Author Topic: Real trade war impact?  (Read 3878 times)

Cardboard

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Real trade war impact?
« on: May 23, 2019, 01:45:02 PM »
The more I look at this, the more I think it simply means that the trend to manufacture in China for export is relocating to cheaper countries faster than otherwise.

Doesn't mean it will be smooth sailing and I think that China will have to change its model to a consuming country vs mostly exporting or another accelerating trend.

I also think it may mean regime change. I can't see the young Chinese people accepting this vision mentioned this week or: "That it will be a long journey, we have been there for 5,000 years, blah blah blah". This really sounds like a communist regime wanting to keep people toiling, retain its power vs changing for the better.

Countries like Vietnam and India must be salivating at the opportunity and this has been going on for some time as costs in China have been trending up for over 10 years now.

Reminds me of an old investment or Gildan Activewear. Bought this back in early 2000's after one of their shipments had been found containing marijuana. Stock came down as a result.

What was interesting is that these guys used a loophole to create their entire business or lower tarrifs for imported clothes into the U.S. from Caribbeans and Central America than Asia or mostly China. Then they developed brand new, state of the art plants in these countries. They basically ended up eating everyone's lunch in printed t-shirts including Fruit of the Loom. Then they expanded in socks and more.

Anyway what do you guys think?

Cardboard


beerbaron

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Re: Real trade war impact?
« Reply #1 on: May 23, 2019, 07:37:07 PM »
You hit it right on the nail. Companies are not even remotely thinking about bringing back production to US.

If you want firsthand experience, i m currently travelling to Asia, back from Vietnam guess what i was doing there... My company is goin full gas on getting out of china, like hundreds of SKU moving, halt on all new projects in China, etc...

It was going to happen, just made it a top priority. Now how ho we profit from it is the question.

Beerbaron

Ross812

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Re: Real trade war impact?
« Reply #2 on: May 23, 2019, 08:20:59 PM »
The more I look at this, the more I think it simply means that the trend to manufacture in China for export is relocating to cheaper countries faster than otherwise.

Doesn't mean it will be smooth sailing and I think that China will have to change its model to a consuming country vs mostly exporting or another accelerating trend.

I also think it may mean regime change. I can't see the young Chinese people accepting this vision mentioned this week or: "That it will be a long journey, we have been there for 5,000 years, blah blah blah". This really sounds like a communist regime wanting to keep people toiling, retain its power vs changing for the better.

Countries like Vietnam and India must be salivating at the opportunity and this has been going on for some time as costs in China have been trending up for over 10 years now.

Reminds me of an old investment or Gildan Activewear. Bought this back in early 2000's after one of their shipments had been found containing marijuana. Stock came down as a result.

What was interesting is that these guys used a loophole to create their entire business or lower tarrifs for imported clothes into the U.S. from Caribbeans and Central America than Asia or mostly China. Then they developed brand new, state of the art plants in these countries. They basically ended up eating everyone's lunch in printed t-shirts including Fruit of the Loom. Then they expanded in socks and more.

Anyway what do you guys think?

Cardboard

I have been building a woodshop dust collection system with HVAC metal ducting the past 6 weeks. I went to homedepot tonight and the wyes I've been paying $14.50 each are now $18 .68.
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LC

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Re: Real trade war impact?
« Reply #3 on: May 23, 2019, 09:08:25 PM »
Ross, off topic but why metal ducting? Most woodshops Iíve seen use flexible hose as drops.
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Viking

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Re: Real trade war impact?
« Reply #4 on: May 23, 2019, 11:43:40 PM »
If anyone really understands what is going on with the trade war and how it will play out please enlighten us all :-)

A couple of my key take aways:
- nobody has much of a handle as to what is going on today, this week, this month, the next 6 months, the next year or the next 3, 5 or 10 years (regarding trade and Trump)
- the bond market is quite pessimistic with yields on 10 year treasuries under 2.35%
- the stock market seems to be completelty asleep at the wheel; the averages are down only a little over the past 2 weeks. Do they expect a deal?

scorpioncapital

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Re: Real trade war impact?
« Reply #5 on: May 24, 2019, 01:39:12 AM »
I find in several cc transcripts of many industrial companies saying they will offset tariffs with price increases..I'm also reminded of Buffetts essay on how inflation swindles the equity investor and am not sure how your run of the mill industrial companies can so freely raise prices without volume decreases. Perhaps these are great companies but not all of them should be able to pass through 25 percent tariffs to customers. Either management is being disingenuous or I'm missing something.

Cigarbutt

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Re: Real trade war impact?
« Reply #6 on: May 24, 2019, 05:22:50 AM »
2 questions:
By moving sources of imports to different countries (trade diversion effect),
a)How will that improve the trade deficit?
b)What about the common sense suggestion that the eventually imported product will be more expensive to the consumer?

It's hard or impossible to predict what will happen but, from a historical perspective, the last 30 years has witnessed a very unusual rise in global trade and the consensus is for more of the same with some tweaks along the way.

The following two references seem to be helpful:
https://blogs.imf.org/2019/04/03/economic-forces-not-tariffs-drive-changes-in-trade-balances/
https://www.schwab.com/resource-center/insights/content/street-fightin-man-president-trump-ups-trade-war-ante?cmp=em-RBL

Ross812

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Re: Real trade war impact?
« Reply #7 on: May 24, 2019, 07:40:47 AM »
Ross, off topic but why metal ducting? Most woodshops Iíve seen use flexible hose as drops.

6 inch metal ducting for the main lines and flexible hose drops. I used metal instead of PVC because I had some interesting turns to get through the truss webs in the ceiling and 6 inch PVC bends don't come in enough variants to make it work. Not having to worry about static is nice too.
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orthopa

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Re: Real trade war impact?
« Reply #8 on: May 24, 2019, 07:47:56 AM »
Ross, off topic but why metal ducting? Most woodshops Iíve seen use flexible hose as drops.

6 inch metal ducting for the main lines and flexible hose drops. I used metal instead of PVC because I had some interesting turns to get through the truss webs in the ceiling and 6 inch PVC bends don't come in enough variants to make it work. Not having to worry about static is nice too.

To add to the offtopic discussion have a 3HP cyclone myself. What HP is your dust collector? Are you sure that ducting wont collapse? Traditional HVAC ducting is typically too thin and will collapse.


orthopa

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Re: Real trade war impact?
« Reply #9 on: May 24, 2019, 07:48:52 AM »
Ross, off topic but why metal ducting? Most woodshops Iíve seen use flexible hose as drops.

Too much resistance and loss of static pressure. Every 1 foot of flexible hose equal to ~5-10 ft of pvc and metal ducting.