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Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

wsj.com

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Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#81

Post by tesseract »

cperciva wrote: post #53
liztsai wrote: post #46

This is a simple duty arbitrage play. For anyone wondering what he actually did wrong, there are a few key points to note. Aluminum (and all materials, really) is exported and imported and duties are paid on the basis of the HS code and (if there is a trade agreement to be taken advantage of) certificates of origin (COO) along with the usual shipping docs. China is inclined to tax exports of primary aluminum because…

A similar, and perhaps more amusing, situation happened in Canada a few years ago. We have a 245.5% import tariff on cheese (why? Because dairy farmers are more important than poor people, apparently) but there was a much lower tax on "food preparations", including packaged pizza toppings. So companies would package up "pizza topping kits" in the USA, import them to Canada as "food preparations"... and then remove th…

This kind of waste seems common and from an outside perspective very frustrating.

There is a famous example where Ford imported cargo vans from Europe to the US with disposable seats in them so they would be taxed (more cheaply) as passenger vans. I think the tax in question was referred to as the "chicken tax".

The situation is a bit different but China's value-added tax scheme combined with the prevalence of factories in bonded export zones leads to a lot of useless shipping of goods (or components of goods) from China to Hong Kong (or another nearby foreign jurisdiction) and back for no good reason other than to avoid tax. I'm sure this works out great for the local freight industry...

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#82

Post by nyolfen »

cperciva wrote: post #70
gdwatson wrote: post #67

Earlier quoted context omitted.

Isn't the whole point of free trade agreements to prevent those sorts of tariffs? Does NAFTA not cover cheese?

Yes, that is the point. No, NAFTA does not cover importing dairy products into Canada; similarly the USA kept tariffs on some dairy products as well as sugar and peanuts. Unfortunately pretty much all "free trade" deals turn out to be "free trade except for a small number of politically well-connected industries". :-(

Kvetching by free trade acolytes about 'real' free market capitalism reminds me strongly of leftists bickering about the USSR not actually being communist.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#83

Post by ittekimasu »

CountSessine wrote: post #62
JoeAltmaier wrote: post #4

Earlier quoted context omitted.

Its not clear he's done anything wrong. Shipping Aluminum to Mexico? What's the problem.

That's what I was thinking. If China wants to subsidize American manufacturing by selling us cheap aluminum, what's the problem? This is is bad if you're part of the tiny American aluminum mining and extraction business, but it's probably pretty fantastic if you're part of the huge and important industries making anything with aluminum, like cars and airplanes. Why do we want to protect primary industries when histor…

Do you know the story of how the British went from petty traders to "greatness"?

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#84

Post by ArkyBeagle »

Kenji wrote: post #55
cperciva wrote: post #53

Earlier quoted context omitted.

A similar, and perhaps more amusing, situation happened in Canada a few years ago. We have a 245.5% import tariff on cheese (why? Because dairy farmers are more important than poor people, apparently) but there was a much lower tax on "food preparations", including packaged pizza toppings. So companies would package up "pizza topping kits" in the USA, import them to Canada as "food preparations"... and then remove th…

I loathe farmer subsidies. I have no idea why our government gives farmers so much money and so many advantages - nobody in our society really benefits from those incredible spendings and it's a significant fraction of our state budget.

It's a way of bandlimiting (lowpass filtering?) price change through mild overproduction.

It works because overproducing food costs less than the risk of market shortage transients. It's one of those Catch-22 moments where you feel in awe of the genius of it.

I am very sorry it is a significant fraction of your state budget. Given the nature of the risk profile your state should not be underwriting this risk.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#85

Post by ArkyBeagle »

hkmurakami wrote: post #59
oxryly1 wrote: post #57

Earlier quoted context omitted.

Some (likely outdated) idea to do with treating farming capacity as a strategic reserve.

There's some rogue political wing in Japan that wants to have 100% capacity for domestic food production to meet domestic consumption needs. They've been pushing for subsidies for years to achieve "food independence", whatever that means. I imagine their true goal is to just pad their pockets.

It really seems to more of a sacrifice to some god of the Apocalypse to me. Although given the history of Japan since the Meiji period, nothing should surprise me.

Medieval Japanese culture is just so achingly beautiful it does not surprise me that people have such love fr it.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#86

Post by ArkyBeagle »

oxryly1 wrote: post #66
cheez wrote: post #60

Earlier quoted context omitted.

Why would it be outdated?

The days of sieges and naval blockades are behind us now. Probably.

Then there are those "aircraft carriers made of sand" in the South China Seas.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#87

Post by [deleted] »

Kenji wrote: post #55
cperciva wrote: post #53

Earlier quoted context omitted.

A similar, and perhaps more amusing, situation happened in Canada a few years ago. We have a 245.5% import tariff on cheese (why? Because dairy farmers are more important than poor people, apparently) but there was a much lower tax on "food preparations", including packaged pizza toppings. So companies would package up "pizza topping kits" in the USA, import them to Canada as "food preparations"... and then remove th…

I loathe farmer subsidies. I have no idea why our government gives farmers so much money and so many advantages - nobody in our society really benefits from those incredible spendings and it's a significant fraction of our state budget.

[deleted]

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#88

Post by [deleted] »

at-fates-hands wrote: post #28
rrggrr wrote: post #17

Earlier quoted context omitted.

This is correct. Three factors drove the bubble in aluminum and other commodities: Increased energy expense, speculative and fraudulent investment, and some increased consumption. However, three factors are likely to continue to drive aluminum and other commodities under the mean: Lack of confidence, spectacular debt burdens and deflationary trends across commodity price inputs. Its likely to be years before a stable…

I remember working at a bike shop around this time and within 6 months all of our bikes went up in price like $50-100. I had no idea what was going on and asked one of corporate office guys what the deal was. He said between India and China, they had both put huge strains on steel, aluminum and titanium and it was causing a shortage for bike manufacturers, so they were raising their prices since the prices for these…

[deleted]

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#90

Post by 627467 »

seanmcdirmid wrote: post #29
627467 wrote: post #22

Earlier quoted context omitted.

A genuine question: why is this dumping, but importing any other electronics (say any modern computer, cellphone, appliances) not so?

Selling at below cost is dumping. Selling at above cost is not.

I understand. But how do we know the real cost when the country we are talking about is China? Even in transparent economies like the EU, you find convoluted ways to subsidize companies (or convoluted ways to accuse companies of receiving subsidies - depending where you stand in these issues)
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