Here is a 1) a great article and 2) a rather lengthy ( one hour) video from Union Pacific Lance Fritz on trade disruptions and putting the Nations economy at risk. Of course the same applies to us up here in much the same way.
Just came back from grocery shopping and I purchased Strawberries, Raspberries and Blueberries all from California. The prices seemed within a normal range of usual but I don't think the effects have trickled through yet. I look for point of origin more than I do for price. I'm always leery of some produce from 3rd world. Ontario grown fruit and veggies are best but hard to get up here... go fiqure.
Our own wild blueberries and Saskatoons will be available early fall in abundance. A Saskatoon is a very large blueberry type fruit with a much tougher skin, makes great jam.
MiningmanA Saskatoon is a very large blueberry type fruit with a much tougher skin, makes great jam.
I am relieved. I thought they were the residents of the largest city in Saskatchewan. But I guess they are Sasketonians?
Miningman Union Pacific Lance Fritz on trade disruptions and putting the Nations economy at risk.
Trade wars are destructive and unnecessary. Another fake problem set up so the real estate developer can find a solution.
Saskatoonians--- two oo's , aka basket of deplorables, OR the nicest people on the planet, depends on which side of the fence you are on!
Oil and gas, cattle ranchs, endless fields of wheat and canola, potash miners, cowboys and Indians, lots of rail lines going every direction of the compass.
Calgary is your Dallas, Edmonton is Denver, Saskatoon is Kansas City
Last thing Lance wants is the possibility of any production of consumer goods actually moving back to the US. If it would happen, facilities would probably locate close to the large population centers. Where the majority of consumers would be. Long haul intermodal would become short haul and probably go by truck. Just my opinion
Jeff
Thats an interesting take however quite transformative. The New World Order took some time before everything was in place. Perhaps a more fair and equitable balance of trade will be the next step.
The railroads have a huge advantage in efficiency and environmental concerns. Also any country needs to develop its own natural resources and some base line of industrial production for its own survival and security. This again requires railroads.
Less defective junk at the dollar store is a good thing.
Well one thing is for certain and that is we live in very interesting times.
I think things are moving to a better end. The railroads have adapted remarkably before and will again.
jeffhergertLast thing Lance wants is the possibility of any production of consumer goods actually moving back to the US. If it would happen, facilities would probably locate close to the large population centers. Where the majority of consumers would be. Long haul intermodal would become short haul and probably go by truck. Just my opinion Jeff
There are many 'large population centers' in the USA, unless the product is ONLY popular in the population center where it is manufactured there still is the need to ship the finished product nationwide. Who transports the traffic is open to question.
By the same token the commodities required as raw materials for manufacture of finished products are rarely located in the immediate vicinity of the point of manufacture.
Businesses when they get to the point of having a nationwide market for their products factor in all the factors of raw materials, available workforce, land acquisition costs, major sales destinations, transportation options of their products and try to make the best, most informed decisions they can.
Never too old to have a happy childhood!
Miningman The railroads have adapted remarkably before and will again.
You hit the nail on the head. For all of their flaws, successful market driven businesses change as their markets change. And the times are always changing.
Rio Grande Valley, CFI,CFII
How much of railroad revenue is tied to moving containers that originate from overseas? And guess what's inside those containers. Railroads will be hard hit, at least over the short term, as they've become the conduit for cheap stuff out of Asia..
Your typical big box discount store could be reduced in size to an 8 ft X 8 ft room if all they sold was "proudly made in the USA" stuff. Take out all the "farn" stuff and there's not much left.. and Cletus will need to pay "made in America" prices the next he buys a hammar or a shirt at Walmart.. Fun times ahead.. It will certainly be an adjustment for railroads and their shareholders who will miss those longhaul container moves and regret that 50 years ago the rails pulled up most of their branches and sidings, rendering them unable to do much other than longhaul bulk moves.. Oh well.. might be better news for the trucking industry.
BaltACD jeffhergert Last thing Lance wants is the possibility of any production of consumer goods actually moving back to the US. If it would happen, facilities would probably locate close to the large population centers. Where the majority of consumers would be. Long haul intermodal would become short haul and probably go by truck. Just my opinion Jeff There are many 'large population centers' in the USA, unless the product is ONLY popular in the population center where it is manufactured there still is the need to ship the finished product nationwide. Who transports the traffic is open to question. By the same token the commodities required as raw materials for manufacture of finished products are rarely located in the immediate vicinity of the point of manufacture. Businesses when they get to the point of having a nationwide market for their products factor in all the factors of raw materials, available workforce, land acquisition costs, major sales destinations, transportation options of their products and try to make the best, most informed decisions they can.
jeffhergert Last thing Lance wants is the possibility of any production of consumer goods actually moving back to the US. If it would happen, facilities would probably locate close to the large population centers. Where the majority of consumers would be. Long haul intermodal would become short haul and probably go by truck. Just my opinion Jeff
It's true there are many major population centers. But I would say that future facilities would be more decentralized, instead of a few very large facilities trying to supply the whole country. And any new facilities would probably be highly automated as much as possible. To be sure, there would still be some long haul movement of goods, but not as much.
I think production moving to within 5 or 6 hundred miles of consumption is a bigger threat to UP than "driverless" trucks etc. They would have to evolve beyond just obsessing about their operating ratio and stock price. I don't have much confidence in them, or any other business in the current climate of short term gain over all else, doing that.
It's probably all acedemic anyway. I don't expect much production to return. No one really wants to see that happen. Companies don't want to have to pay higher wages, even if there wouldn't be as many employees as in years past. Too many prospective employees are aghast at the thought of working at a job where they might get their hands dirty, no matter what the wages or actual working conditions are.
If the new tariffs cause a trade war, it will slow down the whole economy worldwide. Everybody will lose. The effect will be all encompassing, and not just related to the cheap products that are made offshore. It will negatively affect all of the rail traffic, all business, and all quality of life.
If you look at the world and see a slightly unleveled playing field, it’s best to just leave it alone. If you try to level it, there will always be others who thought it was level in the first place, and now you have made it unlevel. That is why it always leads to a trade war, which is far worse than a playing field that is slightly out of kilter.
And as if that is not bad enough, the new tariffs amount to a federal tax increase that takes money out of everyone’s pocket and grows government (Economics 101).
jeffhergertIt's probably all acedemic anyway. I don't expect much production to return. No one really wants to see that happen. Companies don't want to have to pay higher wages, even if there wouldn't be as many employees as in years past.
I wouldn't hold my breath either. A 25% tariff wouldn't make many products expensive enough to make production in the USA (or in my case Europe) economical especially with union wages.
Jason Shron, the owner of the model railroad manufacturer Rapido Trains Inc. in Canada, once made up the calculation for an HO scale passenger car. The China made car was sold for around CAN $100. Produced in Canada with non-union workers the needed to cost CAN $400. And with union workers? Who would buy at that price?
That might be an extreme example with a lot of assembly work but it shows the tendency
The rising wages in China might change the picture over time. But the companies will move on to othe low wage companies like India, Bangladesh, or Vietnam to keep costs in check for consumer and maximise their profit.
I think the railroads might suffer because less is imported and exported leading to a downturn of the economy. And railroads might suffer from the relatively small difference between shipping cost from China to West and East Coast.
A 40 ft container from Shanghai to Long Beach costs about $1,600, to New York $2,800 changing daily. To Rotterdam, Netherlands it is $1,300. That is the influence of the 20,000 TEU mega carriers.Regards, Volker
One thing to remember in a trade aka Tarrif war it is the country running the defict that normally wins the thing. Why that nation stops sending cash instead of goods overseas to the other nation. Which is more important to other nations goods or cash. Which is easier to spend. The nations the USA is in tariff battles over are all nations we are running massive trade debts with. Just think about that for a minute. Where else is China going to sell over 500 Billion a year in goods to one nation Germany over 150 Billion a year in cars to. Canada over 15 billion in Lumber to. No other single nation can consume what the USA does and the rest of the world is about to find out they better open up their markets to our goods really fast or face the facts that our money will no longer be coming to their countries anymore.
Shadow the Cats ownerOne thing to remember in a trade aka Tarrif war it is the country running the defict that normally wins the thing.
If it were so easy.
I might remember you of the failure of the Smoot-Hawley Tariff Act of 1930 which didn't cause the great depressing it prolonged it and hurt the USA's and the world's economy.
In March 2002 President George W. Bush imposed steel tariffs. He lifted them in December 2003 after the WTO ruled them illegal. The results of the tariffs were at best neutral.
The current tariff system was decided on in 1998 in a conference with the USA. And not only other countries tried to protect some of the products. The USA did it too. The often cited automobile market is a good example. The EU has tariffs for all US cars including SUVs of 10%. The USA has tariffs for EU cars of 2.5% and EU SUVs and light trucks of 25%.
Shadow the Cats ownerGermany over 150 Billion a year in cars to.
You say Germany exports cars worth 150 billion to the USA?
Here are the numbers from the official German trade statistic for 2017: Exported to the USA 494,000 cars worth 28 billion EUR ( about $33,6 billion). At the same time German car manufacturers built 850,000 cars in American factories empoying about 50,000 Americans. About 25% of these cars were exported to Europe.
Both EU and China had offered negotiations but not with a gun at the had. Before Mr. Trump became president the Transatlantic Trade and Investment Partnership was negotiated. He stopped the negotiations.
Shadow the Cats ownerNo other single nation can consume what the USA does and the rest of the world is about to find out they better open up their markets to our goods really fast or face the facts that our money will no longer be coming to their countries anymore.
You might be right about the size except for China, but your conclusions are wrong. Why does the USA have these large deficits? Looks to me like Americans like foreign products better than Made in USA or they are less expensive. So when there aren't coming goods from China or the EU or other countries anymore. Where does the USA get them from?
Not only the other countries will suffer, the USA and its consumers and workers will as well. China has a totalitarian system. Their government will not feel pressure from the people.
That is different in the USA. What will happen when people realize that they have to pay more for goods or farmers can't sell their crop to China anymore because the get it elsewhere.
There will be no winners in a trade war only loosers all around the world including the USA.Regards, Volker
Volkner the total includes all the cars imported into the USA from the EU the Volvo's from Sweden all the Italian sports cars the British cars plus all the parts. That figure listed was for all makes and models and included all parts shipped overhere for assembly and or repairing cars. Could Europe stand to lose that much out of their economy risking that many jobs. It is not just finished cars I was talking about the parts also add up.
As for agriculture if China decides to buy the 40% of the worlds exported soybeans from someone else where is that crop going to have to come from. Other countries are going to have to BUY them from the USA we are the largest exporter of them in the world. Along with rice pork and other items they hammered us with. You see the problem they are hitting us with tarrifs on things their country needs to even FEED their over 1 billion people with. We instead are hitting China with tariffs on goods they sell us that people can choose to buy elsewere. We have a choice China really does not when it comes to where it is going to buy enough soybeans rice and pork to feed its population. Not to many nations grow an estimated 200 million tons of excess soybeans. China last year bought 97 million metric tons of them from the USA alone. Just were is the rest of the world going to make up for what they need. That is a huge hole in the global market.
Shadow the Cats ownerVolkner the total includes all the cars imported into the USA from the EU the Volvo's from Sweden all the Italian sports cars the British cars plus all the parts. That figure listed was for all makes and models and included all parts shipped overhere for assembly and or repairing cars. Could Europe stand to lose that much out of their economy risking that many jobs. It is not just finished cars I was talking about the parts also add up.
You should be correct with your numbers. The whole EU-USA trade deficit is only $120 billion not 150 billion. Car exports to the USA are about $55 billion. If you take services into the equation the trade with the is balanced
And yes we can afford this. The German car manufacturers built 16.5 million cars in 2017. The Export to the USA was about 3%. For other EU countries it is not much different. German cars are kind of a status symbol in USA I think. The biggest market for German cars is China.
Shadow the Cats ownerYou see the problem they are hitting us with tarrifs on things their country needs to even FEED their over 1 billion people with.
We'll see where they'll get the agricultural goods. It is not that China will not buy from the USA. It will be less and at lower income for the farmer as others are now competetive that don't bear the tariff.So the farmers need to adjust their prices
Take pork: The USA exported 2.45 million tonnes to China in 2017, Germany 1.86 million tonnes. We have a surplus of about 4.5 million tonnes. There are a lot of countries in Africa that would be glad if our cheap pork wouldn't overflow their markets anymore so that their agriculture can recover.
China tries to hit were it can hurt the USA and especially Mr. Trumps supporters most. This is not a game and the USA started it. The EU did the same when it imposed tariffs on products from states were Republican leaders come from.
China negotiated with the USA and there were first results but the USA or better Mr. Trump thought better of it. The EU offered to negotiate but as I said not with a gun at the head. I thought it is called negotiations.
Shadow the Cats ownerWe have a choice China really does not when it comes to where it is going to buy enough soybeans rice and pork to feed its population.
You'll be surprised how many products you'll need to buy from China. Even with 25% tariffs many Chinese products will be less expensive than Made in USA or elsewhere.
It is not make-or-break. It is about rising costs for consumers on both sides. There will be no winners.Regards, Volker
Trade is not a two party negotiation like a real estate deal. There are multiple suppliers of the products subject to tariff penalties. Targeting specific countries for specific products is a laughable action.
So China wants soybeans - if they are not supplied from the US at a price China is willing to pay - there are other sources. The money that would have come to the US for the beans now goes elsewhere and benefits agricultiural industry there. If a tariff creates a void in the market - the marketplace will fill the void.
Tariff battles are lose - lose propositions.
The President of the USA had not waivered an iota when it comes to his America First policy, starting right off at the inauguration speech. So to brush this off as bluff is very dangerous for those countries with massive trade surpluses. Justify whatever you want but in the end those countries will suffer the most.
Of course there are a myriad of political factors being played off here and must also be taken into account.
If countries like Germany and most of the EU, including my own (Canada) actually owed up to their NATO commitments that would mitigate things.
The play with China is more about all the Chinese official and sanctioned shenanigans going on with theft but more than half a trillion dollars of deficit really cannot continue.
The much touted Canadian tariff on American dairy of 275% is to protect primarily Quebec dairy farmers and would cause new ripples of separation if it was removed. No way our government goes through that again. Yet on the other hand, not only are our NATO commitments far in arrears but our Prime Ministers insistence on tying together trade with gender equality issues and climate change is nonsense.
I think the US President is a reasonable man and a move toward fairness and more market orientated policies by other trading nations would be a very positive move and be welcomed.
If not then the world will indeed start feeling some pain. The US at this point could easily be self sufficient, even if the Union Pacific Railroad handles less containers in stack trains.
Right. And the United States does not subsidize its farmers. I'm no fan of supply management either, but it is what it is.. Most countries subsidize their agricultural sector. Even the United States does.
About our "commitment" to NATO..the 2% of GDP is a target...and not a contract we have with anyone. How about we all serve for a year or two in the military? I'd be all for that..I did, and would certainly encourage anyone who enjoys the freedoms we enjoy to enlist and serve in order to really appreciate what we have. I'm wondering who made Trump the czar of NATO.. who gives a dang what he wants or thinks.. Members of NATO are sovereign nations, and Trump can say whatever he wants.. If he wants to commit X% then go right ahead.. we keep Y and don't need to apologize for it given our past in defending our freedoms in every major war.
Over the long term this trade disagreement is going to help us going forward. Clearly, we have put all of our eggs in the NAFTA basket.. to our detriment. But, the good news is that this too shall pass, and we wil soon be on good trading terms again. AND.. We've got CETA.. and we've got the TPP.. and.. we're close on a number of agreements with other countries. As a nation Canada needs to trade.. we're a relatively small country with an efficient economy that generates far more than our small population can consume on its own.. Thus the need for markets elsewhere.. The US will remain our close friend and trading partner whether Trump likes it or not.. due to our close proximity and our very similar cultures. But, if there's anything at all that needs to be learned from this it is this: DO NOT PUT ALL YOUR EGGS IN ONE BASKET.. its bad for a business to have only ONE customer.. and its even worse for one country to have only ONE dominant trading partner. Imagine owning a beautiful home, but the switch for the electricity is in the neighbour's house.. that's pretty much the situation we're in now..
Euclid If the new tariffs cause a trade war, it will slow down the whole economy worldwide. Everybody will lose. The effect will be all encompassing, and not just related to the cheap products that are made offshore. It will negatively affect all of the rail traffic, all business, and all quality of life. If you look at the world and see a slightly unleveled playing field, it’s best to just leave it alone. If you try to level it, there will always be others who thought it was level in the first place, and now you have made it unlevel. That is why it always leads to a trade war, which is far worse than a playing field that is slightly out of kilter. And as if that is not bad enough, the new tariffs amount to a federal tax increase that takes money out of everyone’s pocket and grows government (Economics 101).
+1 Bingo. Get out of equities now. Stagflation (remember that from the 1970s?) is coming in a year or two. The new world order will be everyone else doing okay and the US isolated, in a recession, with inflation. Fun times!
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Here is a shorter version with the pertinent subject matter.
video link would be set to 7 minutes 13 seconds.
MiningmanThe play with China is more about all the Chinese official and sanctioned shenanigans going on with theft but more than half a trillion dollars of deficit really cannot continue.
China is a special case, no question. But the USA has deficits with other countries too. The deficit is not always only the fault of the partners with the export surplus or their tariffs.
The USA should ask what they perhaps can change to get more competetive.
Last month I found a report about a 3,600 TEU container vessel that cost $209 million built in the USA (Jones Act). The Emma Mearsk with 15,200 TEU cost in 2018 money $175 million built in Denmark (EU). A 21,000 TEU built in South Korea costs $175 million too. And Denmark is not a low wage country.
Germany fell to the end of the EU country's economical development, from leader to laggard. It is now the leader again but after painful cuts to wages (pay freeze over a few years) and welfare system. Our unions went along knowing there was no other way to get down the unemployment rate of 11.7% (5 million people) and rising wages again.
If productivity and wages don't fit anymore companies look for ways to reduce labor expenses like GE going to Fort Worth and EMD to Muncie.
On the other hand you need products other countries want to buy. Your own market is so large, companies think of it first not the export. In Germany we have to keep export in mind.
Automobiles are a good example. Even lowering the EU tariff to zero wouldn't help the American car builders much. They have only very few fitting models for the European market.
Pointing at others means three fingers point back at me.Regards, Volker
VOLKER LANDWEHROn the other hand you need products other countries want to buy. Your own market is so large, companies think of it first not the export. In Germany we have to keep export in mind. Automobiles are a good example. Even lowering the EU tariff to zero wouldn't help the American car builders much. They have only very few fitting models for the European market.
IMHO, the auto industry is a fitting example. Particularly post-war and into the sixties, there was little market for small cars. European and Japanese cars (and small US sports cars like the 'Vette and T-Bird) were seen as a niche market that provided little competition for the "boats" that Americans wanted. Bigger was better.
Even cars made by US companies for foreign markets sold miserably in the states (Opel).
Because foreign autos provided little competition to the US automakers, the workers could pretty much ask what they wanted for wages, and did. With no real competition, the automakers had little choice but to pay up. So we ended up with low-skills jobs getting paid premium wages. We also ended up with robots on the assembly lines.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
At the risk of getting shot down like the Famous World War I Flying Ace Snoopy on his dog house, here are a couple of respectful thoughts.
President Trump seems to view almost everything as a business deal and for the most part does follow the tenets laid out in his book Art of the Deal. Basically go in and ask for the stars when you really want the moon, and then negotiate back from there. You might get the stars, or some stars and the moon, or just the moon. He is very brash but if you look through the noise of both President Trump and the media, that pattern seems to be there over and over again.
He is also pragmatic - he wants to get a deal of some sort because he knows he can come back again and negotiate again in the future. If you can strike one deal with a counterparty, you have a good chance of striking another deal in the future.
Also, remember that President Trump went to Wharton, and despite what critics say, you don’t get through Wharton and become a billionaire by being an idiot. You may not agree with his policies, but the fact of the matter is he is not a low IQ person. That does not mean one has to like or agree with him.
President Trump reminds me most of General George Patton - brash, mercurial, a disrupter, and adept at focusing on results.
I expect we will see some renegotiated deals come to fruition in the next six months or so that will result in more freer trade - not free trade yet but freer trade on many items. That will allow President Trump to say that he made a better deal.
He is a pragmatist and will ”move the chains”, to borrow a football phrase, but will not have the tariffs go on so long as to crash the economy. That would not be pragmatic or logical or sound business.
Again, just some respectful thoughts based on observations, and my crystal ball is just as cracked and cloudy as ever,
kgbw49President Trump reminds me most of General George Patton - brash, mercurial, a disrupter, and adept at focusing on results.
Patton tended to generate a lot of casualties on both sides.
Dave H. Painted side goes up. My website : wnbranch.com
A person with power just talking about adding tariffs slows the economy.
Well there are tariffs now enacted all over the place. The markets have not flipped out yet, but the Union Pacific Railroad sure as heck is worried. I see the picture clearly but am reluctant to discuss this on the Forum. PM to me if you want to chat.
I sure as heck would not want the Union Pacific at my door.
Euclid all that money that is our trade defict worldwide does not leave this nation in goods and services rendered to other nations it leaves this nation in Hard Currency we have to pay for those goods. Just imagine what shape our infastructure could be in with say an additional 50 Billion a year to spend on it. Let alone how much smaller the deficts would be for this nation along with our debt we owe why less money being spent for welfare programs more tax revenues coming in to the governments nationwide. Better schools for our kids more jobs overall nationwide. Yes trade wars are bad overall however we as a nation can not keep sending half a trillion dollars in cash each year to China without it starting to hurt us in the long term.
Shadow the Cats owner Yes trade wars are bad overall however we as a nation can not keep sending half a trillion dollars in cash each year to China without it starting to hurt us in the long term.
Well then we should just stop doing it if it is hurting us. Why is it someone else's fault? A trade war will hurt us more.
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