Tariff like it's 1897


#441

Is this the thread for basically all economic news? Because the indicators are starting to flash red.


#442

I have a Fusion Hybrid and I’m pretty happy with it, so I wasn’t too happy with Ford dropping the line.

That said, I think the main reason Ford didn’t need a bailout was that they secured a big line of credit just before the crisis while GM and Chrysler were having to roll over their loans at a moment when no one felt safe loaning out money.

In Canada, mortgage loans are just 4 or 5 years terms, at the end of which you have to refinance. I’ve always wondered what exactly happens if there is a big credit crisis when the mortgage comes up for renewal. That seems to be what happened to GM (adding “and you were just laid off” to the analogy).


#443

That is precisely the reason. Two years before the crisis hit, the CEO of the time (who was brought in from Boeing) basically mortgaged all of Ford’s assets for $18 billion to begin the overhaul. The assets included factories, office buildings, equipment, patents, trademarks, everything.


#444

I know when gas prices were higher you saw places like South Dakota going crazy over oil. But when prices dropped didn’t that production drop because the price was under what they needed to make a profit? And if there is weaker global demand doesn’t that just show that a good economy here would be the outlier, not the norm. And thus less likely to be sustained, especially with the tariffs?


#445

It’s certainly not likely to be sustained, if only because most of the rest of the world is heading into a downturn. But that doesn’t mean US demand is currently lower than it appears.


#446

I’m coming in late to the conversation, but many of the points raised above don’t really hold a lot a water. GM is not getting out of the small-car business, they’re just dropping the “sedan” class. They’ll still be making plenty of gas-efficient small vehicles… just not in the US.

Sedans have been on a decline for a long while now. Most US customers who might be interested in a 4-door vehicle would prefer an SUV-style body if the cost and mileage were equivalent… which they typically are.

The other point to make here is that Trump is (probably unintentionally) right in his tweets above. The US protects the small-truck market (which includes many SUVs) with the 25% “chicken tax” tariff. That means that not only do US customers prefer light trucks to cars, but that US automakers are almost totally protected from meaningful foreign competition in that area… while they are not protected from car sales. Since light truck sales in the US are almost always greater than 50% of all vehicle sales and since they only have to compete against each other, it makes perfect economic sense to concentrate the vast majority of their efforts on that market.

You can absolutely do this! It’s not easy or cheap, but there are lots of hobbyist gear-heads who do “kit cars” and do some really cool mods.

Your basic point holds because it is FAR from cost-effective to build your own road-legal vehicle from stock parts, but should you ever find yourself with access to a full vehicle garage…


#447

My wife has a cousin who built his own car from a kit. He did such a good job the company had him show the car in Las Vegas at a car show. But this guy has his own fully stocked massive garage next to his house. Two levels, solar paneled. Not something the average guy would have.


#448

Which was where I was going with it. I mean the tools required to assemble a PC are: a screwdriver. Maybe.
The tools required to assemble a car are countless, expensive and include a building.


#449

Trump hits the eject button.


#450

This means we won the trade war, right? Big deal. I heard they are easy to win.


#451


#452

It’s gonna be another laughable 1/2% increase like NAFTA.

So when we get rid of that stupid 10% regressive tax, whoops tariff! we’re all paying?


#453

Having put out (or at least dampened) one fire, Trump naturally starts another:




#454

The constitution is really clear the legislative branch has the power. NAFTA was ratified by Congress.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

I know Congress has (foolish IMO) delegated some powers to the executive branch. But they can clearly reverse that delegation.


#455

And all they have to do is act. Congress, actually do something intelligent. Sure, it would be logical, but freakin McConnell is still in charge in the Senate. I’ll believe it when I see it.


#456

I don’t really know how I feel about the Trump/Xi deal. Unfortunately, I really feel like we need things to get bad sooner rather than later while the idiots can correctly see directly that Trump is to blame. This deal, even though temporary, shows that Trump’s bullying works and can gets the results, which just emboldens him and his base.


#457

I disagree that he’s gotten results. China didn’t agree to anything concrete except for the delay. China got a lot (60+ days to prepare) without giving much up.

China will probably deliver on a bit more imports as promised, but all of the other issues with state capitalism that are the core US complaints don’t have any substance at all. What this is is Trump getting rolled by Xi because of his SPX obsession.

It’s funny, because Trump’s trade agenda is much closer to a traditional Democrats’ (it’s why he won, IMO), but liberals have switched to being pro trade just as rapidly as conservatives have switched to being anti-trade - Trump really has upended the traditional stances of both parties in this respect.


#458

It seems a lot closer to the “deal” with Europe, which was basically smoke and mirrors, than the NAFTA rewrite, which was actually a good deal for the US, if pretty modest. The main difference, it seems to me, is that China’s government is actually in a position to direct imports, unlike the EU. But without further detail on what is covered by the agreement, I suspect it’s like the EU and soya beans — an economically meaningless gesture to flatter Trump’s obsession with trade balances.


#459

If I’ve learned anything it’s about optics, and the base will be sold as this being an example of getting results, as all the articles I’ve seen says that this 90 day delay came with a promise to buy a lot more agriculture in the short term. So yes we may say “this is dumb and doesn’t do much” it’s heavily positioned to be framed and sold as his bullying getting results.


#460

It will be interesting to see. The farmers are really the only ones who will know if the Chinese are buying more farm products or not, if they don’t actually buy more, the farmers will be able to compare sales vs year ago.

I suspect most people in the rural regions of the country actually are friends a few farmers. So if farmers really turn against Trump (admittedly wishful thinking on my part) this may hurt him with the base.