mills have already announced double digit price increases within days of the president ial announcement. In addition, various surcharges will be effective in 02.

QUESTION: Can you purchase your steel from less impacted nations (i.e., European countries)?

There are several variables that limit this opportunity. Product mix makes the change more difficult and time consuming. Due to increased demand, lead time has substantially increased, which result in further price increases in less impacted countries. The cost to produce steel is relatively the same. Labor in Europe mirrors costs in the U.S. Add itionally, currency rates adjust constantly, and the U.S. dollar is currently weaker than the Euro. Shipping costs, lead time and availability also play into consideration.

QUESTION: What is the impact of steel as a percentage of product?

Steel and aluminum amount to a significant% of most of our products. However, we are only passing partial impact to our customer base.

QUESTION: What are [insert vendors name] projections regarding costs as we move into next year?

Tariffs create uncertainty. It is difficu lt to say what changes domestic mills will implement to add capacity. With the current situation, the U.S. Steel Market will maintain a gap in supply and demand. Additional concerns include how fore ign countries will respond to these tariffs; so, the situation could get worse before it gets better.

With all that said, we are doing our best NOT to pass all the cost increases to our customers. Based on current and future projections, we are only passing partial impact to our customers, while working diligently to reduce costs and mitigate supply and lead times thought other means. But, due to the large steel/aluminum content in our products and unprecedented impact and uncertainty in the global supply markets, we are forced to take this measure.

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IN SHORT, even though they might not buy the steel / tariff from China, prices went up globally across the board. Normally vendors raise 3 to 5% annually due to inflation, but because of trumps tariff they were forced to raise it 3 to 5% TWICE within a year. Note some of these pieces of equipment range from 5k to 100k in cost, so 3 to 5% is a huge amount.

Are there no American sources of these components?

The tariffs seem to be targeted at protecting such companies.