Many U.S. consumers think that Germany makes far better cars than the U.S. companies produce. BMW, Mercedes and Volkswagen all have their fans. They won’t think of buying Cadillac, Buick or Lincoln, and the foreign car advertising doesn’t even mention those brands as competitors in their messages. Given these perceptions one might say that the Germans have what economists call a competitive advantage over the United States in automobile technology.
So why does the EU charge a 10% tariff on U.S. imported cars while the U.S. tariff rate is only 2.5%? Is there a justification for this? Do you think that this is an example of “free trade practices” from our European allies?
This is an example of what Trump is fighting. There is no justification for this tariff structure. The need to help “war torn Europe” disappeared in the 1960s. Tariffs should either be the same rate between countries for the same or similar goods, or they should be repealed.
Personally can’t stand any GM product. I’m no fan of BMW. I do like Porsche, Audi, VW (which all used to be branches of Stutgart Motors), and MB (depending on the time period, they had several rough years in the late 80’s through the late 90’s).
I am however an exclusive FoMoCo consumer though.
Anyhow, I agree with your sentiments on the tariffs. I’m all for making things equal. If the other nations want free trade, they need to remove their tariffs.
I drive a 2016 Cadillac CT-6 Platinum Edition, and I am extremely pleased with it. It has a twin turbo charged engine that generates a little over 400 horse power and ever feature that I could need or want. I priced the Jaguar that is similar to it, and the price came in at $18,000 more.
Reviewers constantly complain about Cadillac CUE, the computer based control system. If you can operate an iPad, you can master Cadillac CUE.
Most American cars were junk in the 1980s. I know first had because I owned a couple of them. That’s when they lost a lot of their market share and the customers never came back. It’s a shame that they won’t give a them a look now.
I have driven a Mustang as rental. It’s a fun little car, and I’d like to own one, but it just doesn’t fit into my plans at the moment.
Trump is fighting trade deficits. His rhetoric over the past 40 years has been wholly centered on them “beating” us as evidenced by trade deficits. He talks about fairness too. He could have gone and said, hey, look, EU, cut your tariff to 2.5 percent or we’ll match yours. That’s not what he’s doing.
We have a 25-percent tariffs on small pickups – the chicken tax somehow. Tariffs are all over the place. We should eliminate them.
You mention competitive advantage, but you have grounding in economics and should know that comparative advantage provides benefits to both sides of a trade, even when someone doesn’t make anything as well and even when things aren’t “fair.”
I drive Mustangs. It’s a fine car. If I were in the position to buy a Cadillac, I’d buy a Porsche or a Vette. And neither you nor Donald Trump should stand in my way simply because you would prefer I drive American. Interfering in this transaction also is anti-capitalist and anti-free-enterpise.
I’ve been a Ford fan for years, owning several Fords, Mercuries and Lincolns. My last car was a black Lincoln Town Car that I loved to drive. I’ve had a few GM cars, Pontiacs and Chevys, but they were all junkers for the most part…even the ones I bought brand new. When Ford continued to sponsor the NFL, I went to the Honda, except for one Porsche and one Datsun (Nissan) the first foreign-made car I’ve ever owned. It’s an Accord and, while somewhat less smooth-riding than my Lincolns or Mercs, it’s a superb automobile. If Ford ever drops their support of the NFL, I MIGHT go back to buying them because I have a soft spot for them since I learned to drive on my Dad’s old, '52 Ford Custom with the flat-head V8 engine and “three on the tree,” and MY first car purchase was a '62 Galaxy Sunliner convertible with a 390 engine, dual glass-pack mufflers in fire-engine red!
My largest children have always hated riding around in the back of the Mustang. I didn’t care because I am mean! Lots of space in that little Mazda though, and it’s definitely smaller than the Mustang. I’d probably be a lot more sympathetic to moving around 90-year-old in-laws.
Send, since you take a keen interest in manufacturing jobs, you might want to look into how it is Germany held onto its manufacturing growth even after China joined the WTO, without raising tariffs, or weakening their currency.
It’s, frankly, the right way to do things.
Italy by contrast shows us why the opposite approaches fails, and grasping onto low-value manufacturing is no virtue.
Maybe you should explain this to us in your own words. Your video does not play on my machine, and I am keenly aware of viruses spread by such links. Maybe if you can express it in your own words, maybe you don’t understand it.
The focus is on being value-added – China is the world’s factory, but they have to do it, with German-made tools.
The name of the German’s policy, which supports small and medium sized business is Mittlestand:
Businesses maintain relationships with schools to properly induct people into one trade or another, the tax code is simplified for their use so they aren’t lost trying to hire & keep on a costly staff to navigate it, and the firms tend to specialize good & early at what they’re going to do, and do it well.
Competition is what is emphasized, as is targeting selling products further and further up the value chain.
They don’t make shoes, they make the machine you’d use to make the shoes. DESMA is such a company, which is the world leader for making machines, that make PVC soles.
These Mittelstand businesses employ more than 60% of the workers and create more than half of their exports.
They aren’t protected, nor was the German mark manipulated to give them an advantage, so they had to innovate to stay on top.
This is an example of how economic systems work. The country that is best at producing precision machinery, Germany (which is a long-term tradition for them), builds the machine and exports it to China, which presumably has the cheaper labor sources. There is nothing strange about this whole scenario.
The trouble is you use this argument to pound Trump’s goals, which is shallow thinking. Do you think that some person or group, who is above it all, can run or even predict how an economic system will develop and organize? The best thing government can do is to provide a political and economic climate that encourages grown and innovation. Government has shown itself to be a poor predictor in picking economic winners and losers.
What I would call “democratic economics” how the capitalism works. People come with new ideas and put them into motion. The best ideas might start in a garage with a rudimentary computer, for example, and flower into an industry that changes life for mankind for the better. Those who believe in top down economic systems seldom achieve that.
Communists and increasingly “progressives” think they can run everything. They think that they can run an economic system from the top down with things like five year plans. The trouble is economies are too complex, and there is too much data process to make this work.
Of course the “progressives” are more interested in “fairness” than they are in really running the economy. They want to distribute income and wealth, in the process think that nothing will change as a result of their taking over with the economy. It’s the workers that produce all the wealth, and the owners who take it from them, isn’t it? At least that’s what Marx told us, and he has to be right. Innovation and management of productive assets don’t mean anything. All wealth is generated by the workers.
In the end the top government officials take most everything for themselves, and the workers and the people can’t even get enough toilet paper. This has happened repeatedly, and the colleges and universities in this country continue to sell the lie, and many young people have bought into it.
That is exactly how I see President Trump and modern Republicans. Call it shallow if you will, but the idea of a free enterprise is rather simple. China’s top-down response to this will be devastating for China as well. Art Laffer pointed out in a Fox interview in the last day or two that Xi Jinping said tariffs are bad for both sides, yet he’s engaging in it too. He suggested it will lead to a collapse in the Chinese economy. I suppose some would applaud this result, but I don’t.
If you believe people who are dealing with it, you’ll find out about the real world damage it’s causing – in sort of an inefficient wealth redistribution scheme. A nail factory in Missouri is going out of business while an aluminum plant has reopened 60 miles away. Soybean farmers are suffering, and the president had to give them a $12 billion handout. Pig farmers run into trouble, and no one cares. Manufacturing costs are rising as a direct result of these tariffs. When the next round of tariffs hit on Sept. 24, it’s a 10-percent tax on you. It rises to 25 percent in January after we pass the Christmas season.
It’s not about what happens on paper. It’s about real-world consequences.
Trump has been all about retaliatory tariffs all along? Trump has been about the trade deficit, which is all but meaningless. Also, we have numerous tariffs, with very high rates, in place like the other countries. I’ve pointed to several over numerous threads. Beyond that, we have other regulations that inhibit international competition, in shipping for example.
This is real world stuff.
And the trade deficit (which is the irrelevant goal of these tariffs) is still increasing.
In addition to the real-world impacts, these tariffs penalize individual people for their economic choices at the checkout counter. You very likely make those same choices regularly. It’s literally regulation on the personal spending preferences of American citizens. Although our rights are intangible, it’s a real thing.
No, you’re esteeming Trump, without invoking past experience, or thinking of what comes after him.
We’ve been down this road before Send, both with Bush’s Steel tariffs, and the Plaza Accords.
Instead of making the situation better with temporary measures that we then later repeal, we get permanent cronyism built into our system.
Shoring up businesses & practices that deserve to fail, sustained by tariffs and subsidies.
No; which is why giving Trump this power is folly. He has no promise that other nations will cave, or given his actions, that this was even his intention.
He’s building up “temporary” policy that will take decades to repeal; such is the nature of Government.
That’s not what tariffs are.
They’re violence on the economy; on carefully crafted systems that do more, for more people, than any you’re trying to “save” by implementing them.
Further, we have the body of the evidence, that countries that do nothing in the face of tariffs, prosper better, than those who implement them.
Tariffs, make your economy weak. They do not help. They obstruct innovation, and privilege social/political connections, over economic merit. It’s building your economy into an economic cul-de-sac.
We did this with the airplane, with steam ships, with steel, and it’s been a disaster every time.
In short, there is no economic justification for tariffs, it’s never advantageous.
Your entire argument comes from there being a political opportunity in using them. But that forgets that the Chinese regime will be around far longer than Trump. They can wait him out. Same to most of the leadership in the EU. And that we have prior experience with protectionist experimentation to predict what this tends to result in.
Because the entire government is. not. Trump., and power you give it, is power it seldom lets go of. That’s its nature.
Nope, it’s doing something we know doesn’t work. This isn’t new, we been to this rodeo before.
Again, this about heightening political opportunity over hard-learned economic reality.
I have no faith that politics mediates things more rationally than economics does on its own, and I have no reason to believe that Trump can implement changes that out lives his transient time in office.
That is, besides giving the Government more power, which it always holds onto, and always misuses.
It’s not just stupid economic policy, it’s also immoral, for exactly the reason socialism is immoral: what right does the state have to pick economic winners and losers? What prima facie right does the state have to interfere with peaceful trade between consenting parties?
If you keep throwing up posts like that, you’ll get your butt kicked out the Democrat Party. Belief in the socialist ideal is becoming a requirement over there. You see more and more of the veteran members of the House and Senate scurrying to embrace all controlling state or at least paying lip service to it.
One would think that gadfly, Bernie Sanders, would be an unpopular figure in the Democrat Party. In 2016 he ran for the party’s ultimate prize, the presidential nomination. Yet in 2017 he jumped back to his Independent status and says he’s not a Democrat. In the old days the party regulars would roundly ignored him as a crack, but now he’s the new “Hubert Humphrey.” The party elder who is be respected as “a great thinker.”
Trump is running a risk with his aggressive policies toward the unfair tariff issue, but the concept is sound. Why should we allow the Chinese to import fish into the this country with virtually no tariffs and yet see them slap a 40% duty on our products? It’s not like the Chinese are our allies with their aggressive military actions in the Asian seas. Like Russia they are our advisories and are hardly deserving of a special status.
Yep, everything is temporary so we shouldn’t try to do anything. Nope, the dictators are there forever, and our elected leaders are temporary so doing anything about an injustice is useless and risky.
Can you understand how weak that argument is? Why bother to have elections if nothing can ever change because any action a democratically elected leader is temporary? Why can’t you address the unfairness of the current tariff structure?That is the real issue.
As for Canada and EU, how do you treat your friends who are taking advantage of you? Do you just sit and let them use you, or do you address the issue? Is addressing the issue forbidden because you might unset a friend?