Metal tarriffs- cockamamie scheme, or real sales tactic?

To add a non-automotive component to this, I work for an alcoholic beverage wholesaler. Many of our suppliers have told us that prices will be going up more or less lockstep with the tariffs. Aluminum cans and glass bottles are, for many wineries, breweries, and distilleries, are predominately sourced from China and elsewhere and what domestic manufacturing there is can’t come close to covering the demand. Some of it is simply adding profit, some of it are long been put off inflation-related price increases using this as cover, and some of it is truly from higher costs.  Additionally there’s worry in the industry on what China’s tariffs will do to their demand for our wine and spirits, so producers are getting hit twice: higher costs and lower demand. 

so what you're all saying is, is that I need to go get back that 250# of scrap aluminum I just dropped off at my neighbor's house and sit on it for a while, eh??

irish44j said:

The0retical said:

What's really interesting about the metal tariffs has been the American steel and aluminum manufacturers response. 

While the tarrifs made imported steel more expensive than that of US suppliera, the US companies replied by raising their prices to match or just barely undercut foreign competitors. The result is the most profitable quarters most of them have seen in decades. 

 

And very little new hired personnel or (re) opened facilities. The tariffs are all about hooking up the shareholders. With the volatility of politics and never knowing if this admiinstration is going to cancel or double the tariffs next week, major US manufacturers certainly aren't going out and hiring a ton of expensive workers or invest in expensive new facilities in the short-term. They're just pocketing the profits and shareholders and execs are smiling. Just like in every other country that has protectionist trade policies.

Amen.

In reply to P3PPY :

If the economy takes a nose dive because of tariffs scrap prices won’t increase or won’t increase dramatically. 

In reply to frenchyd :

Scrap prices seem to be tied closely with oil prices.  If oil prices go up, scrap goes up too.

Although since a lot of our scrap got melted down to send to China so they could sell it back to us, the dynamic may shift just a bit.

Knurled. said:

In reply to frenchyd :

Scrap prices seem to be tied closely with oil prices.  If oil prices go up, scrap goes up too.

 

Although since a lot of our scrap got melted down to send to China so they could sell it back to us, the dynamic may shift just a bit.

That's partly because of commodity floating with the dollar price, as the dollar got weaker relative to international currencies commodity prices would go up, when the dollar was stronger commodity prices would go down.  Because of the increase in US production of oil the price has gone down relative to the strength of the dollar because a lower amount of demand is being supplied internationally.  

We import CCTV equipment from China.  ALL our costs were increased by 25%.  So, a lot of non steel etc costs are moving up.

frenchyd said:

Walk through a furniture store and look at where things are made.  

Pennsylvania Love me our Amish furniture store. And I've been installing an Ikea kitchen this week, all the panels and shelves are US made. The hardware probably isn't, I haven't looked.

In reply to Keith Tanner :

Good point Kieth but the Amish are not afraid to charge a premium for their work. We have an Amish bed and while it’s nicely made from local wood I don’t think the couple made and sold have much impact on national bed sales.  

I have no problem with paying someone for their work, especially given the quality of the work. You can't champion quality stuff made by US craftsmen and complain about the price at the same time - that's what drove everything offshore in the first place.

Meanwhile, Ikea may have an effect on a national level. Their wood stuff comes from all over the place - I've got stuff that's made in Canada, the US and Eastern Europe. I'll take a closer look at where all the kitchen components came from, I know about the US source for some of the parts because there's actually a CARB information sticker on them.

I'm off to buy some tools from Lee Valley

speaking of furniture.. I read this book recently and it was interesting..

https://www.amazon.com/Factory-Man-Furniture-Offshoring-American/dp/031623141X/ref=sr_1_1?ie=UTF8&qid=1539712725&sr=8-1&keywords=factory+man

i too would like to join in on the sky is falling conversation. 

TurboFocus said:

i too would like to join in on the sky is falling conversation. 

Access granted. Troll away. 

Keith Tanner said:

I have no problem with paying someone for their work, especially given the quality of the work. You can't champion quality stuff made by US craftsmen and complain about the price at the same time - that's what drove everything offshore in the first place.

Meanwhile, Ikea may have an effect on a national level. Their wood stuff comes from all over the place - I've got stuff that's made in Canada, the US and Eastern Europe. I'll take a closer look at where all the kitchen components came from, I know about the US source for some of the parts because there's actually a CARB information sticker on them.

I'm off to buy some tools from Lee Valley

Eastern Minnesota and Wisconsin are the home of massive forests of hardwood. With only a very few small shops dedicated to the manufacturing of furniture ( including a few Amish ).  

There used to be a large furniture manufacturing company that up into the mid 1980’s had men loading and pushing wood pieces on carts right from the last century. Going from station to station loading, unloading, just like their grandfathers did before going off to World war 1. That place employed over 500 men who made a modest wage doing mindless work. 

Meanwhile the Chinese now buy whole logs loaded into shipping containers shipped to China to a factory of about 3 city blocks that runs 24/7/365. Run by a handful of men. There the container offloads the logs with total automation. The logs are harvested with the finished piece in mind eliminating most of the waste. Pieces are cut dried finished and assembled by automation and robotics box and loaded back into the shipping container for distribution from around the world. Virtually untouched by human hands.  

The Chinese don’t just buy from America  but Russia, South America, Asia and indeed any place in the world.  

Pure and simply they eliminate waste and inefficiency because they built state of the art plant. 

The few American factories left making furniture must go to exteme  lengths to remain competitive or rely on well respected names like Amish, Stickly etc to command a premium in order to justify their inefficiency.