U.S. to collect 25% tariffs on Chinese woodworking equipment starting July 6

[Joe Adams]

PLEASE NO POLITICS!

I saw this on Woodworking Network and wanted to alert anyone considering buying woodworking machinery in the near future.

Brands that immediately come to mind are Jet, Powermatic, Grizzly, Laguna, Baleigh, etc. although at least some of their offerings are made elsewhere.

"Planing, milling or molding machines for working wood and other materials, as well as grinding, sanding or polishing machines, bending or assembling machines and related machine tools for working wood are on the list of items on which the U.S. will begin collecting 25 percent tariffs on July 6."

Here's a link to the article. (Mods - Apologies if not allowed.)

https://www.woodworkingnetwork.com/news/woodworking-industry-news/us-will-collect-25-percent-tariffs-chinese-woodworking-equipment-july

AGAIN, PLEASE REFRAIN FROM POLITICAL RESPONSES.

Thanks!

[Victor Robinson]

So what does this mean in practical terms? That those companies will increase prices approximately 25%? Or will the purchase of those companies' machines also become somehow more convoluted or difficult?

[Matt Mattingley]

The no political responses have got to be a joke. Three of my suppliers have raise their prices because of political reasons. It all revolves around aluminum. Aluminum is now the new gold in the US. Without being political, why has aluminum gone up in price???

A dollar is a dollar, no matter how you look at it! Tariffs adjust a dollar... why do so many Mexicans cross the border legally, every year to pick apples? That labour is cheaper and you don’t want to do it.

I have a Filipino nanny living in my home which I employ. I exploited the Internet and all revenue agency’s seeking help and position. No one applied nationally.... you know why your kids have iPhones!

I do educate kids in a mass. 50% of them to say to me my parents will take care me. What happens when the riches run out?

[Edwin Santos]

Yes, it will be interesting to see how realistic it is to have a discussion on this subject on a "no politics please" basis.

It's a worthy topic though, and I wonder how quickly we will see price changes on woodworking tools as a result of the tariffs. We definitely live in interesting times.

Many products are assembled in a given country, with components made in China. I don't know if products like that will be affected.
Edwin

[Mike Cutler]

We're going to pay more for a time until all of the political posturing is complete. Not just on goods from China either.
Why aluminum has become so expensive is a little questionable. It must have to do with the manufacturing process because if memory serves me, the only naturally occurring mineral on earth in greater abundance than aluminum is silica. It's definitely not rare.
In the end I believe that you'll see the tariffs will be reduced, if not eliminated, but the prices at the retail level probably won't change enough to reflect this.

[Nick Decker]

I'm gonna make a wild guess, that once prices go up they won't go back down, tariffs or not.

[Justin Meyer]

the only naturally occurring mineral on earth in greater abundance than aluminum is silica.

Aluminum is not a mineral, as it does not occur naturally. Bauxite, the ore from which Al is most commonly (by far) extracted, is a mineral.

Tariffs are fundamentally a politically implemented tool, so any non-political discussion will be limited to how much prices go up and when. "Just the facts, ma'am." :-)

[Alex Zeller]

The current way aluminum is made requires a lot of power. Often plants are next to power plants to reduce the distance needed for the power lines. Then there's the waste byproducts. Like everything in this country the costs are always going up. This is not political, just a fact. When we increase the costs and hoops to jump through to make something companies must decide if they should stay here or move production to a different country. Hopefully China decides that it's better to work out a solution vs continue a trade war. The fact is that for a number of us "hobby" woodworkers even Taiwanese equipment is too expensive to justify. Maybe companies like Grizzly can do like Toyota did with their pickups. Build almost everything over there and just put the bed on in the US. Maybe the solution is going to be do 90% of the work in China and then do the final few steps in the US (or in Taiwan/ India) to avoid the tariffs.

[Justin Meyer]

It all revolves around aluminum.

Why are we bringing Aluminum into this, it's a separate tariff/ issue. OP posted about the tariff on industrial type machinery being implemented...mostly iron and steel made. Although it seems part of the same 'plan' (one is material, the other is machinery, very little of it made with aluminum), co-mingling the two isn't appropriate....a long stretch, at best.

[Brian Holcombe]

Increasing cost with tariffs causes buyers to seek alternatives. Those alternatives see a spike in demand which will eventually translate to higher list prices and temporarily translate to smaller discounts.

It’s impossible to raise prices in a large segment of a market without having an effect on all pricing.

[Brian Holcombe]

Why are we bringing Aluminum into this, it's a separate tariff/ issue. OP posted about the tariff on industrial type machinery being implemented...mostly iron and steel made. Although it seems part of the same 'plan' (one is material, the other is machinery, very little of it made with aluminum), co-mingling the two isn't appropriate....a long stretch, at best.

Aluminum extrusions and parts are on almost every piece of machinery that I own.

[Grant Wilkinson]

Aluminum itself has not gone up in price. President Trump determined that foreign sourced aluminum - mostly from Canada, Europe and Australia - was a threat to the national security of the USA. So, in order to spur US production of aluminum (and steel), the President imposed duties of 10% and 25% on these foreign-produced products. The objective of the President is to encourage US production of these metals for the US domestic market. In the short term, it means that the products that use these metals will be more expensive to manufacture and, assuming that the manufacturers pass along those increased costs, the products will be more expensive for US buyers. In the very long term, I supposed the objective is that the increased US production will return prices to what they were before the tariff was imposed. Time will tell. In the meantime, as demand for Canadian aluminum drops because our aluminum has become too expensive, Canadian aluminum producers are hurting. The same holds true for Canadian steel.

I'm Canadian and have tried in this post to remain non-political. It is difficult for Canadians to understand how we are now considered to be a security threat to our friends in the US, but that is the cold hard truth now.

[Frederick Skelly]

Canada has proven her friendship to the United States time and again, Grant. I value that and I'm sure many others do too.

Fred

[John Stankus]

The current way aluminum is made requires a lot of power. Often plants are next to power plants to reduce the distance needed for the power lines. Then there's the waste byproducts. Like everything in this country the costs are always going up. This is not political, just a fact. When we increase the costs and hoops to jump through to make something companies must decide if they should stay here or move production to a different country. Hopefully China decides that it's better to work out a solution vs continue a trade war. The fact is that for a number of us "hobby" woodworkers even Taiwanese equipment is too expensive to justify. Maybe companies like Grizzly can do like Toyota did with their pickups. Build almost everything over there and just put the bed on in the US. Maybe the solution is going to be do 90% of the work in China and then do the final few steps in the US (or in Taiwan/ India) to avoid the tariffs.

The Toyota Tundra and Tacoma are built here in San Antonio. The body parts are stamped here, V8s made in Alabama and the frames are from Mexico. The body and drive train seem to me to be a significant portion of the truck.

[Roger Marty]

This will trigger inflation and the long overdue stock market correction.

[Justin Meyer]

Aluminum extrusions and parts are on almost every piece of machinery that I own.

Sure, but a very small part in both volume/ weight or product cost. Pick your highest Aluminum content (china COO) machine and do a parts-cost breakdown and tell us what you arrive at. I think it will be instructive.

[Wade Lippman]

We'll see what happens when Boeing is cut out of the Chinese market.

But we all know that trade wars are easy to win, so Me? No worry.

[Alex Zeller]

The Toyota Tundra and Tacoma are built here in San Antonio. The body parts are stamped here, V8s made in Alabama and the frames are from Mexico. The body and drive train seem to me to be a significant portion of the truck.

Decades ago, in the 80's I believe, the US had a tariff on imported trucks. It was called the Chicken tax. To get around it Toyota would build the bed in the US. If you've ever seen an older Toyota pickup where the paint on the cab is fine but the bed was faded badly it was because of the different types of paint used. Japan didn't have the EPA laws we had in the US and used paint that held up better.

https://en.wikipedia.org/wiki/Chicken_tax

[Simon MacGowen]

The President has said the trade war is easy to win. No one has asked...at what cost? I am not talking about just the economic cost.

There is a price to be paid, not all of which is known at this time. Not everything, such as global order or relationships can be measured in dollar terms.

Simon

[Doug Dawson]

This will trigger inflation and the long overdue stock market correction.

Yeah, to heck with anyone retired living off a 401k, they scrimped and saved all their lives for it, those people are animals not deserving of our sympathy. (I'm being sarcastic here.)

We're not allowed to talk about the elephant in the room.

[eugene thomas]

I sure hope this stays politics nutral because smc one of the few places can come and not deal with the exstream wacks.

[Joe Adams]

Just for the record, my request to avoid politics was intended to keep this thread from being locked or deleted. A lot of woodworkers use machine tools imported from China. This thread was intended as a heads up.

[Ken Combs]

Decades ago, in the 80's I believe, the US had a tariff on imported trucks. It was called the Chicken tax. To get around it Toyota would build the bed in the US. If you've ever seen an older Toyota pickup where the paint on the cab is fine but the bed was faded badly it was because of the different types of paint used. Japan didn't have the EPA laws we had in the US and used paint that held up better.

https://en.wikipedia.org/wiki/Chicken_tax

Still going on as of a few years ago, different vehicle, same tax. One of Fords little mini van/trucks was built in Turkey, shipped to the US as a passenger vehicle. At the port, workers stripped the extra seats and interior trim to make work vans/trucks.

And, yes I remember the multicolored pickups, Mazda and the Ford version on the Mazda was the worst. Especially with yellow and reds, the Japanese paint was much different from the US paint after a couple of years.

[Peter Kelly]

Cool, start a "trade war" with the largest buyer of US Federal Bonds. This should go swimmingly!

[Bill Carey]

Perhaps the gentleman from Grizzly will weigh in on this topic. No effect on prices? Price increases? When? Will current stock be increased in price? If prices are raised because of the tariffs, will they be reduced after the tariffs are lifted? Any insight will be appreciated.

[John TenEyck]

Tariffs have never proven good in the long term; this time will be no different and probably worse in many ways beyond $'s and c's. As far as woodworking machinery goes, the companies selling machines made in China are going to get pinched. Euro machines may be next. I only know of a couple of companies still making some classic woodworking machines in the US and they are in the pro level price range. For a mostly hobbiest like me tariffs just reinforce why I look for used machines before considering anything new. I suspect a lot more folks will do the same. The follow on from that is likely a price escalation of used machinery.

John

[Prashun Patel]

Some posts are treading close to the line.

At least one other mod and me are watching carefully.

No harm in debating the merits of tariffs. But keep the sarcasm and/or refs to the administration out of it.

[Brian Nguyen]

Does this effectively kill my chances of ever getting an 8" helical head jointer at a reasonable price that's perpetually back-ordered?

No matter, I caved and went out to re-purchase a used Ridgid 6" over the weekend. Still kicking myself for jumping the gun and getting rid of a perfectly good grey version of the Ridgid last year after ordering the 8" Grizzly.

As others already said--the prices aren't coming down after the dust settles.

[Yonak Hawkins]

In the very long term, I supposed the objective is that the increased US production will return prices to what they were before the tariff was imposed.

That's very funny, Grant.

[Mark Blatter]

It will be interesting to see what the unintended consequences are of the tariffs. An example of what I mean.

I take my cars in every year for emissions testing, and until this year, for a safety inspection. Both were required by law in Utah, but as of Jan 1 the safety was removed by law. Each year there was at least one that didn't pass the safety, for things like a wiper blade that had a 1/8" tear on the end, or a small cracked windshield, even once, a burnt bulb. I refuse to let the inspection place fix these things are it will cost me triple than if I do it myself. So I go and fix the issue, then return for a re-inspection. Once I have passed I have them do a On-The-Spot renewal of my registration. Normally I pay $10 for that service, plus the cost of the renewal. That I will pay gladly so it saves me a trip to the DMV. Every time I have to return for a re-inspection, they would not charge me the $10. At first I was like, 'no charge me as I don't want to fell guilty'. Finally one of the guys working there explained why they don't want to charge me. He said that their corporate office is always pushing them hard to have an average till ring of at least $70, and if they charge the $10, it kills their average. So they just don't charge it.

So do the math. If they let off 1 person a day, 6 days a week, for 52 weeks a year, that about $3100 in a year that the corporate office is missing in pure profit. Now times that by the 25 or so locations that this company has....around $78000 a year in missed profit. What if they don't charge 2 or 3 per day? The unintended consequence of pushing for higher sales per customer means a loss of potentially several hundred thousand per year in pure profit.

What are the unintended consequences of the tariffs? I promise there will be some. Some will see a way to make big money, while others are losing their minds.

[Yonak Hawkins]

For a mostly hobbiest like me tariffs just reinforce why I look for used machines before considering anything new.

John

All of this will cause the cost of used machinery to go up as well.

[Yonak Hawkins]

Mark, it seems to me some of the unintended consequences will be inflation (and all the really bad things that entails), breakdown of working systems, frustration with those in charge and world-wide degradation of economic and political good will and trust.

[Mel Fulks]

Post WW2 it was often mentioned in the news that USA was paying more than its share of many multi country deals.
There was more pride than complaints in those articles. I think a realistic assessment of who needs help and how much we
can contribute needs to be an ongoing practice. Look at NATO.

[Ben Rivel]

Hmm.... Wonder how this will affect Hammer/Felder products. Only tool I really have left to complete my shop is the Hammer A3-31 Jointer/Planer combo.

[Simon MacGowen]

Mark, it seems to me some of the unintended consequences will be inflation (and all the really bad things that entails), breakdown of working systems, frustration with those in charge and world-wide degradation of economic and political good will and trust.

And that means interest rate hikes down the road.

Boom, bust, boom, bust is still the rule.

If you don't have a car to buy (car prices will shoot if the auto tariffs are a go-ahead), a mortgage to pay down, or heavy machinery (mostly imported these days) to invest in, you are the least impacted.

But depending on how and where Euro, Canada, Mexico and China hit back, some sectors will be hit hard. Farming will be a disastrous area for sure.

China will probably limit its citizens to travel to the US, and divert them to other countries to spend their money. A tactic they used to penalize South Korea and Japan when they quarreled. So tourism can be another casualty.

As all these wars are going on, Russia, unaffected by the wars, will push to reduce oil production to counter any negative effect on oil prices because of trade wars.

Recessions will happen depending on how long the wars drag on. The stock market? I am holding on my annual contributions until all this becomes clear -- my financial advisor has been calling me since Feb.

One problem for CEOs is what/when to invest. If steel tariffs are enforced now and removed later, how could an investment in a steel plant be justified? The plant would not be able to compete with imported steel once the tariff is lifted. Same for autos.

The low unemployment rate means shortage of skilled staff and cheap labor from Mexico might not be a reliable source of supply given the immigration crack-down. In the end, consumers and workers may have little to benefit from.

Simon

[David Kumm]

Has anyone mentioned the actual price differential here? I'm hearing the price of a Chinese car will go up 400-500, so what will be the actual impact of a $1500 machine? On average, the US tariffs on imports are less than 60% of what are charged on US goods by others. Periodically the threat of a trade war has been used to leverage an adjustment to tariffs by many Presidents. It is way too early to speculate on the ultimate consequences of a resetting of the tariff issue. The long term goal is also how to slow the trade deficit which eventually leads to problems more serious than what we pay for certain items that may or may not be necessary to our quality of life. These things tend to settle down with time. Even with children, you need to draw a line and reset the rules once in a while. Kids get unhappy but some agreement occurs. Dave

[Simon MacGowen]

Has anyone mentioned the actual price differential here? I'm hearing the price of a Chinese car will go up 400-500, so what will be the actual impact of a $1500 machine? On average, the US tariffs on imports are less than 60% of what are charged on US goods by others. Periodically the threat of a trade war has been used to leverage an adjustment to tariffs by many Presidents. Dave

The tariffs among the western world/economy are similar: https://www.investopedia.com/ask/answers/040115/which-countries-have-highest-tariffs.asp

It is the cumulative effects of the tariffs across different sectors that matter.

China and Japan (both targets of the tariffs in addition to Euro, etc.) are the biggest buyers of the US Treasury Bonds. They do have another economic weapon in their pockets.

Simon

[Matt Schrum]

Has anyone mentioned the actual price differential here? I'm hearing the price of a Chinese car will go up 400-500, so what will be the actual impact of a $1500 machine? ....

The tariffs are supposedly going to be 25%, so that's about $375 on that $1500 machine. I just imported a $4K machine from China, so I am happy I snuck in before these come in effect-- but had that tariff made it a $5K machine, I likely still would have bought it (maybe just saved up for another month or three), I just couldn't find a US or Euro alternative for even double the price.

[Victor Robinson]

Hmm.... Wonder how this will affect Hammer/Felder products. Only tool I really have left to complete my shop is the Hammer A3-31 Jointer/Planer combo.

Maybe it's the cynic in me, but I imagine they'll see this as an opportunity to raise prices whether or not the tariffs affect them. Need to stay x% above the Asian machinery to maintain their brand value.

[David Kumm]

It will also be interesting to see if the tariffs for Chinese machines sourced to Europe for final finishing and distribution are handled. There is more of that than we realize. Agreed there will be inflation if these tariffs hold. There is a realization by both parties that as the deficit grows, inflation is a necessary evil to delay the eventual impact of that debt on our credit rating. Tough set of choices. Balancing economic growth with inflation to reduce total debt as a % of our economy. As with many issues, I see more discussion of the immediate impacts than the long term effects. Dave

[Mac McQuinn]

Good, I'm all for a level playing field.

Mac




"Planing, milling or molding machines for working wood and other materials, as well as grinding, sanding or polishing machines, bending or assembling machines and related machine tools for working wood are on the list of items on which the U.S. will begin collecting 25 percent tariffs on July 6."

[Glen Gunderson]

Maybe it's the cynic in me, but I imagine they'll see this as an opportunity to raise prices whether or not the tariffs affect them. Need to stay x% above the Asian machinery to maintain their brand value.

That tends to be what happens. If the competition becomes more expensive due to tariffs then companies can raise prices more easily on their own products. I mean, why not make more money if the government is going to place extra taxes on your competitors?

And of course, there's still the very real possibility of increasing trade tensions with the EU which might result in tariffs being placed on European machinery as well. The EU just announced 25% tariffs on some US goods, so I wouldn't be the least bit surprised if the US escalated things in response as happened with China.

[Mac McQuinn]

My local dealer has (11) new, 2018, (4) door, 4WD, Tacomas on the lot. Every one is built in Mexico.

Mac


The Toyota Tundra and Tacoma are built here in San Antonio. The body parts are stamped here, V8s made in Alabama and the frames are from Mexico. The body and drive train seem to me to be a significant portion of the truck.

[Brian Holcombe]

Maybe it's the cynic in me, but I imagine they'll see this as an opportunity to raise prices whether or not the tariffs affect them. Need to stay x% above the Asian machinery to maintain their brand value.

I’m not so much a cynic, rather I simply feel this will occur because of the demand created by raising prices in the less expensive competition. Most of the euro manufacturers will offer discounts to the purchaser, if demand spikes I suspect the first action we would see is a reduction in deals and discounts. If they don’t need to incentivize the purchaser than they will not do so.

I think it's very difficult to effect trend with tariff because the other players in the field will respond to increased demand, most will not likely increase supply but instead increase pricing. The tariffed nation may increase supply unless there is some limit to that or find a way around the tariff.

[Charlie Barnes]

The 4 door Tacomas are built in MX. All other configurations of the Tacoma and 100% of Tundras are built in San Antonio as John mentions. I've owned 3 MX built Tacomas and had zero problems with them in case you're wondering. I'm on my 2nd Tundra now and love them too. It will be interesting to see what kind of strategies different companies come up with to work around the tariffs (chicken tax v2?).

[andrew whicker]

I bought some cedar recently and was surprised it was cheaper a few weeks ago then it was this winter. There are also tariffs on Canadian lumber. I get a contracts here and there for garden boxes. I use cedar. We'll see what happens to the price.

Not excited for this tariff war. There was an article (bloomberg?) that described the weapons at China's disposal. Since China is a dictatorship, the gov't can make all sorts of red tape / inspections / fees / etc to do business over there. And since this red tape could be hard to track to 'new anti-America' laws, it could be hard to actually finger point. They can put media spin on our products and services.

They also have the ability to sell our debt, but this would also hurt them. Sounds like that might be a last resort.

[Simon MacGowen]

They also have the ability to sell our debt, but this would also hurt them. Sounds like that might be a last resort.

The Chinese will retaliate only to the extent that works for their domestic audience;
Simon

[eugene thomas]

And it's off and running..........

[Joe Adams]

I humbly beseech thee not to besmirch this thread.

[andrew whicker]

To be fair to all of us, either this is the most boring topic of all time (cheap crappy Chinese tools go up in price) or a very interesting topic that impacts all of us (new tariffs that you might encounter in making an income, whether running a business or keeping your job).

It will probably stray into the 'more interesting' category.

[Mike Hollingsworth]

Until Shiraz chimes in, we are all armchair quarterbacks.

[John Sincerbeaux]

The U.S. has been in a trade war for decades and we lost!
Yet, we worry about the cost hike of a Chinese machine and forget about all the great American-made WW machines no longer made?
No politics here��

[Simon MacGowen]

The U.S. has been in a trade war for decades and we lost!
Yet, we worry about the cost hike of a Chinese machine and forget about all the great American-made WW machines no longer made?
No politics here��

The war was partly lost because our system costs are so high. China and other Asian manufacturers have no to little environmental costs. benefits, pensions, etc. that add onto the costs of their products. Their wages are 1/10 or less than ours. When everything is added up, our cost disadvantages are so obvious.

My concern is not the trade wars but their use as purely a bargaining chip. Once the negotiation is over, everything goes back to normal and whatever trade gains that are secured on the basis of the threats of trade wars will be lost over time, soon and again. Then what?

If we don't address the cost factors and purely look at the deficits, we may win the battle but never the war. Why do you think Walmart is so popular which is stocked mostly with imported goods? Consumers at large are unwilling to pay more for better quality.

Simon

[Brad Shipton]

Woodwork machines will end up being an unintended victim of this tariff strategy. The idea that this industry will come back to North America is unrealistic. The scale is simply not there. Can you bring back some others, absolutely. Once the price creeps up enough North American factories of sufficient scale can automate their plants and compete. If you watch any of the many videos produced showing the monster plants in China you will quickly see low cost labor is key. In the case of woodwork machines, it will simply result in higher consumer costs.

[Edwin Santos]

China and Japan (both targets of the tariffs in addition to Euro, etc.) are the biggest buyers of the US Treasury Bonds. They do have another economic weapon in their pockets.

Simon

Hi, Could you elaborate upon why their buying volume of US Treasury Bonds is an economic weapon?
Edwin

[Simon MacGowen]

. Can you bring back some others, absolutely. .

Hopefully, not this kind:

https://www.youtube.com/watch?v=TmLsV9cSk0o

Simon

[Simon MacGowen]

Hi, Could you elaborate upon why their buying volume of US Treasury Bonds is an economic weapon?
Edwin

"If China does abstain from purchasing Treasurys this year, U.S. interest rates on the margin could rise more than expected."
https://www.cnbc.com/2018/01/10/report-chinese-could-stop-treasury-buying-seen-as-political-but-hits-raw-nerve.html

Japan which used to be the #1 holder of the Treasury Bonds would not have much room as China to sell, but it could cut down the amount of buy too.

This is a weapon that they may not use but one that is at their disposal.

Simon

[Brad Shipton]

Simon, the factories I think that can be made profitable in the future in North America will look more like this.
388148

[Greg Parrish]

Simon, the factories I think that can be made profitable in the future in North America will look more like this.
388148

looks like a scene from The Terminator. No peeps in sight. :(

[Simon MacGowen]

Simon, the factories I think that can be made profitable in the future in North America will look more like this.
388148

But that won't meet the stated objective of the current tariffs: jobs. Once those robots are in place for phones, auto plants, etc., only the corporate America will see the benefits (profits), but not the workers, nor the consumers, I am afraid.

In fact, why can't that be done in America now -- whether there are tariffs or not?

Simon

[Edwin Santos]

In fact, why can't that be done in America now -- whether there are tariffs or not?

Simon
Check out some of the videos on YouTube showcasing the Tesla factory and the Amazon fulfillment centers. Heavy use of robotics, automation, all sorts of other technology right here in North America.

I've heard talk that the job loss trends resulting from globalization pale in comparison to the job losses forecasted from automation and robotics. It's serious but I don't believe it will be that apocalyptic. I believe it will be job shifting more than elimination just like how we've already shifted to less manufacturing and more of a service economy in the US.
Edwin

[Pat Barry]

But that won't meet the stated objective of the current tariffs: jobs. Once those robots are in place for phones, auto plants, etc., only the corporate America will see the benefits (profits), but not the workers, nor the consumers, I am afraid.

In fact, why can't that be done in America now -- whether there are tariffs or not?

Simon
There are still workers. Some are more skilled than those the machines replaced, some less skilled. BTW...China probably makes those robots.

[Alex Zeller]

Until it hits I don't know if we will know the real cost. I assume the 25% is on what the price is to the importer. For example it's what Grizzly would pay for the equipment. Things like shipping costs don't count into it. A quick search for the Burt group and I can find a lathe sold by Grizzly for for $1800 that are listed at $1100 to $1200. That, of course doesn't include any shipping. But assuming Grizzly doesn't get a break on that $1100 price that would be less than $300, not the $450 it would be on the retail price. With luck the impact isn't going to be too great but until importers know how much neither will we.

[Simon MacGowen]

I believe it will be job shifting more than elimination just like how we've already shifted to less manufacturing and more of a service economy in the US.
Edwin

Aren't the tariffs meant to shift us back to the manufacturing economy (steel plants, auto plants, etc.)?!

Simon

[Shiraz Balolia]

This thing posted by the OP is real!

As of right now, July 6th, prices on most woodworking machines coming from China will be subjected to a 25% tariff/duty. We will also be forced to raise our prices by almost that much on July 6th to keep up with the cost increase. When and if the tariff is revoked and a date is announced, we will probably also reduce prices on that date to make the equipment more affordable to more people.

Now then, this tariff only applies to products made in China and not to Taiwan. I list these two countries as that is where most of the woodworking machines come from today. Unfortunately, both Chinese and Taiwanese suppliers have been raising prices because of material increases (aluminum, copper, steel etc) even before the tariffs became an issue. So its like a double whammy for us. Taiwanese machines may go up a little as well due to that fact, but no where near the 25% that the Chinese imports will face.

Here's my advice, as self serving as it may sound: if we have anything you want in stock, buy it now before July 6th for the best price. Prices will go up on that day and will also affect items that are on back order, meaning customers that have placed orders at a certain price and we do not have that item in stock, will be affected when that item does come in.

There is no silver lining in this message, except that we do have a very large presence in Taiwan and carry a lot of Taiwanese made machines which will not be affected by the tariffs. I hope that China and USA can agree to something where this could be averted before the 6th, but as that date draws closer, we are beginning to lose hope. Another thing to remember, is that there will be industries worse off than us in this "fight". Almost everything you see at major box stores comes from China and all that will be going up!

[Simon MacGowen]

There are still workers. Some are more skilled than those the machines replaced, some less skilled. BTW...China probably makes those robots.

Or, robots assembled in America from parts imported from China!:D

Looks like at the end of the day, we consumers are the ultimate casualty.

Simon

[Simon MacGowen]

This thing posted by the OP is real!

Another thing to remember, is that there will be industries worse off than us in this "fight". Almost everything you see at major box stores comes from China and all that will be going up!

Anyone planning to buy a new car, start looking NOW. If the auto tariff is to go ahead, cars from Canada and Mexico will be totally un-competitive meaning down the road (unless and until the tariff is lifted), car prices have to sky rocket (supply & demand). You can't just open 5 new auto plants and assembly lines (assuming you could find the auto workers) in 6 months.

Simon

[Edwin Santos]

This thing posted by the OP is real!

There is no silver lining in this message, except that we do have a very large presence in Taiwan and carry a lot of Taiwanese made machines which will not be affected by the tariffs.

Ironically, China considers Taiwan to be part of China and routinely punishes (in one way or another) those that do not acknowledge this. For example, China recently reprimanded Marriott and obtained an apology because Marriott listed Taiwan and Tibet as independent countries in a survey on their website. This makes me wonder if there will be another dimension of diplomatic inflammation if there are tariffs levied against China but not Taiwan. This is only speculation on my part, but it's fascinating how high the stakes are and how quickly and exponentially complicated it can get.
Edwin

[Edwin Santos]

In light of all this, the vintage tool aficionados may get the last laugh. Good old fashioned American iron made in simpler times and built to last!

[Frederick Skelly]

Anyone planning to buy a new car, start looking NOW. If the auto tariff is to go ahead, cars from Canada and Mexico will be totally un-competitive meaning down the road (unless and until the tariff is lifted), car prices have to sky rocket (supply & demand).

Has anyone seen the specific terms of the tarriffs on cars? Several foreign companies manufacture stateside now - and US automakers rely heavily on plants elsewhere. Will a Chevy imported from Canada be effected? How about a Ford imported from Mexico? For that matter, how about a Honda built in Ohio?

[Doug Dawson]

Woodwork machines will end up being an unintended victim of this tariff strategy. The idea that this industry will come back to North America is unrealistic. The scale is simply not there. Can you bring back some others, absolutely. Once the price creeps up enough North American factories of sufficient scale can automate their plants and compete.

No manufacturer with a lick of sense is going to open up a new plant in the US on the basis of these tariffs, because on the time scale it would take to do so, the tariffs will already have been reversed. So wrong-headed they are. The upshot is, that in the meantime the consumer will be forced to just [censored] and take it. There's no prettier way to put it.

[Simon MacGowen]

Has anyone seen the specific terms of the tarriffs on cars? Several foreign companies manufacture stateside now - and US automakers rely heavily on plants elsewhere. Will a Chevy imported from Canada be effected? How about a Ford imported from Mexico? For that matter, how about a Honda built in Ohio?

One possible scenario:

"About 44 percent of the 17.2 million new vehicles sold last year in the U.S. were imported from other countries, and half of those came from Canada and Mexico. All have parts from outside the U.S., sometimes as much as 40 percent."

http://fox28spokane.com/experts-say-auto-tariffs-would-raise-prices-cost-jobs-2/

It would be uglier than what we are seeing with woodworking machines in terms of the dollar value.

Simon

[Wade Lippman]

And that means interest rate hikes down the road.



Normally inflation is caused by an overheated economy and interest rates go up to quiet it down.
In this case inflation will be caused by destruction of international trade and economic chaos. The economy will be badly damaged and interest rates should go down. At least that is how I see it.

[Wade Lippman]

But that won't meet the stated objective of the current tariffs: jobs. Once those robots are in place for phones, auto plants, etc., only the corporate America will see the benefits (profits), but not the workers, nor the consumers, I am afraid.

In fact, why can't that be done in America now -- whether there are tariffs or not?

Simon

20 years ago the president of Stanley Hardware showed me some machines to make screws that hadn't been used in years because they changed to imported screws. I said that was odd; they were fully automatic so labor wasn't an issue, and questioned why imported screws would be cheaper.
He said that it hadn't occurred to him and he didn't know how to answer me.

These things can be complex.

[Simon MacGowen]

Normally inflation is caused by an overheated economy and interest rates go up to quiet it down.
In this case inflation will be caused by destruction of international trade and economic chaos. The economy will be badly damaged and interest rates should go down. At least that is how I see it.

Let's hope so.

But whose economy will be damaged? The Euro's, Canadian, Mexican and Chinese?

According to the logic of the impending trade wars, America would win them with ease and its economy should be the one that benefits.

When persistent inflation, regardless of who causes it, and low unemployment rates are recorded, "it's the Fed's job to... a tightening, or rate increase, attempts to head off future inflation." https://www.investopedia.com/university/inflation/inflation3.asp

When commodity and day to day goods prices increase, the pressure to increase wages also goes up. When everything goes up in prices, Fed. would try to put a break on the hot economy by hiking the rates.

I am no economist, but that is how I see it from the consumer's point of view.

Simon

[Doug Dawson]

Normally inflation is caused by an overheated economy and interest rates go up to quiet it down.
In this case inflation will be caused by destruction of international trade and economic chaos. The economy will be badly damaged and interest rates should go down. At least that is how I see it.

If China decides to stop buying US Treasuries (government bonds) then the Treasury interest rate will go up to attract other investors. This has a cascading effects on other things. Who is going to put money into a marginally-earning account when (at least short-term) government bonds are a better deal. This affects you and you and you. Econ 101.

The whole thing of "interest rates going down" was relevant when the economy needed to be stimulated. Not in this case, where somebody is

[Joe Jensen]

You have to think globally. On the natural resources side. There were apparently 5 huge ships full of soybeans headed to China when China responded with tariffs on soybeans. Rather than pay a 25% tariff, the soybeans headed to Saudi Arabia. Now apparently Saudi doesn't really use soybeans. Why would they buy a ship full? To resell them to China. Longer term what will happen is China will switch to other countries to buy, and those other countries will buy from the US. Long term global prices may rise slightly and overall demand could drop a little but it should basically level out. Harder for China as they are generally selling finished products. Take TVs, the US market is huge. China is very strong in the sub $500 category but not a sole source. China made TVs will be more expensive than before so when a consumer goes to the store the Korean TV will now be cheaper than the Chinese one. Korean demand will go up and Chinese down. Could be that global demand shifts here to. I was just in a Q&A session with the head of economic data in Washington DC. The estimates for the value of technology the Chinese government steals from the US ranges from $200B a year to $600B a year. This is what the US side of the battle is over.

[Edwin Santos]

If China decides to stop buying US Treasuries (government bonds) then the Treasury interest rate will go up to attract other investors. This has a cascading effects on other things. Who is going to put money into a marginally-earning account when (at least short-term) government bonds are a better deal. This affects you and you and you. Econ 101.



Unless the Fed steps in and fills the buying void left by China.
The Fed has done it before, and even now, they are the largest holder of Treasuries by a large margin. China is the largest foreign holder, with Japan #2.

A significant drop in T30 yields (with the corresponding increase in coupon) would have a catastrophic effect on the Federal budget due to the cost of borrowing. Unless of course we returned to a budget surplus situation and no longer needed to deficit finance. Imagine that.

As an aside, the manner in which the Fed buys debt issued by the Treasury is difficult to understand. Could you imagine meeting your own financial obligations by borrowing money from yourself when you're already in a deficit? It's really an oxymoron, at least to a simpleton like me. But yet it happens, and on an enormous scale.
After the Great Recession, a lot of smart people thought this practice would lead to massive inflation and devaluation of the US dollar but it didn't. I've given up trying to understand it and have now decided that modern macroeconomics is basically sorcery.
Edwin

[Mel Fulks]

Yeah ,China is touchy about Tiawan. I guess they consider its success embarrassing. So they claim they own it.

[Jim Becker]

Aren't the tariffs meant to shift us back to the manufacturing economy (steel plants, auto plants, etc.)?!


I think that there are some that are personally convinced that might be the end result, but suspect that most folks would agree that "that ship has sailed" for raw materials in particular. While manufacturing for industries such as automobiles has been doing ok in North America including the US (with "foreign" brands like BMW and others producing here, too), the kinds of capital expense necessary to reboot industries like steel wouldn't be very attractive at this point. We all live in the most global economy that's ever existed and tariffs don't just hurt the parties on either side of the argument, but hurt everyone at some level because there no longer are borders when it comes to makers and consumers for the most part. Tying this back into the original question, the proposed tariffs are going to have a major negative impact on the folks who product our tools, such as Shiraz, as well as the folks who buy them...the community we all belong to here. And it goes beyond that...this is going to hurt independent retailers, the trades and all the folks who buy goods and services produced by the tools that are going to cost more. IE...everybody. It's a vicious thing...

[Steve Milito]

Maybe it's the cynic in me, but I imagine they'll see this as an opportunity to raise prices whether or not the tariffs affect them. Need to stay x% above the Asian machinery to maintain their brand value.
Your not being a cynic, it's going to happen. In an open market, the domestic producer is already producing the total amount of product that he can at the price he can fetch. The foreign competitor is also presumed to be producing at equilibrium. When the foreign products are taxed it raises their price, thus lowering the units they sell. Potentially, the demand for domestic products will be somewhat higher, but the producer can't supply more units, thus the price adjusts to a new, higher equilibrium point for both domestic and foreign producers, with a decrease in overall units sold but with a higher percentage going to domestic producers. Incidentally, the domestic producer makes more profit.

[Peter Christensen]

I wonder if this will cause the Chinese to "dump" excess machines on the Canadian market at low prices just to move them out of their plants. Fingers crossed.

[Wade Lippman]

The estimates for the value of technology the Chinese government steals from the US ranges from $200B a year to $600B a year. This is what the US side of the battle is over.

If that is true, then it should be dealt with.
It is hard to see how a duty on aluminum from Canada or table saws is going help.

[Simon MacGowen]

If that is true, then it should be dealt with.
It is hard to see how a duty on aluminum from Canada or table saws is going help.

It is called collateral damage.

From Euro to Canada to Japan and even South Korea, the tariffs and trade wars may make little sense to them, but when the two largest economies in the world collide, everyone will suffer. Who knows? May be this is all brinkmanship, or may be this is the beginning of a new global model in which protectionism is the norm for everybody.

Simon

[Chris Parks]

I can't see the logic but then politicians usually have a simple view on this sort of stuff. In a nutshell China produces the vast quantity of the electronics the US and the ROW buys and there is no way on God's earth that that production capacity can be moved. That being the case either the consumer cops the tarriff bill or he goes on strike and refuses to buy. What won't happen is the production being moved to the US or any other country, it is just not going to happen and my bet would be that the retail sales might dip but they will return to normal after the initial sticker shock wears off so the citizen consumer copped it in the neck.

Australia is going through a similar thing at the moment, one of our wealthier citizens who owns a big chunk of retail sales in this country has been lobbying the govt to put a 10% tax on every single item bought from overseas and it comes onto effect this month. Amazon have said they won't play ball and told Australian consumers that we can't buy from their US website which while inconvenient is hardly going to mean much as there are ways around that embargo. What it does mean is that in a small way the US suffers because one greedy individual thinks he can increase his wealth by lobbying the govt.

[Martin Wasner]

To be fair to all of us, either this is the most boring topic of all time (cheap crappy Chinese tools go up in price) or a very interesting topic that impacts all of us (new tariffs that you might encounter in making an income, whether running a business or keeping your job).

It will probably stray into the 'more interesting' category.

Boring is accurate. Take the real debate out, and the discussion about whole versus 2% milk sounds positively riveting.

[Joe Jensen]

The meeting in Washington was with Kevin Hassett, Chairman of the Council of Economic Advisors. I did not know one thing he spoke about. He said that during the cold war to fight the spread of communism and Russia's influence on developing countries the US made it's markets very open with super low tariffs. China for example set 20% tariffs for US imports and we agreed to 2%. He said most trade deals were crafted for that purpose. Now that countries like China are first world and have economies that are plenty strong, imbalanced trades deals are no longer an important tool to spread capitalism.

[Simon MacGowen]

You have to think globally. On the natural resources side. There were apparently 5 huge ships full of soybeans headed to China when China responded with tariffs on soybeans. Rather than pay a 25% tariff, the soybeans headed to Saudi Arabia. Now apparently Saudi doesn't really use soybeans. Why would they buy a ship full? To resell them to China. Longer term what will happen is China will switch to other countries to buy, and those other countries will buy from the US .

This is so beautiful...on paper. It worked seamlessly as if soybeans were sold by the US govt to Saudi Arabia govt by contract and not a business transaction between two private businesses, one in US and in Saudi Arabia. In the scenario you painted, some mystery businessman would buy million metric tons of soyabeans from US farmers and then resell them to China which would take them because China had no alternatives or would like to help the US farmers during a trade war with America (one in three rows of soyabeans ends up in China currently)!

Brazil, not the US, is the largest exporter of soyabeans in the world and China does have an option if it decided to shut out a lot, not all, of imports of beans from America.

We can not look at tariffs or trade wars in one dimension. China is not a sitting duck, waiting to be shot just because you think your tariffs will and theirs won't.

I understand the trade deficits with China need to be fixed, but I don't understand how applying the same attack strategy on the allies would help the cause when the focus should be soley on China.

Simon

[Simon MacGowen]

Boring is accurate. Take the real debate out, and the discussion about whole versus 2% milk sounds positively riveting.
Boring? I bet every Forum owner would wish that every thread would go boring like this...running 6 pages long on the first day it is created.

Nothing is boring when people go back and forth on a topic with an inquring mind and in a civilized manner.

Simon

[Matt Mattingley]

China has become a super manufacture. Their raw materials is their labour force. They show up at the auctioning block out bid everybody for scrap metal. All the containers that are shipped here with product get almost a free ride back. They take back our garbage and turn it into gold.

The US buys raw aluminum about 40% from Canada. Canada ships quite a bit to China for their manufacturing and then it shipped to the US again as product.

The US manufactures used Mexico for close production in the automotive and manufacturing sector’s to cut rates. To make consumers happy happy happy.

The US manufacturers used Canada because of free trade agreement 20 some odd years ago. Canada was considered somewhat of an equal to the US with a very open border. (This changed shortly after 911.) product could still be bought from Canada at a 25% discount. Still to this day Canadian workers (with the same skill set) work for less money than the average American demands. Most Canadians pay more taxes which ends up leaving them with even less free spending money. Canadians also have a harsher climate which taxes each individual More then the average American and Mexican.

The state of California has a higher population than all of Canada combined.

The guy at the top is trying to find a way to tax his American people.

He could’ve just raised sales tax to 13% which Ontarians pay on everything purchased. But, this would make him the bad guy. He’s making the manufactures pay the tax/tariff.

I guarantee he will not put these same restrictions on national defence. Because I know otherwise. The defence department is still allowed to purchase without Tariffs.

In the end, you’ll be taking your old Table-saw, Lathe, drill press... to the local machine shop for repair which they’re going to gouge you an extra 25%. Or you learn how to fix things yourself before putting it in the scrap pile for you to re-purchase at 400% more.

[Keith Outten]

Ladies and Gentlemen,

I see this topic as an economic discussion as long as you keep politics out of your posts it will remain active.
I don't expect our Moderators to have to edit posts every day in order to maintain this thread so please keep your comments on the economics of this issue and leave the politicians to do what they will.

[Prashun Patel]

If we have to choose between boring and inflammatory, I choose boring. It keeps more members. Reminding people to remain civilized is better than heavy handed editing.

Remember Martin and Simon that much of the moderators attitude and practice is a reflection of what many of your peers and fellow members express to me privately.

We get many warnings from your peers to watch certain threads and to remind people to behave before things get out of hand.

Grumble if you wish but that’s how it is.

[Joe Adams]

Ladies and Gentlemen,

I see this topic as an economic discussion as long as you keep politics out of your posts it will remain active.
I don't expect our Moderators to have to edit posts every day in order to maintain this thread so please keep your comments on the economics of this issue and leave the politicians to do what they will.

Thank you, Keith. I hesitated to start this thread but considered it important to members who are contemplating new purchases for their shops. It has spawned some interesting discussion and I am grateful to everyone for remaining civil. Creekers are a good group of people and you host an amazing platform for us to meet.

[Jacob Mac]

I might have to move up my bandsaw purchase

[Bill Dufour]

I suppose they may change the names on some things for sale. rather then calling the fraction digital calipers special wood working ones they will just drop the wood working form the name.
Grizzly will have to do the same for their woodworking vertical mill...just call it a high speed spindle mill. Maybe call it good for metal and organic materials?
A table saw will become a non ferrous metal cutting saw, etc.
Bil lD

[J.R. Rutter]

Simon, the factories I think that can be made profitable in the future in North America will look more like this.
388148

Last year I met a former manager of a cabinet door factory in Oregon (who is a direct competitor to me) that currently produces 5k - 6k doors/day. Last year alone, they installed 15 robotic arms with plans to continue that trend in every possible step in the process.

[Simon MacGowen]

That is creative, although changing the name of an imported product wouldn't help, not to mention the risk of being accused of false declarations.

Is second hand or demo woodworking machinery subject to the same tariff? If not, may be lightly used tablesaws etc. would have a good export market.

Simon

[Nick Decker]

From Shiraz's post: "Another thing to remember, is that there will be industries worse off than us in this "fight". Almost everything you see at major box stores comes from China and all that will be going up!"

That's where I think the tariff nonsense will end. While a given politician might not mind offending woodworkers, he would think twice before offending everybody that shops at WalMart and Home Depot.

[Edwin Santos]

If we have to choose between boring and inflammatory, I choose boring. It keeps more members. Reminding people to remain civilized is better than heavy handed editing.

Remember Martin and Simon that much of the moderators attitude and practice is a reflection of what many of your peers and fellow members express to me privately.

We get many warnings from your peers to watch certain threads and to remind people to behave before things get out of hand.

Grumble if you wish but that’s how it is.

Hello - Don't you think it's been a civilized, interesting and relevant discussion thus far?
Interesting; not boring nor inflammatory. Give people a chance, you might be pleasantly surprised.

Of course, right after saying that, someone may show up with a flamethrower.... but, let's be optimists.
Maybe you moderators think we're a dangerous crowd, neither pretty nor proud. But I'd rather laugh with the optimists than cry with the cynics, Virginia.
No offense Prashun, just having a little fun....

[John Gornall]

At what point is the duty applied - I assume it's not at the retail price - maybe at the importer's cost - so the retail price would not need to go up the full 25%

And where does all the billions in duty collected go?

[Steve Shepherd]

Tariffs are essentially a supply-side shock....they act as a tax on the end consumer of the imported product. So specifically to the OP's observation's, woodworking stuff becomes more expensive, all things being equal. In the medium term, the relative exchange rate between currencies adjust to compensate for the increased cost, reducing the actual effectiveness of the tariff on reducing demand for the foreign product. The effectiveness of the tariffs is therefore a function of the flexibility of demand relative to price (ie: how essential is the product, can you go without it), and the availability of substitutes. That's why there was a "hold on a second" moment in the media when it was pointed out that the almighty iPhone fell on the list. And yes, a majority of the consumer goods found in walmart, Target, or most national chains are manufactured in China.

The thing is this: at this stage, China needs the US more than the US needs China to accomplish it's long term goals. It is a relative insular economy, driven by consumption, so in a game of who can hold their breath longest, US wins. It will be at the expense of a subset of the population or economy, but the overall effect is more manageable for the US than for China.

Finally, I'm Canadian, so let me say this: it seem most Canadians, including our PM, are misinterpreting the "security" aspect of the steel and aluminum tarriffs...the wording doesn't say that it is because Canada is a security threat....its saying that not protecting the integrity of the US aluminum manufacturing industry is a security risk...ie: they need to be able to have an industry that is self sufficient in the event of increased demand and disrupted global supply chains during a conflict. Problem is, the administration fails to realize that even a 25% tariff won't be effective in limiting imports, because of a) the sheer amount of aluminum the us needs can be manufactured domestically, and b) the magnitude of cheap electricity available from Hydro in Quebec provides a cost advantage that is VERY difficult to overcome in justifying the expansion of US aluminum production....even before the Canadian dollar falls further to compensate for the tariff.

On a lighter note, here's my NAFTA resolution proposal.....we get Mexico to move Cinquo de Mayo back a couple of months, move it, Canada Day and Independence Day to July 2, and the entire continent take the whole week off, with trade balanced evenly among Guacamole, beer, and BBQ related products.

[Simon MacGowen]

At what point is the duty applied - I assume it's not at the retail price - maybe at the importer's cost - so the retail price would not need to go up the full 25%

And where does all the billions in duty collected go?

"The U.S. International Trade Commission-Tariff Database, is an interactive data base that will enable you to get an approximate idea of the duty rate for a particular product. Please be aware that the duty rate you request is only as good as the information you provide. The actual duty rate of the item you import may not be what you think it should be as a result of your research.

CBP makes the final determination of what the correct rate of duty is, not the importer."

From the CBP website.

The tariff is just a duty and it goes to the Treasury. Some look at it as another form of tax as importers will try to pass the additional costs to the consumers. If a car is imported with a $5,000 tariff, the car dealership is not going to cut its profit margin to absorb that. Car buyers will see a price jump instead. Of course, car sales will be expected to drop as some will choose not to buy a car at all or will look for a second-hand car, and some car salesmen will lose their jobs. It is not pretty, but then no one says it will be.

Simon

[Simon MacGowen]

And yes, a majority of the consumer goods found in walmart, Target, or most national chains are manufactured in China.

The thing is this: at this stage, China needs the US more than the US needs China to accomplish it's long term goals. It is a relative insular economy, driven by consumption, so in a game of who can hold their breath longest, US wins. It will be at the expense of a subset of the population or economy, but the overall effect is more manageable for the US than for China.



I, for one, believe the trade imbalance between America and China should be worked on. However, if history is an indication, we must guard ourselves against over-optimism when it comes to trade wars. China has been more than once including in recent time after the June 4 1989 crackdown imposed with harsh economic measures, and she has proven its resilience. Who can hold their breath longest is a question with an unknown answer at this point. Not only is America acting alone this time, it has also widened its battlefield to include its allies as opponents! A coalition of opponents this time, if you may.

China is a tightly controlled country and it also has a huge reserve to act as a buffer, meaning the central government can disregard any market principles and enforce reliefs as it sees fit. Here, when prices go up because of trade wars, do we have a safety net like that? I am doubtful.

If a war is really easy to win, the war probably wouldn't start at all, unless your opponent is suicidal. I have not known China as a country looking for a solution to end itself (economically of course).

Simon

[Nick Decker]

Steve S., excellent post.

[Alex Zeller]

"The U.S. International Trade Commission-Tariff Database, is an interactive data base that will enable you to get an approximate idea of the duty rate for a particular product. Please be aware that the duty rate you request is only as good as the information you provide. The actual duty rate of the item you import may not be what you think it should be as a result of your research.

CBP makes the final determination of what the correct rate of duty is, not the importer."

From the CBP website.

The tariff is just a duty and it goes to the Treasury. Some look at it as another form of tax as importers will try to pass the additional costs to the consumers. If a car is imported with a $5,000 tariff, the car dealership is not going to cut its profit margin to absorb that. Car buyers will see a price jump instead. Of course, car sales will be expected to drop as some will choose not to buy a car at all or will look for a second-hand car, and some car salesmen will lose their jobs. It is not pretty, but then no one says it will be.

Simon

While the CBP may make the final ruling the importer is going to set the price of the tariff. The CBP will just issue guidelines and then investigate companies that might be under reporting. There's no way the CBP could go through the amount of stuff that this tariff is going to impact before July 6th. I wouldn't be surprised if a lawsuit is filed asking for more time to get the numbers correct. After all any company that gets it wrong is on the hook, not the consumer who bought the product. An honest mistake could bankrupt a company if their profit margins don't cover the cost of the tariff.

[Simon MacGowen]

On a lighter note, here's my NAFTA resolution proposal.....we get Mexico to move Cinquo de Mayo back a couple of months, move it, Canada Day and Independence Day to July 2, and the entire continent take the whole week off, with trade balanced evenly among Guacamole, beer, and BBQ related products.

With one more condition: All other goods crossing borders during that week will be tariff-free!:D

Simon

[Joe Jensen]

This is so beautiful...on paper. It worked seamlessly as if soybeans were sold by the US govt to Saudi Arabia govt by contract and not a business transaction between two private businesses, one in US and in Saudi Arabia. In the scenario you painted, some mystery businessman would buy million metric tons of soyabeans from US farmers and then resell them to China which would take them because China had no alternatives or would like to help the US farmers during a trade war with America (one in three rows of soyabeans ends up in China currently)!

Brazil, not the US, is the largest exporter of soyabeans in the world and China does have an option if it decided to shut out a lot, not all, of imports of beans from America.

We can not look at tariffs or trade wars in one dimension. China is not a sitting duck, waiting to be shot just because you think your tariffs will and theirs won't.

I understand the trade deficits with China need to be fixed, but I don't understand how applying the same attack strategy on the allies would help the cause when the focus should be soley on China.

Simon

One more datapoint. The European Union applies a 10% tariff on cars imported from the US. The US has a 2% tariff on cars coming into the US from Europe. Why should we continue with this?

[Simon MacGowen]

One more datapoint. The European Union applies a 10% tariff on cars imported from the US. The US has a 2% tariff on cars coming into the US from Europe. Why should we continue with this?

Then raise the tariff for cars from Europe, but not at the same time when you are dealing with your biggest economic foe which is China. When you stack China with Euro, Canada, Mexico, Japan and South Korea, you are not the lion you think you are in the cage. Timing is everything. Focus is a strategic edge. I feel sorry for the Commerce Secretary who has not one but multiple battle fronts to tend to.

Simon

[Joe Jensen]

Then raise the tariff for cars from Europe, but not at the same time when you are dealing with your biggest economic foe which is China. When you stack China with Euro, Canada, Mexico, Japan and South Korea, you are not the lion you think you are in the cage. Timing is everything. Focus is a strategic edge. I feel sorry for the Commerce Secretary who has not one but multiple battle fronts to tend to.

Simon

I am just making counterpoints. IF the US is finally going to level the trade and IP enforcement playing field, now is the right time. We have been told for years to no longer expect GDP growth at the 3% level, and that growth below 2% is the "New Norm". Q1 numbers showed a GDP growth rate over 3% and Q2 numbers are reportedly going to show a GDP growth rate of nearly 4%. We now have more job openings that people seeking jobs, and the last 2 months were 2 of the 4 months since WW2 to have unemployment under 4%. If anything the economy may be overheated. If you are going to correct trade unfairness this would be a good time to do it, rather than when the economy is weaker.

https://www.realclearpolitics.com/video/2018/06/05/council_of_economic_advisers_chairman_best_economi c_data_since_world_war_ii.html

[Simon MacGowen]

If you are going to correct trade unfairness this would be a good time to do it, rather than when the economy is weaker.



This, I agree.

A more preferred approach in my opinion is to deal with China first, and then the rest, OR deal with the rest, and then China. There are pros and cons with either approach, but both are still better than the current approach, lumping all your traditional allies with the #1 source of your trade imbalances. The current approach is the exact opposite of "Divide and Conquer."

Simon

[John Patric]

One more datapoint. The European Union applies a 10% tariff on cars imported from the US. The US has a 2% tariff on cars coming into the US from Europe. Why should we continue with this?

True but tariffs are not generally like for like so the EU might be buying US wheat and the tariffs on cars is to to try and even out a deficit. One thing I notice is that all the talk is about goods and no consideration is given to services when talking about trade imbalances.

[Joe Jensen]

True but tariffs are not generally like for like so the EU might be buying US wheat and the tariffs on cars is to to try and even out a deficit. One thing I notice is that all the talk is about goods and no consideration is given to services when talking about trade imbalances.

True, we were told the administrations ultimate goal is to make all tariffs "like for like" meaning that all tariffs everywhere are equal.

[David Kumm]

There is always more opposition to dealing with a problem than ignoring it. Dave

[Alex Zeller]

Tariffs have been a problem for a long time and when people accept them, stop thinking about them is when pain is going to be felt when we are faced with trying to remove them. China is not going to remove it's tariff on new cars imported from the US without being forced to. The "chicken tax" tariff is one of the reasons why companies like Toyota now build vehicles in North America. China has a huge automotive market that is being fed mainly by cars being built in China because of the cost to import is just too high. With a Chinese lathe on backorder this could very well hit my wallet but I'm hoping that in the long run it'll balance things out.

[Ray Newman]

"There is always more opposition to dealing with a problem than ignoring it." -- Dave Kumm

BINGO!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Steve Schoene]

Alex. The tariffs stimulate increased domestic production purely because domestic manufacturers can charge higher prices. Completely unlikely that the expansion will encourage domestic prices to drop to anything close as inexpensive as before the tariff.

[Martin Wasner]

Last year I met a former manager of a cabinet door factory in Oregon (who is a direct competitor to me) that currently produces 5k - 6k doors/day. Last year alone, they installed 15 robotic arms with plans to continue that trend in every possible step in the process.


We were talking at lunch the other day what it would take to let mama Fanuc take over the whole works. From scanning and defecting rough lumber, to getting it ready to load in the truck. I'm betting stacks of millions. But, I wouldn't have to attempt to hire cabinet makers any longer, just delivery people and maintenance techs.

[Alex Zeller]

Alex. The tariffs stimulate increased domestic production purely because domestic manufacturers can charge higher prices. Completely unlikely that the expansion will encourage domestic prices to drop to anything close as inexpensive as before the tariff.

In part yes, but they are also being used to get China to drop it's tariffs on US goods. China has been playing this game for some time now and has learned how to force companies that want to sell in China to open up factories in China vs import. Once there it's real easy for the Chinese to get intellectual property used in the production of goods. This round of tariffs is meant to punish China for doing so. There's already a next round being planned 4 times the size of this one. Clearly the plan is to make China feel pain.

[Simon MacGowen]

True but tariffs are not generally like for like so the EU might be buying US wheat and the tariffs on cars is to to try and even out a deficit. One thing I notice is that all the talk is about goods and no consideration is given to services when talking about trade imbalances.

I mentioned about China having a weapon in its pocket to retaliate: controlling the number of tourists going to the States (they spend more money than any other tourists. Many Japanese shops (even when some of the goods they sell are made in China!) depend on the Chinese tourists to flourish). They can also send their students to other countries like Canada, the UK and Australia if they have to do that, which is a big big source of money for many university programs in the States. Many private boarding schools in the UK will be in trouble if China bans its citizens from sending their kids to study there.

Service wise (which is not part of the trade imbalances), China can inflict real pains on some sectors...but if that happens, we are talking about all-out war.


Simon

[Simon MacGowen]

There is always more opposition to dealing with a problem than ignoring it. Dave

I may have missed it, but I have not seen one single post in this thread that advocates taking no action.

It is irresponsible for any leader or decision maker to push the country into trade wars without careful planning and execution. People's career, jobs and lives are at stake here. You cannot go to a trade war with someone by saying some will suffer, but some will gain. Measures must be objectively evaluated and their consequences planned for. To rally the country and its citizens, you need to explain your strategy. I see no strategy here. If there is one, it is so fluid that it does not seem to exist.

If your auto sector benefits from a trade war, what about the farmers who could be hard hit? Do we have a relief plan in place to help the farmers before we fire the first shot? This is not a game or a redistribution of wealth. Yes, we see a long-term goal, but in the short-term, you have got to have measures in place to help you reach the long-term goal.

Simon

[Rich Enders]

It is 25% of the ex. Works price as noted on the shipping paperwork.

[Rich Enders]

The July 6 (US$ 34 billion) grouping "only" covers 818 HTS categories. A second set (US$16 billion covering 284 categories) is now in public hearings and may take 3 months to complete. The Administration has asked the USTR to suggest a third set (US$200 billion) that would be subject to a 10% tariff. I have also heard that there is a fourth set covering an additional US$200 billion in consideration, but that is unverified.

[Simon MacGowen]

The Administration has asked the USTR to suggest a third set (US$200 billion) that would be subject to a 10% tariff. I have also heard that there is a fourth set covering an additional US$200 billion in consideration, but that is unverified.

Better reschedule the meeting with my financial advisor to 2021...:D

Simon

[Simon MacGowen]

We were talking at lunch the other day what it would take to let mama Fanuc take over the whole works. From scanning and defecting rough lumber, to getting it ready to load in the truck. I'm betting stacks of millions. But, I wouldn't have to attempt to hire cabinet makers any longer, just delivery people and maintenance techs.

https://www.youtube.com/watch?v=tRKmPMBOLao

[Frederick Skelly]

If we have to choose between boring and inflammatory, I choose boring. It keeps more members. Reminding people to remain civilized is better than heavy handed editing.

Remember that much of the moderators attitude and practice is a reflection of what many members express to me privately.

We get many warnings from your peers to watch certain threads and to remind people to behave before things get out of hand.

No offense intended to anyone, but I agree with this. I have no interest in folks' politics - only their tools and projects. :) :) :)

[Rich Enders]

Of interest here is the fact that the majority of the "Chinese" exports that are a target of this tariff, are coming from from SE China in the Shenzhen area not so far from Hong Kong. This is a massive economic area in which foreign investment is both allowed and encouraged. The purpose for China is to employ vast numbers of workers (plus some tax revenue). The main advantage for the foreign investor is the low cost and availability of the labor pool. The main restriction on the foreign investors is that they can only export their production. This has the effect of protecting the existing domestic market for the existing suppliers, and in encouraging new manufacturers to locate in China and employ the population.

These foreign investors are folks like Ford, and Whirlpool, and GM, and Taiwanese machinery producers, and Japanese electronics companies, and virtually all of the world's fortune 5000 (and a lot of smaller investors)

So in targeting "Chinese" exports with this tariff, are we really hurting the Chinese government? The effect may be to cause some unemployment, but somehow I don't see it properly targeting what we want.

The issue as I understand it is intellectual property (IP). The companies that want to do something high tech anywhere in China have to agree to share their IP with the Chinese. For years China has been an assembler of components for others that have technology (like Apple whose phones are assembled by a Taiwanese company in factories located in China) (For $8 each). Now China want to move further into manufacturing technical items as well as doing the assembly. So they are strong arming companies who want to take advantage of the labor pool.

So, is a tariff that will have a minimal impact on the Chinese government (and a far greater impact on the US economy) going to solve the problem? It doesn't make sense to me. Somehow we all (countries) need to gang together to force China to play fair by not allowing technology to be arm wrestled away from the rightful owners.

[Wade Lippman]

The issue as I understand it is intellectual property (IP). The companies that want to do something high tech anywhere in China have to agree to share their IP with the Chinese.

That's what I don't get. They aren't stealing anything; if companies don't want to share their IP, then they don't have to. If the practice is illegal, the US should do something about it appropriate to the offense. If it is legal, then starting a trade war is absurd.

[Ron Citerone]

That's what I don't get. They aren't stealing anything; if companies don't want to share their IP, then they don't have to. If the practice is illegal, the US should do something about it appropriate to the offense. If it is legal, then starting a trade war is absurd.

I agree. So some company makes a deal with the devil risking their IP in exchange cheap labor and access to a controlled market economy and I am supposed to feel bad? The risk is all put on U.S. workers and shareholders IMHO.

[Jerry Olexa]

Simple summary: IT'LL COST YA MORE to buy those tools!!

[andrew weldon]

Basically I should probably put in that preorder/backorder for the Grizzly 15" planer I've been waiting to buy..

[Bill Dufour]

I belive the oldest building ion California is the customs house in Monterey. Governments were funded by charging tariffs on cargo imported into the country. Income tax was a temporary measure to pay for world war one and it would go away after that war ended 100 years ago.
Bill D

[Alex Zeller]

Basically I should probably put in that preorder/backorder for the Grizzly 15" planer I've been waiting to buy..

If it's not in the states before the 6th then it'll be subject to the tariff. If it's made in Taiwan then it's not part of the tariff. But Grizzly is planning on a 5% price increase on Taiwanese equipment because of rising costs not related to this tariff. Basically if it's not in stock chances are you'll not get it before the 6th. It is possible the shipment Grizzly is waiting for that could show up before the 6th may not have every piece of equipment already sold but if it's one of their more popular models I think the odds are against you.

[Matt Mattingley]

Just imagine if you can drive across the border and pick it up for 25% less and call it personal use.....

[Bill Orbine]

Just imagine if you can drive across the border and pick it up for 25% less and call it personal use.....

Or....... you can just go out and buy used three phase old iron:rolleyes:

[Curt Harms]

That's what I don't get. They aren't stealing anything; if companies don't want to share their IP, then they don't have to. If the practice is illegal, the US should do something about it appropriate to the offense. If it is legal, then starting a trade war is absurd.

It seems to me that if a company chooses to manufacture in a country using that country's engineering and technical talent, they're sharing their IP whether they intend to or not. Re tariffs how is it okay for 20% tariffs going one way and 2% the other? I always thought the unbalanced trade was a means to help countries whose manufacturing base was devastated by WWII rebuild. I think they've been rebuilt and then some. So what's the excuse for ongoing one way trade deals?

[Rich Enders]

Curt,

I am just learning as the situation develops, but certainly under the WTO (which most of the worlds countries are members of including the US, and China) there is no possibility of a 2%/20% trade tariff situation. Please note Item 1 of the WTO principals:

1. Non-discrimination. There are two major components: The most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the mainWTO rules on goods, services, and intellectual property, but their precise scope andnature differ across these areas. The MFN rule requires that a WTO member mustapply the same conditions on all trade with other WTO members, i.e. a WTOmember has to grant the most favourable conditions under which it allows trade in acertain product type to all other WTO members.[49] "Grant someone a special favourand you have to do the same for all other WTO members."[30] National treatmentmeans that imported goods should be treated no less favourably than domesticallyproduced goods (at least after the foreign goods have entered the market) and wasintroduced to tackle non-tariff barriers to trade (e.g. technical standards, securitystandards et al. discriminating against imported goods).[49]






Rich

[Steve Demuth]

The thing is this: at this stage, China needs the US more than the US needs China to accomplish it's long term goals.

I rather doubt that. Two decades ago when I first travelled to China, maybe. Today, exports to the US are about 3.5% of China's GDP, and their consumer economy is growing rapid enough to absorb the consequences of a significant reduction in that pretty rapidly. Clipping their economy by 1% in a trade war with the US will be at most a short-term set back.

China has some pretty serious economic challenges in the years ahead (they have a huge internal debt fueling their growth, a rapidly aging population, and rampant pollution and resource degradation), but US exports are a small piece and f their puzzle.

[Steve Demuth]

That's what I don't get. They aren't stealing anything; if companies don't want to share their IP, then they don't have to. If the practice is illegal, the US should do something about it appropriate to the offense. If it is legal, then starting a trade war is absurd.

There is both quasi-theft and outright theft of IP rampant in China.

The quasi-theft is the requirement that companies that operate in China do so through a Chinese partner. This is at least of questionable illegality in the WTO rules, and while not a uniquely Chinese practice, it is much more thorough there. This forces transfer of IP to Chinese companies in order to access their labor market.

Outright theft is also not uncommon. I saw it in action often in an earlier job - Chinese engineers would come to work for us for a few years right out of school or a Chinese company, and after 3 years move over to a Chinese company that would in short order put a competitive product to ours in the market. Since the products I worked on were software, it wasn't terribly difficult to prove that this involved outright theft of code, as well as transfer of protected IP if we could get access to the competitor's software (which on occasion, we did).

I am not saying other countries don't do this, but it is a far more common and institutionalized in China than anywhere else I've ever worked.

[Peter Kelly]

China has some pretty serious economic challenges in the years ahead (they have a huge internal debt fueling their growth, a rapidly aging population, and rampant pollution and resource degradation).The environmental degradation in China is horrifying. If you're from the west and not used to breathing the toxic soup that usually hangs over the large cities (Beijing), your lungs will start to hurt after being there for a day or two. Food security is up at the top of that list of challenges as well. How to feed the largest population with precious little clean water and non-contaminated arable land is going to be incredibly difficult.

"Cheap" items from there will have come at a terrible cost.

[Rich Enders]

The following relates to your quasi-theft I believe. "There are signs that China is sensitive to U.S.pressure, with senior official visits to Washingtonand a vague statement<http://www.scmp.com/news/china/diplomacy-defence/article/2138087/china-vows-end-forced-tech-transfers-manufacturing> earlier this week by Chinese premier LiKeqiang that China would no longer forcetechnology transfers to Chinese companies".

Rich

[Joe Jensen]

That's what I don't get. They aren't stealing anything; if companies don't want to share their IP, then they don't have to. If the practice is illegal, the US should do something about it appropriate to the offense. If it is legal, then starting a trade war is absurd.

What they did to ZTE was block their shipments into the US. ZTE just recently paid a $950M fine to open shipments up again. That said the tech they stole gave them way more than $950M in benefit. This problem is very broad across tech in China. All other developed countries enforce IP infringement, China does not. Enforcing company by company is not getting the job done. Getting China to enforce IP infringement and getting equal tariffs are the goals. The tariffs are very unlikely to last long. No country wants a trade war. This is Trump forcing a negotiation. He may not win but he is forcing the issue.

[Simon MacGowen]

The environmental degradation in China is horrifying. If you're from the west and not used to breathing the toxic soup that usually hangs over the large cities (Beijing), your lungs will start to hurt after being there for a day or two. Food security is up at the top of that list of challenges as well. How to feed the largest population with precious little clean water and non-contaminated arable land is going to be incredibly difficult.

"Cheap" items from there will have come at a terrible cost.

China has now stopped accepting the imports of recyclable plastics, and many western countries (cities and towns), used to shipping trashes (including discarded computers etc.) to China, are now looking for other solutions including trying to find other Asian countries which are willing to take them. Wonder if we in the west would look at this "imbalance" and do something about it!

So that part of the world is good for use as landfills and ours isn't? Talk about imbalances!


Simon

[Joe Jensen]

China has now stopped accepting the imports of recyclable plastics, and many western countries (cities and towns), used to shipping trashes (including discarded computers etc.) to China, are now looking for other solutions including trying to find other Asian countries which are willing to take them. Wonder if we in the west would look at this "imbalance" and do something about it!

So that part of the world is good for use as landfills and ours isn't? Talk about imbalances!


Simon

I have to travel there frequently for work. Eating there always concerns me, especially seafood as much of it is farmed and the fish farms are super scary.

[Simon MacGowen]

This is Trump forcing a negotiation. he is forcing the issue.

Good...but the EU, Canada, and even Mexico are not stealing like China!

Simon

[Charlie Jones]

I wouldn’t worry about a trade or tariffs. The US holds most of the cards. If the Chinese want to sell their cheap machinery here they will back off on a trade war. If they don’t Taiwan or some other countries will take up the slack. An American company may even get in the game. Just hold off a little while before buying or buy before the tariffs go into effect. This will all straighten out as other governments realize the US means business. We have been very tolerant of their tariffs and price controls and thefts for years. It is about time to end that. We finally have a leader who can make it happen.

[Chris Parks]

The thing is this: at this stage, China needs the US more than the US needs China to accomplish it's long term goals.

That is classic western thinking, we think in years and at most a decade or two, the Asians think in centuries to achieve their goals. There is a big push by China at the moment and in the long term which is being talked about in the Asian/western pacific/sub continent regions about this new Chinese policy....

https://www.smh.com.au/world/asia/china-s-trillion-dollar-project-changing-the-world-20180618-p4zm4k.html

Taken from here which has more information

https://www.smh.com.au/topic/belt-and-road-initiative-jle

And it has begun, the first train that links London the China

https://www.youtube.com/watch?v=9GQrO6kAMcA

China will in the coming century steam roll the western world but every western country has their head in the sand.
You can call me a pessimist which I am sure will happen but I prefer to think I am a realist.

[Matt Mattingley]

The way I look at it, it’s just a tax on Business owners, and consumers, Middle-class, upper class. The next thing that will happen with this kind of inflation is...minimum wage will rise to 10-$12/hour. Business costs will rise and the popular vote will be won.

This is a popularity contest. If everybody goes to the poles that got a raise and their boss made less how will the voter turn out be next time round?

[Matt Mattingley]

Ive
That is classic western thinking, we think in years and at most a decade or two, the Asians think in centuries to achieve their goals. There is a big push by China at the moment and in the long term which is being talked about in the Asian/western pacific/sub continent regions about this new Chinese policy....

https://www.smh.com.au/world/asia/china-s-trillion-dollar-project-changing-the-world-20180618-p4zm4k.html

Taken from here which has more information

https://www.smh.com.au/topic/belt-and-road-initiative-jle

And it has begun, the first train that links London the China

https://www.youtube.com/watch?v=9GQrO6kAMcA

China will in the coming century steam roll the western world but every western country has their head in the sand.
You can call me a pessimist which I am sure will happen but I prefer to think I am a realist.

You know your stuff. But there is a lot of debt everywhere. The guy at the top is going after countries that have the most debt, but also have the most steak in US treasurys and bonds.

He’s asking for is shareholders to give back or he’s going to make his citizens, that consume shareholders products, pay!

I would like him to put a tariff on every border 25%! Built US or get taxed! Everything from water, electricity, fuel, electronics, vehicles, machines, airplanes, Metal, dairy, agricultural, every thing that crosses the border.

Whether it is from Nigeria, Kuwait, Japan, Canada, Mexico, Middle East, South America, China, Taiwan, Australia, England, UK, Iron, Iraq, Kuwait, United Arab emirates… put 25% tariff on them all! This will make America great again!

Iceland does 150% to 200% tariff on everything shipped into the country!

But they consume the most electricity per capita of the entire world. This is some more food for thought.

[Chris Parks]

When the US became economically dominant in the early 20th century and more so after WW2 the rest of the world shrugged and got on with it so to speak. Now that the US is being threatened from another country that eventually will take over that role the US is in panic mode about the whole thing. Countries have periods of influence and dominance, witness the period that Britain ruled the world and how its influence has faded in the period since the last world war. The same will happen to the US, maybe to a lesser degree but it is inevitable. I won't see it as the decline takes place but I will put money on it happening.

[Matt Mattingley]

When the US became economically dominant in the early 20th century and more so after WW2 the rest of the world shrugged and got on with it so to speak. Now that the US is being threatened from another country that eventually will take over that role the US is in panic mode about the whole thing. Countries have periods of influence and dominance, witness the period that Britain ruled the world and how its influence has faded in the period since the last world war. The same will happen to the US, maybe to a lesser degree but it is inevitable. I won't see it as the decline takes place but I will put money on it happening.
The guy at the top called this the “on“ a national security risk... this is no different then implementing the Adam bomb affect... Who is at risk of fall out... and what are the implications?

Result, we will all pay more for machines and everything built from other countries. Who is crying? We have lots of money, let’s spend it!

[Van Huskey]

If anyone is interested these are the relevant HTSUS sections

8465.92.00 Planing, milling or molding (by cutting) machines for working wood, cork, bone, hard rubber, hard plastics or similar hard materials
8465.93.00 Grinding, sanding or polishing machines for working wood, cork, bone, hard rubber, hard plastics or similar hard materials
8465.94.00 Bending or assembling machines for working wood, cork, bone hard rubber, hard plastics or similar hard materials
8465.99.02 Machine tools for working wood, cork, bone, hard rubber, hard plastics and similar hard materials, nesoi

Seems to cover just about everything.

I look forward to some interesting discussions at IWF in August.


edit: BTW nesoi means not elsewhere specified or included and is added to make 8465.99.02 a catch all

[Simon MacGowen]

If anyone is interested these are the relevant HTSUS sections
8465.99.02 Machine tools for working wood, cork, bone, hard rubber, hard plastics and similar[/COLOR]hard materials, nesoi

This is the killer. Unless one can get an exemption or resorts to the use of false declarations, there is no escape from the tariff.

Taiwanese manufacturers are laughing to the bank.

Simon

[Martin Wasner]

Chinese machines going up isn't really that big of a deal. It's an infrequent expense, and still doesn't come close to pricing them out of their market.

Given the choice, I'd rather pay $2500 more on a $10,000 tool than the $35 more on a sheet of plywood I'm paying

[rudy de haas]

I would expect someone from Grizzly to weigh in on this but, pending an authoritative comment, my guess is that this will have very little effect because Grizzly gets much of its better stuff from Taiwan, not China. Taiwan may now do in reality what Tom Clancy had them doing in fiction: putting "We're the good guys" labels on things to make sure American importers and consumers are clear on the distinction.

[scott vroom]

Rudy, Grizzly weighed in here: https://sawmillcreek.org/showthread.php?265843-Grizzly-s-prices-on-some-machines-going-up-25

[John C Cox]

I live in a place that saw nearly 100% of manufacturing dry up and die because of cheap imports from countries that levy gigantic protective tariffs against the items produced here... And as a result - our families have to settle for low paying service sector jobs.... That has driven many working class families into poverty because the door is simply shut on them..

I don't much like the idea of my prices going up - I do like the prospect that more jobs will be available for myself, my relatives, and hopefully for my kids. So I say - let's try it out and see how it goes.

[Yonak Hawkins]

Reckless, poorly-thought-out initiatives like this contrived trade war are how strong economies of influential Nations become also-rans. Once the other Nations of the World realize they can carry on business among themselves very well, without the bothersome dominion of the US, they will do just fine. It's been heading this way for awhile now, anyway. This will just accelerate it.

[Simon MacGowen]

The clash between the world's largest and second largest economies will happen sooner or later. If this isn't the one, come or near China 2035, a goal China has established to surpass the America, the clash will be a reality. America has the military power, but the monetary and soft powers are receding, more so with the soft power as she leaves the climate pact, human rights council and the G7 (in spirit).

No one has the crystal ball, but conflicts are unavoidable as one tries to maintain its world's leader position while another seeks to displace and replace it. 2035 may be a bit too optimistic, but 2050 could be a possible milestone for China to work on.

Simon

[Matt Mattingley]

I would expect someone from Grizzly to weigh in on this but, pending an authoritative comment, my guess is that this will have very little effect because Grizzly gets much of its better stuff from Taiwan, not China. Taiwan may now do in reality what Tom Clancy had them doing in fiction: putting "We're the good guys" labels on things to make sure American importers and consumers are clear on the distinction. Taiwan is mainly supplied by China, and all countries involved. Up up up goes the consumer price. There is no hiding from industrial industry!

I’ll give you an example. I make something that is made in Canada. To ship to the US and it is 90% aluminum, I got to declare that. 30% of what I shipped is made in China, I got to declare that. All new production orientation values I got to declare to the US. Boooo to that. This pretty much takes any consumer grade machine and gives it tarrifs. 99% of what I build custom made machines, tooling and education people entering the industry. I try to keep a constant rapport with students, faculty and businesses to achieve the best results possible. The new up incoming students, I am severely struggling with! They want to be on their iPhones… there are new social thing is gone rampid!

Internet drop shippers just ding the customer! It’s a pretty easy motto thrown off on government tariffs.

Boo who... order for me today, I don’t care. I make or don’t make,... just like anybody else.

[Grant Wilkinson]

To me, we, the consumers are the biggest part of this. It's not the cheap import that puts a Canadian or US manufacturer out of business. It's us, the consumers, buying the cheap imports that puts the Canadian or US business out of business. Every time a new Walmart opens here, there are news stories about how the wicked Walmart will kill the local Ma and Pa store. They would not die if I and other buyers didn't shop at Walmart. But, on opening day, we are lined up like sheep outside the door to buy cheap Chinese tee shirts. Then, we go home and wonder why Ma and Pa clothing store has closed.

In woodworking terms, if we all bought Oneway or General or Robust or whatever made in Canada or US, General would still be making machines in Canada. Instead, we choose to buy imports from China, then blame China for General going out of business. I'm not saying that I am any different from anyone else. I have so much money to spend and I want the best bang for my buck. But, I need to realize that I'm part of the problem.

[Simon MacGowen]

To me, we, the consumers are the biggest part of this. It's not the cheap import that puts a Canadian or US manufacturer out of business. It's us, the consumers, buying the cheap imports that puts the Canadian or US business out of business. Every time a new Walmart opens here, there are news stories about how the wicked Walmart will kill the local Ma and Pa store. They would not die if I and other buyers didn't shop at Walmart. But, on opening day, we are lined up like sheep outside the door to buy cheap Chinese tee shirts. Then, we go home and wonder why Ma and Pa clothing store has closed.

In woodworking terms, if we all bought Oneway or General or Robust or whatever made in Canada or US, General would still be making machines in Canada. Instead, we choose to buy imports from China, then blame China for General going out of business. I'm not saying that I am any different from anyone else. I have so much money to spend and I want the best bang for my buck. But, I need to realize that I'm part of the problem.
Not just us consumers but both us and the merchants who in the name of growth and profits move their production overseas.

We just learned that Harley Davidson. is not raising its prices but is shifting some of its production out of US to avoid the EU tariff.

Simon

[John C Cox]

To me, we, the consumers are the biggest part of this. It's not the cheap import that puts a Canadian or US manufacturer out of business. It's us, the consumers, buying the cheap imports that puts the Canadian or US business out of business. Every time a new Walmart opens here, there are news stories about how the wicked Walmart will kill the local Ma and Pa store. They would not die if I and other buyers didn't shop at Walmart. But, on opening day, we are lined up like sheep outside the door to buy cheap Chinese tee shirts. Then, we go home and wonder why Ma and Pa clothing store has closed.

In woodworking terms, if we all bought Oneway or General or Robust or whatever made in Canada or US, General would still be making machines in Canada. Instead, we choose to buy imports from China, then blame China for General going out of business. I'm not saying that I am any different from anyone else. I have so much money to spend and I want the best bang for my buck. But, I need to realize that I'm part of the problem.

It goes beyond this....

What has happened is that the US (and many other nations as well) has used trade policy to "Grease the Wheels" of their diplomatic efforts on other fronts.... A bit of Quid pro quo.... It was a knob they could turn - so they did.....

This effort to "Grease the Diplomatic Wheels" by opening the doors to foreign trade does no good if your consumers at home will not BUY said foreign products because they prefer the home made ones instead or because your domestic product is less expensive.....

For example - notice that you cannot buy a Crescent brand USA made adjustable wrench or Stanley USA made chisel for ANY price... It's not that the Import stuff is a competing "down market" line... It's that the "Up market" lines are completely gone.... This is intentional... Remove the choice so you cannot even buy domestic for ANY price.

During the Gulf War.... We made large trade concessions to gain airspace and land bases... To cement those trade concessions - our government enlisted Large Multi-National retailers such as K-Mart, JCPenny, Sears, and Walmart to ensure those foreign made goods made it to stores here for sale..... They literally forced US manufacturers to foreign source a large % of the goods sold thru the retailer or no sales through these large retail giants... It didn't matter that the respective US product was higher quality and lower priced - which it was.... That was the deal PERIOD!!!!

And foreign sourcing this stuff was a ROYAL PITA!!!!! Most of those places were not set up to meet US quality, packaging, or shipping demands... Our boys spent countless hours and millions of dollars sorting out their production, processes, and quality to be able to sell here... Very expensive.... And at the end of it - the "Thanks" they got was getting back-doored by the very same large retailers and foreign "partners" they had worked so hard to sort out.... And then - cut off from this revenue stream to pay off their "Investment" they died....

It really was very nasty - and we did it to ourselves...

But I suppose that we see how it all has worked out for these large Retail Giants.... Lets be honest - why would I want to pay top dollar for cheap import junk at Sears when I can pay very little for the same cheap import junk at WalMart... On that list of retailers... There is only 1 that is not currently on the ropes for these decisions.... Nobody will pay JCPenny or Sears prices for Walmart quality goods... We will pay up market prices for up market quality made in the US and Europe - but we won't pay these high prices for cheap imports... And so guess what - I am not crying for them.....

[Rich Enders]

Simon,

Isn't it 2025?

[Simon MacGowen]

Simon,

Isn't it 2025?

2025 is the Made in 2025 strategic plan; 2035 to surpass America https://www.tandfonline.com/doi/abs/10.1080/23340460.2016.1210240?journalCode=rgaf20 ; and 2050 the global leader https://www.bloomberg.com/news/articles/2017-10-17/xi-to-put-his-stamp-on-chinese-history-at-congress-party-opening

Their plans may not work out of course, but they have the ambitions. Often, their plans are also for domestic consumption purposes, and it is very hard for outsiders and the so-called experts whom have been proven wrong many times to really assess their chances of success. But their day will come, and that is not something the world can really change. They are investing in good wills (soft power) with a lot of nations outside America, and overtime, they will reach the goal of being recognized as the leader in many areas such as climate control. They are buying time as they have been over the past 30 years. Time is really on their side.

Simon

[Simon MacGowen]

So where is all this tariff money going?

The consumers will be paying for it and the government will be collecting it. Sounds like a new tax to me.

Is this how the powers to be plan to pay for the tax decrease the wealthy just got? :eek:

Whether we look at it as a new tax, an old tax, or as a necessary cost to try to bring the trade imbalance down, the money goes to Treasury. Same for other governments which are in trade wars with America. Someone has got to pay the bill, and consumers round the world are stuck here. The tariffs on the woodworking machines and tools will reduce some sales, but excite those who are sourcing from EU, Taiwan and Mexico, as well as the second-hand market.

Simon

[Chris Parks]

There is a funny thing about taxes, if you don't see them you forget about them. When Australia went to a Goods & Services Tax instead of a sales tax added at the point of sale it was generally known that in a very short time no one would worry about it because effectively it was hidden in the retail price and that is exactly what has happened. The same happens with tarriffs, include it in the cost of importing and it goes away so after a short while it becomes business as usual as no one sees it.

[Martin Wasner]

Same with income tax. If everyone had to write a check for the previous years owed taxes, people would be much more involved in the operation of their government.

[rudy de haas]

Well..

First: My understanding is that the American side thought they had a bilateral deal with Canada in place at the end of the recent G6 meeting - but then Trudeau called a press conference to play politics with the issue and made things much worse for everyone. Sad and pathetic and everyone will be hurt by this in the short term. In the longer term, however, a genuine free trade agreement of the kind advocaed by larry Kudlow is inevitable. So short term pain, longer term gain om tje Canada - US relationship.

Second: the issue with China is that they consistently impose significant non tarrif barriers against anything from outside their economy. What the American administration is after there is simply reciprocity: do unto others, etc. Those barriers will either fade away as American mfgs get access to Chinese markets, or stay as American industry builds to serve the American market. In the end, Americans win either way and the rest of the world caneither go along or stand on the side lines pouting.

Third: the specific impact on Grizzly as a company is lilkely to be much less than anyone now thinks. Three reasons: 1) unless they're truly incompetent they'll have force majeur clauses in their supply contracts and can now abandon those for which these tarriffs have a real,l ong term, impact. 2) they can source much of what they need from Taiwan and the lesser tigers (Korea, Thailand, et al); and, 3) they can refocus engineering and mfg development to US production and wrap the cost increases that produces over today's rates in the flag - offering improved quality with a patriotic tinge will make them more, rather than less, competitive.

[Chris Parks]

Well..

First: My understanding is that the American side thought they had a bilateral deal with Canada in place at the end of the recent G6 meeting - but then Trudeau called a press conference to play politics with the issue and made things much worse for everyone. Sad and pathetic and everyone will be hurt by this in the short term. In the longer term, however, a genuine free trade agreement of the kind advocaed by larry Kudlow is inevitable. So short term pain, longer term gain om tje Canada - US relationship.

Second: the issue with China is that they consistently impose significant non tarrif barriers against anything from outside their economy. What the American administration is after there is simply reciprocity: do unto others, etc. Those barriers will either fade away as American mfgs get access to Chinese markets, or stay as American industry builds to serve the American market. In the end, Americans win either way and the rest of the world caneither go along or stand on the side lines pouting.

Third: the specific impact on Grizzly as a company is lilkely to be much less than anyone now thinks. Three reasons: 1) unless they're truly incompetent they'll have force majeur clauses in their supply contracts and can now abandon those for which these tarriffs have a real,l ong term, impact. 2) they can source much of what they need from Taiwan and the lesser tigers (Korea, Thailand, et al); and, 3) they can refocus engineering and mfg development to US production and wrap the cost increases that produces over today's rates in the flag - offering improved quality with a patriotic tinge will make them more, rather than less, competitive.

Best of luck with that view, there is no way the US can win a trade war with China because China see it as a long term strategy (decades) and the US historically begins to have internal dissension on stuff like this and the Government is forced to back down after a few years. American dominance of the manufacturing and financial markets began to wane a few decades ago but they refuse to see it and it will continue to wane while China is on the upswing.

[Matt Mattingley]

Metal and aluminum are first on the list and consumption products. These are not the big boys. Energy IS... and it will be next... Once fuel, NG and electricity, hardwood and softwood has the same tariff... and then other natural resources like wood and timber and water. What will happen next?

The Toyota Corolla and Honda Civic/CRV replacement parts are already going through price adjustments. Your next simple break change is churching churching....

Edit; I had no clue how much is Simon has at steak. I feel for you Simon as I am a manufacturer for one of your distant distant manufactures. But, we will work through this!

Another edit: BMW is now considering the international tarif with price increases. Mercedes is doing the same thing right now.... i’m waiting to hear the news.

This is mainly to do with dies and stamping production....

[Dave Zellers]

Third: the specific impact on Grizzly as a company is lilkely to be much less than anyone now thinks. Three reasons: 1) unless they're truly incompetent they'll have force majeur clauses in their supply contracts and can now abandon those for which these tarriffs have a real,l ong term, impact. 2) they can source much of what they need from Taiwan and the lesser tigers (Korea, Thailand, et al); and, 3) they can refocus engineering and mfg development to US production and wrap the cost increases that produces over today's rates in the flag - offering improved quality with a patriotic tinge will make them more, rather than less, competitive.

I'm reluctant to respond since I know so little about this, but I do wonder if this tariff battle with China isn't COMPLETELY about Taiwan and China's obvious desire to pull it back into their sphere and the West's desire to not let that happen. The war for Taiwan's freedom doesn't have to be fought with guns. It can be fought with dollars.

[Simon MacGowen]

Your optimism deserves credit (though I don't necessarily agree with all your points).

I don't know if it was an excuse or PM Canada really upset at the POTUS, but before a meeting with the rocket man, America wanted to appear strong, right? But I am inclined to thinking that the NAFATA is going nowhere and in the end, it will be replaced by bilaternal agreements instead.

China is catching up real fast, like it or not:

https://www.bloomberg.com/graphics/2016-us-vs-china-economy/
https://www.weforum.org/agenda/2016/12/the-world-s-top-economy-the-us-vs-china-in-five-charts/

Simon

[Dave Zellers]

It would really help if folks would quote exactly what they are responding to because this is turning into a very interesting conversation.

[Matt Mattingley]

Your optimism deserves credit (though I don't necessarily agree with all your points).

I don't know if it was an excuse or PM Canada really pissed off POTUS, but before a meeting with the rocket man, America wanted to appear strong, right? But I am inclined to thinking that the NAFATA is going nowhere and in the end, it will be replaced by bilaternal agreements instead.

China is catching up real fast, like it or not:

https://www.bloomberg.com/graphics/2016-us-vs-china-economy/
https://www.weforum.org/agenda/2016/12/the-world-s-top-economy-the-us-vs-china-in-five-charts/

Simon
China has been catching up so fast, I give them five years.... I have lost tens of dozens of tool makers for set up and production in robotics, stamping... for two-year contracts to train. Our technically teached can make more there in two years than 6 years here. We are shooting ourselves in our own foot. How do we stop people from leaving our country that are highly trained in our country from teaching people in different country’s ???

I have a good buddy in medicine. He works for a large pharmaceutical company. Their inventions are not yet subject to tariffs yet. He suggested to me that there equipment is subject or could be subject due to metal. So he suspects the whole drug industry increasing their prices as well. I guess this would probably take insurance policies into affect spinning off a whole new aspect.

Are,
Our Drugs are going to increase?
Are our vehicles going to increase?
Are our power going to increase?
Are our International produce going to increase? Sea containers are made Metal.
Are our flights and cruises going to increase? They are made of metal internationally.

International trade sucks! But remember somebody is benefitting from all of this. Who is it???

[Simon MacGowen]

International trade sucks! But remember somebody is benefitting from all of this. Who is it???

A million dollar question.

Hot from the press: In response to the tariffs, China announced on Sunday that it is unleashing over 100 billion into its economy to stimulate domestic activities. She is digging in...we consumers better buckle up (put a hold on any of your major investment decisions, I'd say).

Russia has been dumping its US Treasuries and is it ganging with other countries in this trade war (which largely doesn't affect Russia)? That remains to be seen. Anyone who thinks the trade wars are strictly a short-term trade matter between America and China/America's traditional allies is overlooking the trade war's implications.

Simon

[Brad Shipton]

Rudy, our government (Canada) did not say anything post G7 meeting that they have not been saying for months. That was not politics, that was simply stating our government is going to stand up for Canadians. I believe the reaction to the comments was related to the Asian photo op, and not trade with Canada.

[andrew whicker]

Rudy, our government (Canada) did not say anything post G7 meeting that they have not been saying for months. That was not politics, that was simply stating our government is going to stand up for Canadians. I believe the response was related to the Asian photo op, and not trade.

I'm really crossing my fingers that the President of the United States doesn't make huge policy changes because his feelings are hurt or because another country played emotional politics. I'm still not sure what the US vision is. At first, we heard rumblings of IP issues and thought maybe the tariffs were directed towards solving those (even though many experts thought there were better ways to go after IP issues). Now we have world leaders hating the US and digging in their heels. Where ever this 'US will win no matter what the outcome' thinking is coming from is alluding me. Give me some of that punch.

[Eric Commarato]

Where are all the people here that always said BUY AMERICAN?

[Rod Sheridan]

Where are all the people here that always said BUY AMERICAN?

Eric, I was probably one of those people, although I would have said buy Canadian, and then American.

I sold a hobby shop full of Canadian (General) machines when I updated my shop with 2 Hammer combination machines.

If you know of any American or Canadian manufacturers of such machinery I would be very interested...........Thanks, Rod.

[Simon MacGowen]

If you know of any American or Canadian manufacturers of such machinery THAT IS NOT USED/SECOND-HAND I would be very interested....

I could have been more than willing to pay for a "Made in USA" or "Made in Canada" SawStop.

Simon

[jim mills]

I've seen threads shut down for far less political banter. Where are the moderators? I say this topic has run it's course, and is of little to no value anymore. I doubt I'm the only one having difficulty refraining. Let's all head to our social media echo chambers, where we can voice our real opinions, and reserve this site for woodworking.

[Edwin Santos]

I've seen threads shut down for far less political banter. Where are the moderators? I say this topic has run it's course, and is of little to no value anymore. I doubt I'm the only one having difficulty refraining. Let's all head to our social media echo chambers, where we can voice our real opinions, and reserve this site for woodworking.

Jim, I don't see anything acrimonious in this discussion or any personal attacks. Plus it has stayed on the impact of the tariffs on woodworking machinery . If this particular thread is of little to no value to you, why don't you just ignore it or block it?
At least a few people have indicated they find it interesting. I disagree with some of the opinions expressed, but others have been enlightening or thought provoking.
regards, Edwin

[Joe Jensen]

Here is an interesting chart comparing US tariffs to the European Union and China.

https://www.washingtonpost.com/resizer/d_9liAc9JveYKUjfORFc72gevVk=/1484x0/arc-anglerfish-washpost-prod-washpost.s3.amazonaws.com/public/IZYNJJWJHYZWFBKUJQA5MB2PBY.png

[Sean Nagle]

I could have been more than willing to pay for a "Made in USA" or "Made in Canada" SawStop.

The absence of 100% American-made woodworking machinery has been going on for a very long time. It didn't occur over night. I "tooled up" in the mid-90's and even then it was rare to find any American-made woodworking machinery that was not "industrial" in size, availability and price. Most everything was made in Taiwan or was some American-Taiwanese hybrid with a bunch of U.S. flag stickers to make to feel good about your purchase.

[Jim Becker]

I've seen threads shut down for far less political banter. Where are the moderators?

This thread is being very carefully monitored by the moderation and administration team. The same is true in the Sales Tax topic in OT. So far, the discussion has been mostly on focus and the goal is to keep it that way because it's very much relevant to power tool buyers and manufacturers/vendors. Only a few posts have had to be deleted when they moved from the subject of tariffs into pointed political reference. This community welcomes good discussion and the "no politics/no religion rules" are to prevent activities from being specifically about those things. Discussing a public policy or event that specifically affects woodworking and related clearly can happen when folks are thoughtful and courteous. If you feel differently, then please contact Keith Outten accordingly.

Jim
Forum Moderator

[jim mills]

I'm really crossing my fingers that the President of the United States doesn't make huge policy changes because his feelings are hurt or because another country played emotional politics. I'm still not sure what the US vision is. At first, we heard rumblings of IP issues and thought maybe the tariffs were directed towards solving those (even though many experts thought there were better ways to go after IP issues). Now we have world leaders hating the US and digging in their heels. Where ever this 'US will win no matter what the outcome' thinking is coming from is alluding me. Give me some of that punch.

I'd say this falls outside of the realm of woodworking.

[Van Huskey]

I'd say this falls outside of the realm of woodworking.

Jim addressed it directly and pointed out that there is a higher power if you care to appeal. In the end just don't open the thread. I for one think a 25% price increase in a significant number of machines people buy and use here is certainly germane. There is a difference between discussing a politically based issue and discussing politics, though it is a razor's edge and the reason the moderators all over it.

[Carlos Alvarez]

The total impact on the tool price isn't 25%. It's 25% of the COST of the steel itself, before machining or any other work. I have no idea how much that is, but it's certainly got to be a heck of a lot less than even just the cost of a machined part made from that metal. Has anyone figured out the net impact of this on most tools? Probably not huge.

We already had a jump in tool prices some years ago. Luckily, I had mostly outfitted my shop in the years prior to that and saw my used tools being worth more than the purchase price.

[Van Huskey]

But that said, the total impact on the tool price isn't 25%. It's 25% of the COST of the steel itself, before machining or any other work.

Unfortunately, that is not the case. It is a 25% tariff on whole machines landed in the US from China, google the Harmonized Tariff Schedule of the US, I posted the relevant HTSUS sections previously in this or the Grizzly thread.

[Simon MacGowen]

The total impact on the tool price isn't 25%. It's 25% of the COST of the steel itself, before machining or any other work. I have no idea how much that is, but it's certainly got to be a heck of a lot less than even just the cost of a machined part made from that metal. Has anyone figured out the net impact of this on most tools? Probably not huge.

We already had a jump in tool prices some years ago. Luckily, I had mostly outfitted my shop in the years prior to that and saw my used tools being worth more than the purchase price.

Not sure about the exact impact in terms of dollar terms. But the Mid-Continent Nail plant in Poplar Bluff, Missouri, the nation's largest nail manufacturer, is reported today in the news to be on the brink of extinction, pondering a move of its operation to Mexico, unless an exemption is given. More than 10% of its people have already been laid off.

Some 21,000 US companies have filed for exemptions and that speaks volume about the impacts of trade wars on the various businesses. If a full-blown war erupts globally, few (countries or consumers) would escape unhurt.

Like you, my shop does not need any more machines, even it does, any new machines will not be from China anyway. But as a hobbyist woodworker, I will be more concerned about lumber if the trade wars spread over to other areas like forestry.

Simon

[Carlos Alvarez]

Unfortunately, that is not the case. It is a 25% tariff on whole machines landed in the US from China, google the Harmonized Tariff Schedule of the US, I posted the relevant HTSUS sections previously in this or the Grizzly thread.

Ah, ok, I had seen a thread elsewhere on the steel tariffs and confused the two. I thought it was on the raw materials themselves. Do you have any feel for how much the actual machine cost this applies to is versus the retail price? Meaning a $1k machine at Woodcraft has a tariff of....?? I simply have no idea what percent markup there is from landed cost by the time I buy it.

[Jim Becker]

Ah, ok, I had seen a thread elsewhere on the steel tariffs and confused the two. I thought it was on the raw materials themselves. Do you have any feel for how much the actual machine cost this applies to is versus the retail price? Meaning a $1k machine at Woodcraft has a tariff of....?? I simply have no idea what percent markup there is from landed cost by the time I buy it.
Shiraz from Grizzly posted that it's going to affect the tools directly by 25%...including on backorders because as a manufacturer, they cannot avoid the tariff nor than they absorb it. In his company's case, if it's not physically States-side on the date the tariff commences, the up-charge applies for all sales of the affected tools. I would imagine other companies will handle things similarly, given the 25% number.

[Carlos Alvarez]

Shiraz from Grizzly posted that it's going to affect the tools directly by 25%...including on backorders because as a manufacturer, they cannot avoid the tariff nor than they absorb it. In his company's case, if it's not physically States-side on the date the tariff commences, the up-charge applies for all sales of the affected tools. I would imagine other companies will handle things similarly, given the 25% number.

25% of RETAIL price? That seems impossible. What if it goes on sale? How is the retailer going to report their selling price? Or are you saying it's on the MSRP? I believe tariffs normally apply to cost as delivered.

[Dave Zellers]

25% of RETAIL price? That seems impossible. What if it goes on sale? How is the retailer going to report their selling price? Or are you saying it's on the MSRP? I believe tariffs normally apply to cost as delivered.

All we know is Shiraz said on July 6 Grizzley's prices on woodworking machines made in China will see a 25% increase. Machines made in Taiwan will not.

[Van Huskey]

25% of RETAIL price? That seems impossible. What if it goes on sale? How is the retailer going to report their selling price? Or are you saying it's on the MSRP? I believe tariffs normally apply to cost as delivered.

The tariff will come during the customs process and be assessed based on the "wholesale" value. Now when the importer adds a full 25% to the retail price it does reflect and increase of profit per item (very simplified) but they may be doing it for several reasons, one to help offset loss of sales (which may have the opposite impact) or mobilizing their customers to call their elected leaders and cry.

What we do know is Grizzly is going up 25% on Chinese machines, period. We do not know how the others will react, they may be able to ride it out longer due to in-country inventory, they may try to hold prices for a time to develop goodwill, they may also choose to increase price to a lesser extent. All have merit and potential downfalls.

With this and the sales tax issues (which magnifies the tariff for online sales in most states) someone could go to buy a Chinese made woodworking machine 3 months from now and see the price 35% plus higher than buying from an out of state online dealer today. (I know about use tax but 98% don't pay it)

[Carlos Alvarez]

All we know is Shiraz said on July 6 Grizzley's prices on woodworking machines made in China will see a 25% increase. Machines made in Taiwan will not.

I have had no luck finding a definitive answer on WHAT the 25% applies to, but it makes zero sense to apply it to retail price. If I import something to then re-sell, there might not even be a retail price yet.

But I found tidbits that say it's really on some kind of base cost:

From AP:

A 45 percent tariff on Chinese-made goods could drive up U.S. retail prices on those goods by an average of about 10 percent, Capital Economics has calculated. Consumers would find it hard to escape the price squeeze.

[Sean Nagle]

I have had no luck finding a definitive answer on WHAT the 25% applies to, but it makes zero sense to apply it to retail price. If I import something to then re-sell, there might not even be a retail price yet.

But I found tidbits that say it's really on some kind of base cost:

From AP:

If you read through the thread started by Shiraz, he explains that there have been material price increases (steel and aluminum) affecting both the Chinese and Taiwanese tools. It was implied that the 25% covered both the tariff and increased manufactured pricing.

[Van Huskey]

I have had no luck finding a definitive answer on WHAT the 25% applies to,



By what do you mean which machines? If so I read, pulled out the relevant sections and posted them in this or the Grizzly thread, as a whole it covers every tool for woodworking. If you mean what value the tariff is applied to it is the value of the machine in wholesale terms when it reaches the US port. Again how the importer prices the goods after that, whether they use their old formula or simply add 25% is unknown save for Grizzly who has said it is 25% across the board, but even that could be a mental ploy, "we said 25% but we decided on 15% to be nice, don't ya love us even more now?".

[Carlos Alvarez]

By what do you mean which machines?

No, I was talking about what number it applied to, because people are making it sound like it's a 25% retail increase. Which becomes 27-ish% when you include sales tax.

[Van Huskey]

No, I was talking about what number it applied to, because people are making it sound like it's a 25% retail increase. Which becomes 27-ish% when you include sales tax.

People are saying that since the only importer that has chimed it said exactly that, Chinese Grizzly machines will go up 25% (of the previous retail price) on July 6th. This is the only one we know about, what the rest do is up to them. In the end it makes no difference to the customer what value the tariff hits, it only matters what it does to the price. Though it doesn't mean we don't want to know for various reasons.

Edit: https://sawmillcreek.org/showthread.php?265843-Grizzly-s-prices-on-some-machines-going-up-25

[Jim Becker]

Since he has a bias and financial interest, I wouldn't bother listening to him.
There is no bias...his machines have a stated and confirmed price increase on the date. My suggestion was that other firms may very well do the same.

[Carlos Alvarez]

Saying that it doesn't matter what the tariff is on is like saying that companies can set any retail price they want and remain in business. The reality is that the tariffs' effect on the final price will be measured by the same competitive pressures as all other costs. It's not a magical thing that will let everyone spike their profits. They will just be another pricing factor.

[Phillip Gregory]

In light of all this, the vintage tool aficionados may get the last laugh. Good old fashioned American iron made in simpler times and built to last!

That's a little ironic considering that many of the tools in question are clones or near-clones of American (mainly Delta) tools from the 1940s-1970s. Grizzly as well as many others sell clones or near-clones of the Unisaw, 12/14 saw, RC33 planer, DJ15/DJ20 parallelogram jointers, 14" cast iron band saw, 20" steel framed band saw, 6x108" edge sander, the LD and HD shapers, as well as the Max spindle sander. Grizzly sells a different 20" disc sander than the other importers, but Jet/Powermatic still sell the old Max round pedestal design. Many of the parts even interchange between the currently-produced Asian machines and the older American ones.


There is no bias...his machines have a stated and confirmed price increase on the date. My suggestion was that other firms may very well do the same.

I wonder how much in sales he'll lose because due to supply and demand curves, as price goes up, he'll sell fewer machines. Hopefully they won't close another location like they closed down the PA showroom, as I'd bet the location they'd close would not be the Bellingham, WA location that contains their headquarters.

[Dave Zellers]

Since he has a bias and financial interest, I wouldn't bother listening to him.

I think that's unfair since he took the time to start a new thread clearly stating what his company would be doing. If his costs are going up 25%, then it is going to get passed on to the consumer. If another company wants to eat a small amount of the increase to gain a price advantage, that is simply a free market at work. Since everyone here is simply speculating and asking questions, it seems to me information from the horses mouth has real value. Either way, we will know in 10 days.

I agree with those who say it's highly unlikely anybody will tool up anytime soon in the USA but existing manufacturers in Taiwan might already be tooling up to gain an advantage over Chinese made equipment.

[Van Huskey]

Saying that it doesn't matter what the tariff is on is like saying that companies can set any retail price they want and remain in business. The reality is that the tariffs' effect on the final price will be measured by the same competitive pressures as all other costs. It's not a magical thing that will let everyone spike their profits. They will just be another pricing factor.

What the tariff is on, or even how much the tariff is set at means basically zero to the consumer. The consumer will be mainly price sensitive to two identical widgets. The point is from a consumer standpoint the final price to them is the key and we know one importer is going up 25% on the retail price due in their words to the tariff and increased raw material costs.

[Matt Mattingley]

Just for fun. I am Canadian and American-based. I manufacture products on both sides of the borders. I also import products from other countries as part of my manufacturing.

If I manufacture it in the USA there is no tariffs if I’m using American goods. I just got a 25% raise. Period, period.
If I manufacture goods in the USA with tariff countries involved... I just got a 25% raise on everything. Period.
If I manufacture goods in Canada, with tariff involved, I raise my price about 13 to 14% for American buyers. If they want a high-speed spindle custom-made, cylindrically ground to custom specs...

I think the tarriffs are great for guys just like me. But no good for anyone else.

I pretty much just got a 10% to 20% raise. But… Where the rest of the money is going… your guess will be as good as mine! I haven’t had a raise in 20 years! This is a fun breath of fresh air for me!

Forget about me making an extra5,000- $10,000 year. What is happening with the 20billion.......

The industrial ironworker union(IWU), UAW, CAW don’t like seeing this. Why is it happening?

[Rod Sheridan]

Some 21,000 US companies have filed for exemptions and that speaks volume about the impacts of trade wars on the various businesses. If a full-blown war erupts globally, few (countries or consumers) would escape unhurt.

Like you, my shop does not need any more machines, even it does, any new machines will not be from China anyway. But as a hobbyist woodworker, I will be more concerned about lumber if the trade wars spread over to other areas like forestry.

Simon

Simon, yes it's a lot of companies, I imagine it would take a long time to process all those applications. Hopefully those affected can wait that long.

Fortunately for Americans it's only softwood lumber that has a tariff. I was really surprised to read that it increases the price of a house by 8 or 9 thousand dollars. Once I thought about it, it made sense. Not everyone is like me and only buys 3 pieces of 2 X 4 :D

Regards, Rod.

[Yonak Hawkins]

Where are all the people here that always said BUY AMERICAN?

In this world economy, as it has become, the term, "Buy American" doesn't really mean much anymore. There are products that are wholly made in the US and the profits go overseas. ..But the whole idea of "buy American" is to preserve American jobs, right ? What difference does it make where the profits go ? What about products that are made partly in the US ? Those are American jobs, too, right ?

The thing is, the US economy, and US jobs, are more dependent on a healthy world economy, as is the health of economies across the globe, than any provincial initiative. Unfortunately, the detrimental tariffs and consequent trade wars are harmful to the health of the world economy and will, in turn, hurt the US economy and US jobs, as well as those of all other Countries' economies. Consumers in other countries can't buy American goods if they're out of work.

[Rich Enders]

Custom turned and ground steel shafts can be made in almost any country in the world. Our (US) supplier quoted $9700, and six to eight weeks lead time to shipment with US$ 650 truck freight (they quoted the same 6 to 8 weeks on our prior order and delivered in 20 weeks). We also had our Chinese supplier quote the same specification using the same international quality steel. They quoted US$ 2350 delivered duty paid with 2 weeks lead time (they work 24/7). So who did we place the order with and why? We placed the order with our Chinese supplier............because of the lead time! And the shafts shipped on schedule, and are working perfectly.

So what does story have to do with this thread? I don't believe tariffs are going to have the least effect on China. If we have an IP problem sit down at the WTO and settle it. If we have a trade imbalance, work to improve US industry. Please, no more tariffs. Rich

[Carlos Alvarez]

Custom turned and ground steel shafts can be made in almost any country in the world. Our (US) supplier quoted $9700, and six to eight weeks lead time to shipment with US$ 650 truck freight (they quoted the same 6 to 8 weeks on our prior order and delivered in 20 weeks). We also had our Chinese supplier quote the same specification using the same international quality steel. They quoted US$ 2350 delivered duty paid with 2 weeks lead time (they work 24/7). So who did we place the order with and why? We placed the order with our Chinese supplier............because of the lead time! And the shafts shipped on schedule, and are working perfectly.

So what does story have to do with this thread? I don't believe tariffs are going to have the least effect on China. If we have an IP problem sit down at the WTO and settle it. If we have a trade imbalance, work to improve US industry. Please, no more tariffs. Rich

Do you know for sure that the steel quality is identical? I keep hearing rumors that Chinese steel is mostly polluted and impure. Sounds like BS to push the anti-China agenda, but don't know.

[Rich Enders]

Do you know for sure that the steel quality is identical? I keep hearing rumors that Chinese steel is mostly polluted and impure. Sounds like BS to push the anti-China agenda, but don't know.

Carlos, Of course there is steel for boat anchors and steel for high performance applications. I cannot speak for the low end in China or anywhere else, but the steel for high speed shafts is produced primarily in Germany, and is delivered with a lot certification. The certification includes detail on the additive levels like nickel and chromium as well as physical properties such as hardness before and after heat treating. It is also possible to analyze steel after the fact to confirm what it is.

Of course it would be possible for some one to fake the certification, but that has not been my experience. We have worked for years with a number of suppliers there, and they have more to gain by being honest.

Rich

[Carlos Alvarez]

Carlos, Of course there is steel for boat anchors and steel for high performance applications. I cannot speak for the low end in China or anywhere else, but the steel for high speed shafts is produced primarily in Germany, and is delivered with a lot certification. The certification includes detail on the additive levels like nickel and chromium as well as physical properties such as hardness before and after heat treating. It is also possible to analyze steel after the fact to confirm what it is.

Of course it would be possible for some one to fake the certification, but that has not been my experience. We have worked for years with a number of suppliers there, and they have more to gain by being honest.

Rich

Thanks. I've heard so many unsubstantiated politically-motivated opinions on this.

[Matt Mattingley]

So far this is been a very informative thread! I would hate to see it just deleted by mods! It’s had a lot of good opinions, How people are going to adjust, thoughts on the new tariffs, how this may be beneficial or unbeneficial to the US and the rest of the world and how the regular Joe (that is in the trades person and hobbyist) deals with this.

Yes it has stemmed from political situations, but, I would prefer not to gossip about, like, dislike and/or bash political figure heads.

If this thread is still alive in a year/s from now, you could show how people have adjusted! Benefited, hurt or otherwise.

[Prashun Patel]

Right on, Matt.

[Joe Adams]

Thank you Matt. I can tell from disappearing replies that cross the line that Mods are monitoring this thread and not just locking it. Thank you Mods.

I started it as a heads up to the guys that use Jet, Powermatic, Grizzly, etc. tools in their shops.

I never imagined that it would become a treatise on economics but it has been interesting!

[Jerry Olexa]

Well said, Matt.

[Simon MacGowen]

Things starting to begin more interesting as different countries resort to different strategies in the trade wars. China has just announced a new measure not widely mentioned before: Slashing tariffs on imports from five Asian countries to help replace imports from the US that will become more expensive.

This time South Korea benefits from the new reductions which previously was a target for retaliation when she allowed the US THAAD installation. Last time, even South Korean/Chinese joint ventures were hit, showing the Chinese regime doesn't care about collateral damages that may affect her own business interests when a larger goal is at stake.

If the allies were not caught in the crossfire, America could have considered the same tactic.

Simon

[Craig Regan]

Its always the people in the board rooms and banks that make out best with current administration policies. Everyone else is being taken for a bumpy ride.

[Martin Wasner]

Its always the people in the board rooms and banks that make out best with current administration policies. Everyone else is being taken for a bumpy ride.

Doesn't matter what happens, the smart people make money no matter what

[brent stanley]

I don't believe tariffs are going to have the least effect on China. If we have an IP problem sit down at the WTO and settle it. If we have a trade imbalance, work to improve US industry. Please, no more tariffs. Rich

I think the gvt realizes this, and know folks will still find the Chinese products cheaper and pay the tariffs. This is a way to gather tax money (which is really what tariffs are!) Without raising taxes in the classical way.