Two Wars Are About To Break Out Over Border Adjustment Tax

Tyler Durden's picture

When it comes to the future of the US economy, capital markets, the strength of the dollar, and tax policy in general, few proposals are likely to have as much of an impact as the border adjustment tax, or BAT, which as we profiled before, could have a significant impact on the value of the dollar, pushing it as much as 15% higher, and leading to dramatic changes in global trade patterns. As a reminder, House speaker Paul Ryan is the primary advocate of the BAT, arguing this effective $1.2 trillion tax on imports is the only way Congress can pay for Trump's proposed massive tax cuts.

Since the BAT stands to greatly benefit exporters, who would pay no taxes on exports, thereby dramatically boosting their bottom line, it is obvious why export-focused US businesses are heavily for the proposal. Among them are the "American Made Coalition," a coalition of more than 25 American businesses. Two corporate titans playing a leading role in the push for BAT are GE, which has hosted coalition partners at its D.C. offices recently, as well as Boeing, which also has much at stake in this fight. Other industries include manufacturing, high tech, software, medical device production, agriculture, energy production, biopharmaceuticals and information services.

Furthermore, in addition to Paul Ryan and the House GOP leadership, Steve Bannon has also opined in favor of the border tax and, in recent days. Trump himself has dismissed the cornerstone of the House GOP plan as "too complicated" and has been touting a 35% levy on imports as an alternative. Yet his spokesman appeared to put the tax back in play last week by proposing a 20% tax on goods from Mexico and "other countries we have a trade deficit with" to pay for a border wall. So far, Trump's position on BAT is "fluid."

Meanwhile, as AP reports, a powerful lobbying force has emerged on the other side of the argument, and assures a war in the coming months as the fate of the border tax adjustment is determined in Congress.

Meet the "Americans for Affordable Products", a coalition of more than 100 retailers including Wal-Mart and Target as well as key trade associations, aimed at fighting a Republican proposal on how imports get taxed, a measure they believe would harm their businesses.

The National Retail Federation, along with the American International Automobile Dealers Association, the National Grocers Association and others are joining forces to form Americans for Affordable Products, which will run a campaign to educate consumers and show lawmakers that the so-called Border Adjusted Tax plan would lead to higher prices of as much as 20 percent on everyday items including clothing, food and even gas. The diversified group, which also includes such companies as Nike, Best Buy, luxury conglomerate LVMH and Dollar General, is trying to make their opposition heard even while Congress and the president try to sort out exactly what adjustments to put forth.

"There's a rush to get this done in Congress. We want to make sure our voices are heard," said David French, chief lobbyist for the National Retail Federation, which has been dispatching members to meet with different levels of the new administration as well as lawmakers. Details of the consumer campaign are still being worked out, according to a spokeswoman at the retail trade group.

Since nearly all retail items bought by U.S. shoppers are either wholly or partly produced overseas, as companies have sought the cheapest way to make goods, the risk of an inflationary shock as prices are ultimately passed through to consumers is all too real. And with online competition and shoppers trained to find the best deals, U.S. retailers haven't had the power to raise prices on many goods for several years.

"I'm losing sleep. I am scared out of my mind," said Rick Woldenberg, CEO of Learning Resources, which has signed on to the coalition. It is a family-owned company based in Vernon Hills, Illinois that makes educational toys and employs 150 people in the U.S.  He estimates that under the GOP plan his federal tax rate would soar to 165 percent from 39.6 percent, he would have to raise prices by 10 percent to 15 percent to stay viable, and would have to lay off employees.

Retail industry leaders have gone so far as to "describe it as an existential threat," said Stephen Lamar, executive vice president at the American Apparel & Footwear Association, another member of the  coalition. "When they crunch the numbers, it really affects things like solvency and profits."

Lamar said companies would likely have to pass along higher prices to shoppers, who wouldn't tolerate it. Companies say they also would have to try to squeeze suppliers for more savings and fear they might even have to lay off workers or close stores. He also said a shirt label saying "Made in China," doesn't tell the whole story. Seventy percent of the value of the garment supports U.S jobs in areas like design and logistics, he said.

More improtantly, other groups also oppose the border-adjusted tax, including Americans for Prosperity, a conservative organization backed by billionaires Charles and David Koch, who typically donate generously to Republican campaigns. And with such wealthy backers, it is only logical that this particular war will be waged where it counts: in Congress, and it is there that a problem for the Border Tax emerges.

While both sides of the fight have gamed it out the same way: they think Ryan and the House Ways and Means chair Kevin Brady can probably squeeze the plan through the House, the Senate is a different ball game. As Axios notes, even if Trump loudly supports border adjustability — and that's a big if — he'll have a tough time convincing Senators who fear him far less than House members do. And senators from states home to big box retailers, those with the most to lose should the law pass, have compelling reasons to oppose border adjustability.

GOP Senators being targeted by opponents of border adjustability:

  • Arkansas Senators Tom Cotton and John Boozman (Walmart)
  • Georgia Senator Johnny Isakson (Home Depot)
  • North Carolina Senators Richard Burr and Thom Tillis (Lowe's)

GOP Senators who have already said they don't like border adjustability:

  • Senator David Perdue of Georgia is a former CEO of Dollar General who has a deep understanding of the effects of border adjustment on retail. He said on CNBC: "In my view, it's regressive. It just hammers low-income and middle-income consumers, and it really doesn't foster growth."
  • Senator Mike Lee of Utah told Koch network donors: "This ends up becoming a VAT-like substance and I think it would end up having a lot of the negative characteristics of both a VAT and a tariff ... I really don't like it."
  • Senator John Cornyn of Texas is known to be concerned about border adjustment's effect on gasoline prices. Last week he tweeted: "Many unanswered questions about proposed "border adjustment" tax."

Since tax reform will likely be done through reconciliation, which requires a majority vote, Republicans can only afford to lose two senators on border adjustability.

Ultimately, the biggest question for both sides of this fight is whether Trump will weigh in forcefully on behalf of border adjustment. Trump's chief strategist Steve Bannon is on board and believes it's an American nationalist tax, however Trump has expressed less interest in the past. And the House GOP — supported by an outside coalition — is wisely making their pitch in nationalist terms. Axios cites a source, who favors border adjustment, as saying: "It is safe to say that the retail giants and the Koch brothers have jumped out to a head-start in this debate, but the political environment is tailor-made for the manufacturers and a strong 'American jobs' message."

* * *

Finally, if the BAT does ultimately pass, leading to major changes for US trade and tax policy, its adverse impact on the rest of the world would be far greater. In a new note by Deutsche Bank's George Saravelos and Robin Winkler, the economists have calculated the amount of trade with the U.S. that countries stand to lose if they face a 20% penalty at the border. Mexico is the obvious biggest loser, but Canada and Asian manufacturing economies including Vietnam, Malaysia and Thailand would also be in line for a big hit. In fact, anyone who exports to the US would see a major hit to their GDP almost immediately.

For those who are unfamiliar with the basis, Bloomberg explains that a border tax essentially places a levy on imported goods with the aim of narrowing the trade deficit and making the exports of domestic producers more competitive. The extent to which a country's trade with the U.S. would be impacted is partly determined by how elastic demand for their products in the U.S. is. If the elasticity is higher, they suffer more. In other words, if Taiwanese-made electrical machinery sold in the U.S. suddenly becomes, say, 10 percent more expensive -- after suppliers absorb some of the tax themselves -- and potential buyers can find a domestic substitute easily, then price becomes the defining factor. Bad luck for the Taiwanese, in this example.

While the program would help the U.S. cut its trade deficit and on its own terms would likely be successful, it may not play well with trading partners.

For one, U.K. Prime Minister Theresa May should take an interest, as without a special deal the U.K. stands to suffer a serious reversal, according to Winkler and Saravelos. As demand for the U.K.'s exports to the U.S. is highly elastic, a border tax could turn a surplus of around $1 billion into a deficit of around $19 billion, almost a fifth of gross trade between the two countries.

And, as DB explained back in December, what would all this do to the dollar? Push it up, through increased demand for U.S. products and reduced American demand for goods from the rest of the world, although not immediately and not in a predictable way, the report argues.  Even if a rise in the U.S. currency were to offset some of the competitive advantages that domestic exporters were to gain through the tax, the policy would still “severely undermine bilateral trade relations,” Winkler and Saravelos write.

In short, BAT would lead to a trade war due to a deterioration in terms of trade, even if Trump never actually launched a trade war.

As DB concludes, "while currency adjustment would be gradual and incomplete, even a fraction of the theoretically implied 25% adjustment would be material for the dollar and would leave ample scope for border tax adjustments to severely undermine bilateral trade relations. Mexico, Canada and Asia would be most severely hit by US border taxes while commodity exporters, Latam, and most of Europe would be less affected. The magnitudes of the damage would be enormous in our view."

* * *

To summarize: two wars are about to, or have already broken out, over the Border Adjustment Tax: one is domestic, and involves exporter (GE and Boeing) vs importer (WalMart and Koch Brothers) alliances and trade groups; this war will shift into the Senate, where Republicans can afford to lose at most 2 Senators, yet where as many as 6 are on the fence already (with 3 voicing a negative opinion toward BAT). The second war is one which would break out after the BAT is passed, and it would hammer - at least in the first few years - America's biggest trading partners. And since the impact of the latter would be to force prices of the vast majority of retail goods sold in the US to soar, leading to a big jump in core inflation, eventually leading to a surge in the US Dollar - even if one ignores the diffuse effects and pervasive on global trade - the BAT would have an immediate impact on Fed policy, interest rates, and ultimately, prices of risk assets.

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DownWithYogaPants's picture

Von Firstenberg!

I guess I have to say boo hoo the Masters of the Universe don't approve.

What can I say I'm swimmin' in dough.  I just got a million dollhair bonus.

Looney's picture

 

in addition to Paul Ryan…

I hear that Paul Ryan is vehemently against the Border Adjustment Tax on Tutus.

His speakership alone has costed us all $2 Trillion (1 Trillion Tutus).   ;-)

Looney

Paul Kersey's picture

If it looks like a VAT, walks like a VAT and quacks like a VAT, it's a VAT in duck's clothing.  Yep, this is a VAT.  Now the more than 75% of Americans, who are living from paycheck to paycheck, can pay something like 20% more for most of the things they  will be forced buy on credit or not buy at all.  Making America Great Again, or making the Main Street America depression the Great Depression again?  It's good to be an overlord in a neofeudalistic economy.

TruthHammer's picture

yah, better to keep paying artificially low prices that were never sustainable in the first place until the Dollar fails, and the whole world slides into a Dark Age.

I mean, a tax on imports, is definitely the same as the VATs other countires have, you know, the ones that have it instead of a sales tax...

 

Maximum logic achieved:

-import tax/tariffs = sales tax,

-people paying what things actually cost instead of national debt subsidized slave labor prices (and possibly preventing the greatest economic collapse in history) = evil anti-main street policy

 

I am sure Main Street will thank you when they have 80% unemployment, the USD revalued at 10 cents to the current dollar and denominated in IMF SDRs, and Greek Style asset seizures on their savings.... YAY!!! Keep the debt-funded faux economy party going, Huzzah Main Street....

max2205's picture

All I buy is TP and jello so I am good 

Mr 9x19's picture

a gun 200usd in america is, with import taxe and stupid laws 650euro in germany and 800euro in france ( mav88 )

 

in couple of years usa will not be able to export anyhting, even if gun is made turquey, brasil or whatever.

 

keep that in mind, that's why the world is going down, with robotics even relocalizating of plants/factory will not lead to unemployment, it will just mean that is will be really made in the soil it tells it come from, but it won't change to 2 simple facts :

  • raw materias used is still shit
  • price is still crazy.
TheMeatTrapper's picture

Most Americans are not living paycheck to paycheck, they are living government check to government check.

We can live without cheap Walmart  crap. Well all be better off.

Archibald Buttle's picture

we will be better off when the cheap crap from china at least has some competition from a reasonably expensive american made product that lasts a few years instead of a few uses. the less of my tax FRNs that go to pay for war or backstopping trigglypuff's certain to be defaulted on student loans, the better.

U4 eee aaa's picture

except that now American business will be able to compete which will create more business for them and enable them to hire more people. So the Americans living paycheck to paycheck will get more and better paychecks. This will allow them to pay the higher rates. More money will stay in the economy instead of flooding out of the country to other workers and off shore billionaire bank accounts. You need to look at both sides of the equation for the positive synergies that this move will create in order to show a more balanced effect

Burnbright's picture

Not a VAT tax. VAT is on all goods. A BAT tax wouldn't tax domestic product. It's really a tariff but what ever. It would be a good thing imho because other countries use tariffs against us  and they don't have rights for their workers.

Businesses competting in an inviornment where other businesses can send production in countries that have no standards for employment or regulation and not hsve to pay tariffs on sending goods back are going to take their manufacturing base to the least cost prohibitive.

zhandax's picture

Bingo. There are NOT two alternatives proposed here. There is 1) using a border adjustment tax to reshore our manufacturing and 2) sit on our ass and don't do anything.

The corporations who have made out like bandits stripping this country of jobs like things fine the way they are.

pachanguero's picture

The whores on Wall Street are crying in their beer....too bad assholes

Paul Kersey's picture

"Whores on Wall Street, you mean like this whore?

At the January 19 confirmation hearing, Senator Ron Wyden outlined Mnuchin’s dubious past as follows:

“Mr. Mnuchin’s career began in trading the financial products that brought on the housing crash and the Great Recession. After nearly two decades at Goldman Sachs, he left in 2002 and joined a hedge fund. In 2004, he spun off a hedge fund of his own, Dune Capital. It was only a few lackluster years before Dune began to wind down its investments in 2008.

“In early 2009, Mr. Mnuchin led a group of investors that purchased a bank called IndyMac, renaming it OneWest. OneWest was truly unique. While Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the street faster than just about anybody else around.

“While he was CEO, a OneWest vice president admitted in a court proceeding to ‘robo-signing’ upward of 750 foreclosure documents a week. She spent less than 30 seconds on each, and in fact, she had shortened her signature to speed the process along. Investigations found that the bank frequently mishandled documents and skipped over reviewing them. All it took to plunge families into the nightmare of potentially losing their homes was 30 seconds of sloppy paperwork and a few haphazard signatures.

“These kinds of tactics were in use between 2009 and 2014, a period during which the bank foreclosed on more than 35,000 homes. ‘Widow foreclosures’ on reverse mortgages – OneWest did more of those than anybody else. The bank defends its record on loan modifications, but it was found guilty of an illegal practice known as ‘dual tracking.’ One bank department tells homeowners to stop making payments so they can pursue modification, while another department presses on and hurtles them into foreclosure anyway.”

It also emerged during Mnuchin’s confirmation hearing that while he was in charge, OneWest had foreclosed illegally on active-duty U.S. military service members.

At the close of the confirmation hearing, Senator Wyden added the following:

“Mr. Mnuchin, a month ago you signed documents and an affidavit that omitted the Cayman Island fund, almost $100 million of real estate, six shell companies and a hedge fund in Anguilla. This was not self-corrected. The only reason it came to light was my staff found it and told you it had to be corrected.”

Citizen_x's picture

 

He should have been arrested and tried for "robo-signing".  Others, large campaign contributors types, also weren't arrested and tried.

A poster on ZH, very well versed in the "mortgage meltdown" scheme's, would be the best commentator on Mnuchen misdeeds.  We are living in interesting times; congressional crooks vs financial crooks in a fake news soap opera.

 

TruthHammer's picture

Having been on zerohedge since before that happened, we have fallen a long way in terms of intelligent posts and dynamic conversations.

Screaming illuminati confirmed just because someone is connected to the Banking world, is pretty irrelevant.

Trump was never going appoint someone without expertize in the FIELD of which they will be overseeing, and anyone thinkging otherwise was simply fooling themselves.

It was always going to by a high-achieving, talented, and intelligent person part of the "machine".  The question is, are they someone who will help Trump to achieve HIS agenda, regardless of whatever else they might think/feel.

Trump has laid his agenda out clearly, and he will follow through on it, and his Treas Sec will implement it.

Those Cruzbot and Nevertrumptards who Cassandra'd all election long that Trump was lying and wouldnt do what he said, are taking it in the face bigly now.  The fear-mongering is irrelevant.  Trump's agenda will be implemented, those who dont like it can sack up, cause they lost the election, those pushing the "secret agenda" narratives will join them in being wrong about everything as well.

CrankyCurmudgeon's picture

So because he signed on with Trump, we're supposed to ignore that he is blatantly a scumwad? If a swamp creature signs on with Trump we are to automatically assume that he has changed his ways?

Bullshit. With the tiniest bit of effort Trump could have found a treasury secretary who was not a scumwad.

Mustafa Kemal's picture

"“Mr. Mnuchin, a month ago you signed documents and an affidavit that omitted the Cayman Island fund, almost $100 million of real estate, six shell companies and a hedge fund in Anguilla. "

Ooops, I forgot! Im sorry

Wahooo's picture

Birds of a feather, the orange clown team.

Obadiah's picture

Maybe its just a Trump gambit that needs more time, so he can negoiate indivually with each country even steven?

BigFatUglyBubble's picture

Won't work.  Business will be too skittish to build plants here because they law could be repealed if Trump gets voted out next election.  Also, you will just have to do a tariff, not a BAT, because people will just order things directly from other countries online (ebay) and brick and mortar will get decimated.  Also, if the dollar goes up and we are dicking them, foreign countries will be inclined to dump our treasuries. 

zhandax's picture

People get tripped up in linguistics. There are not two plans here and there is no difference in a BAT and a tariff.

Dumping something increasing in value, unless you think the trend is reversing, is something done to make a statement (and loose money).

shimmy's picture

Sounds like a great plan: tax imports which means prices will go up for Americans who are already broke and this will just make it worse for them. Just be sure to try and brainwash the idiots into thinking this isn't just a tax on the American sheeple. And if/when the American sheeple quit buying as much of this stuff at stores, the stores will then probably lay off workers.  

I am starting to think maybe Trump is a trojan horse to fuck the country up rather than to make it "great" again. Hopefully that isn't the case.

BigFatUglyBubble's picture

I was 90% sure he was, but when he celebrated DOW20K I became 98% sure.

TradingTroll's picture

They are broke because they don't have jobs. Get it yet??

It only seems to work because the true cost of offshoring is masked by the $10trl in new debt Obama added the past 8yrs.

If that debt wasn't added, there would have been riots in the streets and no one could afford to buy anything no matter if it was made offshore or not.

U4 eee aaa's picture

Yes, exactly. When you are spending money you've taken from the next three generations you can make anything look good.

PONIES FOR EVERONE!

(yes, I know that's a typo)

Bismarckrises's picture

This would be awesome if factories would bring back their manufacturing back to the US

poeg's picture

You cats do realize why there's a Toyota plant in America? Subaru? Honda????

U4 eee aaa's picture

but are they triple shifting?

USTerminator's picture

The BAT will accomplish several things that benefit American people:

1. BAT to generate that tax revenue to fund the taxcut that compensates for higher price entirely funded by foreigner. Assume the revenue neutral then there is net impact of buying power of zero to American people.

2. BAT will force price increase on import products and make domestic more competitive so the domestic companies will take advantage of this and make more products domestically and hire more American workers who will have more money to buy more products increase economic activities exponentially.

3. US export will improve significantly that requires more domestically investment and hiring more US workers to fullfil the demand. These American workers will have more money to buy more products increase economic activities exponentially.

4. The unemployed and welfare will get get buying power due to higher cost and available more jobs will decide to get a job to improve the financial and cost of welfare and social services will go down.

5. More jobs and less unemployment will force the companies to raise the wage for all employees.

6. All the retails cry fault but there impact is nil. If the product cost the same across the country then the consummers still need to buy them, just like when gasoline increase in price consummers will continue to buy since there is no choice except for non essential and save money instead which is a good thing. Eventually the domestic producers will pick up and the price will be equalized eventually.

There is really very little downside for US domestic companies and consummers. The biggest loser will be foreign companies export to US and also US companies make products oversea and import back to US such as Apple, Microsoft, Cisco... and mostly tech, textile, argiculture products .....

 

U4 eee aaa's picture

Yes, YES!

Give that boy a gold star (soon to be made in America with real gold)

MattPSU02's picture

I think you missed the fact that our raw material manufacturers underwent a massive merger and plant shuttering phase.   You name it- steel, paper, glass, lumber/MDF, plastic resins, chemicals/gases, etc. etc. all reduced capacity, and retooled so that they could just focus on higher end customers with margin.   If you think that they will suddenly decide to restart a glass or chemical company to meet higher demand, you are wrong.  I've been on the other end of the phone with these people, and they are truly disinterested in you unless you are willing to pay top dollar.  They have a certain amount of capacity, and if you aren't buying the high margin stuff, you get back of the line status, or maybe no goods at all.   What will happen is prices will go up and be passed onto the consumers for most items, and those remaining few factories will get more money.  Only certain items will be made here again.  Plus, many consumer goods are discretionary, and small changes in price will have big changes in sales.  

poeg's picture

Hell, used to be able to buy a Tonka Truck made in North America that a kid could play with out doors without breaking the damned thing. Now I'm paying $50 at a garage sale and that's still a bargain because both grandkids can play with it in the yard for longer than it takes one of them to toss it at the other and have the wheels break off.

 

DocBerg's picture

All of our trading partners have these taxes.  Some, like China even have lots of local content requirements.  So, why is this proposal considered so radical? 

Some years back when I was foolish enough to own a classic British Triumph motorcycle, I would order parts, (and lots of them) from Norman Hyde in Britain.  Their price sheet had several different prices in it for each item, depending on what VAT was to be paid.  I got my stuff for a lot less than the locals did.  Needless to say, incoming Harleys were taxed to the max.  So again, why is this proposal considered so radical?  It merely levels a rather lopsided playing field.

New American Revolution's picture

How does a jump in core inflation make the dollar stronger unless rates rise commensurately?  Or is that it?  But wouldn't the core inflation drop consumption suppressing prices?  Or does that come later?  If so, how much later?  We could have an economist come in and lie to us, but it looks like a chain of unintended consequences to me (i.e. a can of worms).  Perfect for the mind of a Nancy Pelosi where we can pass it so we can find out what's in it...  after all, this IS the DC way, isn't it?  I can tell you the only sure answer... we have change the entire system.  It's like going from DC to AC and not ACdueC.  American has to go from being a nation ruled by it's government to one where the people rule over that government.  The change required is much deeper than that which is contemplated, but it would solve all the problems.  It's called Liberty and it comes with intended consequences.  Serfs Up America!

www.scienceofliberty.us

Dark Daze's picture
Dark Daze (not verified) Feb 2, 2017 10:13 PM

''A 15% rise in the us dollar'? Based on what, fantasy?

I'll tell you what will happen. First, they will most certainly try to kill trump, and 'they' have virtually unlimited resources. If that doesnt work then they will just bite the bullet and stop selling to you. Dont believe me? Well, i'm in a well known south american country right now and no one will accept us dollars anymore; not cab drivers, not hookers, not stores and not even most banks. I think you have totally underestimated the blowback you are going to get.

So you can, if you wish, get the jews to jimmy the exchange markets by buying or selling more paper, but, like venezuela, it will be the black market that sets the real rate and i can assure you, the real rate will be maybe 20 cents, if not lower. Just based on the amount of dollars already printed by the Fed, the true value of you dollar in the exchange markets is 12 cents now. It wont take very long at all before the entire world just says fuck it and fuck you, and do their own deals. China is all set up and running anyhow, so really, who fucking needs you anyhow?

I couldn't even pay for a two dollar cab ride with your fucking frn's. They know you are going to explode and no on wants to be left holding worthless paper.

Now that may be a desireable turn of events for the hard money crowd, but if your money is effectively boycotted, as it seems to be, you are in for a world of hurt because they wont even trade with you in us dollars - too much risk.

As for my country, the quoted loss in trade amounts to peanuts in the long run. What wont be so easy for you is two things. 1. This will be seen as out and out theft by stealth and 2. Your reputation (such as it is) will be destroyed.

I agree with a lot of what trump is doing, BUT, you dont upend the entire world economic structure in a week; and all the little fucking slime balls in congress are going along for the ride because they are basically soul-less pussies, including Ryan, especially Ryan.

Like i've said before, you are fucking going down, trump or no trump. Now you get to see what its like to live in a country where 300 million people cant get the basics anymore. Venezuela eh?

Hahahahahahaha.

MattPSU02's picture

My employer has a large factory in Mexico.  What people do not realize is that we buy most of our raw materials and components in the United States, then bring them over the border.  We even recycle millions of pounds of plastic that otherwise would be wasted.  Our products are low cost discretionary consumer goods that would not sell well if our prices went up.  Believe me, if you hit us with a 20% tariff, prices are going up.  Our suppliers will be injured, most of them in the USA.  

There is another disturbing trend going on right now.  What happened is that many raw material suppliers, like paper mills, lumber, glass, chemicals, etc. etc. have been merging and then shuttering plants, in a desperate attempt to reduce supply and drive up costs.  Conveniently, their Chinese counterparts just underwent a brutal series of plant shutdowns, initiated by the government to reduce emissions. We looked at bringing some work back to the US or to Mexico, and away from China suppliers.  Well, when we went to quote the raw materials here in the US, the suppliers literally could not be bothered by us.  I've never seen so many "no-quotes" and lame excuses.  Each of the remaining mills basically now tailors to higher end manufacturers that have the margin, and they don't want to even talk to anyone else.  If people think that work will come back here to the US, they are out of their minds.  

Xena fobe's picture

I think I can survive without your product.  If your business model is so weak, it can't survive without paying $3 per day for labor, it should go BK anyway.

Herdee's picture

The American Government is bust from decades of war. They're afraid to print. Listen to them talk, everything has to be "revenue neutral" meaning that to upgrade the military or infrastructure the money has to come from somewhere else. That's because thee's not enough tax money coming in to offset an increased interest rate cost. Where's hundreds of billions going to come from to pay increased costs on the $20 trillion deficit? The demographics are killing them and so are the costs associated with older people's health. There's also an epidemic of diabetes in America.

BitchesBetterRecognize's picture

look at that bullshit coming from the very people in government that are placed there "suppostly" to fight the citizens interests........

but you know what? - The people can well take back the power from those motherfucking corporations - "with your wallet" - just don't fucking buy their shit anymore - "buy LOCAL" - i.e. ALL my entire food supply is purchased at my local grocery store-which only sells LOCAL & ORGANIC food ! folks there are awesome, always kind and helpful- so I gladly spend my CASH on them knowing I'm supporting a LOCAL business Own by a LOCAL, who employs LOCALS, and the money stays LOCAL- instead of helping a fucking CEO to get another zero on his fucking multi-million dollar bonus check.

Just stop buying from those doublemotherfucking retail chains- !!!!BUY LOCAL!!!!!    

JailBanksters's picture

That's all very well and done but if you want strawberries in december you ain't going to get them from the USA.

They have to come from outside the USA.

As for Organic, Pfft, it doesn't mean what you think it means.

It doesn't mean it was made without pesticides, fertilizers. It means it was not made using Synthetic Pesticides, Fertilizers.

 

But what if you wanted a Mop, you could pay $10 for Made in USA for one or buy 2 for $5 made in China.

Which one are you going to Buy ?, Now if Trump bumps up the Chineese made one to $10, then you might as well buy the Made in the USA, right right.

But now the Am Made one, don't have get any better or cheaper at making them, but the chineese do if they want to stay in the game.

There is a short term win, but long term America will loose.

 

JailBanksters's picture

BAT VAT GST call it whatever you like, but what it means is the Consumer,

that's you will be paying more to prop up a dwindling economy and any local manufactoring that's left do not have to get any better at manufactoring in order to compete.

 

DrDre's picture

This is Herbert Hoover all over again. Trade wars and protectionism always create more problems. Not that I expect our politicians to know or understand history ...

Xena fobe's picture

Thanks for this article ZH.  Go ahead make my day.  I wont spend a dime if prices increase. 

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) Feb 3, 2017 1:24 AM

Nobody ever questions why a nation like the USA even needs trade. We don't.

Tax the shit out of every import until every job comes back home.

fedupwhiteguy's picture

The U.S. has been protecting its industry with import tariffs since the beginning of this nations' creation.

 

50% of women have a man already picked out as plan b if their current relationship fails. (http://www.dailymail.co.uk/femail/article-2769593/HALF-women-fall-partne...)

60% of women admit to having an affair. (http://magazine.foxnews.com/love/cheating-statistics-do-men-cheat-more-w...)

69% of wives initiate divorce. (http://www.huffingtonpost.com/entry/women-more-likely-than-men-to-initia...)

10% of children are false paternity. (http://disinfo.com/2011/02/one-out-of-ten-people-werent-fathered-by-the-...)

95% of genetic counsellors lie about paternity. (http://thelibertarianrepublic.com/paternity-fraud-is-it-legal-to-lie-abo...)

41% of 1st marriages end in divorce. (https://www.mckinleyirvin.com/Family-Law-Blog/2012/October/32-Shocking-D...)
60% of 2nd marriages end in divorce.
73% of 3rd marriages end in divorce.

82.2% of women granted child custody. (http://www.census.gov/prod/2011pubs/p60-240.pdf)

Child support payments can be extended beyond 18 years of age. (http://dadsdivorce.com/articles/child-support-age-of-emancipation-in-you...)

Alimony payments continue even when women cohabitate with another man. (http://farzadlaw.com/california-divorce/will-my-wife-get-spousal-support...)

Palimony payments forced on men who had live-in girlfriends. (https://www.reference.com/government-politics/states-palimony-laws-ee508...)

Prenups are thrown out in favor of fairness. (http://www.dailymail.co.uk/news/article-3525528/Judges-say-ignore-pre-nu...)

Divorce devastates men financially (paying for 2 households) & emotionally (loss of access to children). (https://eternalbachelor.wordpress.com/2007/07/23/back-to-basics-divorce-...)

Posponing intercourse until 26+ avoids life's pitfalls (cock carousel riders are bad news all around). (https://youtu.be/um3EmS9DKsI?t=581)

Virgin brides divorce less than cock carousel riders. (http://socialpathology.blogspot.com/2010/09/virgin-bride.html)

Women start losing their Sexual Market Value at 20 y.o. (http://www.hookingupsmart.com/2013/10/31/relationshipstrategies/conclusi...)

Women gain weight after marriage. (http://www.thehealthsite.com/fitness/5-reasons-why-women-gain-weight-aft...)

Frequency of sex drops off after marriage. (https://pairedlife.com/physical-intimacy/Reasons-Why-Sex-Decreases-After...)

Woman are just crazy for a man's money. (https://au.answers.yahoo.com/question/index?qid=20130625025358AAcogQy)

Sperm donors can be forced to pay child support. (http://www.nydailynews.com/life-style/health/sperm-donor-sued-child-supp...)