Trade War?

Economic Policy Journal ^ | September 12, 2009 | Robert Wenzel

[webschooner]

I don’t know how the new stoopid Obamaloon tariff is worded, but the article says “Chinese tyres”.

If so, then the Chinese, will just stamp them Made in xxxxx, and continue to make and ship them. Then the tires will make a stop in the Republic of xxxxx and then on the the US.

Obama is a brain-dead nimrod. Now he has pissed off the biggest buyer of our debt, and started a trade war that won’t even work anyway.

[grey_whiskers]

Yes. I think that (for now) we can sink their boomers before they can launch, whereas they cannot even *find* ours.

Explicit treason excepted, of course.

Cheers!

[Zhang Fei]

What has happened is that the Ivy-League trained MBAs and their associates got greedy, and wanted to make more money than under the tried-and-true methods which supported the US worker and the pre-eminence of the US in the world. In addition, they listened to the lies of Third-World-sympathizers in the business schools who convinced them that there is substantial wealth on the low-end-tail of the bell curve, and to sell to the Third World. Compounded by the demographic trends, and false promises of the Third Worlders engaged in mercantilism.

I think you have this backwards. The reason American companies are buying this stuff from abroad is pretty simple - companies in China (and other developing countries) are buying modern equipment from Western companies to make it, and are selling it for significantly lower prices because of cheaper land, labor and regulatory costs (and partly because of corner cutting). But even without corner cutting, they can make this stuff cheaper because everybody buys the manufacturing equipment from the same companies, and costs in China are a fraction of the costs here. Doesn't shipping cost a bundle? In a word, no. Before shipping costs crashed, someone shipping an entire refrigerated shipping container from Shanghai to New York had a per pound shipping cost of $0.10. This means a single tire used to cost $3-$4 to ship (if you choose to refrigerate it) - all the way from Shanghai to New York - and this was before the crash in shipping rates. This has nothing to do with MBA's - the people who first start distributing stateside foreign goods of unknown pedigree are typically small-time importers - gamblers by another name. And the average buyer (guy who makes decisions on what products to import from where) at a big box retailer like Wal Mart isn't an MBA - he's either a community college grad or a college dropout.