Tariff Question

While it is most likely one of many lets single out one company.
Smithfield Foods the largest producer of Pork in the world is owned by China.
With that in mind I have a couple of questions.

How do you charge a export tariff to china to export their own pork.
They own the pigs; They own the processing plant.
If they want to move said pork to their country to feed their people how can we charge a export tariff on said pork.

How do we charge china a export tariff on anything including steel.
When they own a very large company that supplies our food.
To heck with saving steel workers jobs I want to eat.
 
The situation is no different with Smithfield than with any other multinational company. When goods cross a country's borders, that country has the ultimate authority to decide whether those goods may be imported or exported, and what tariffs are due. No different for General Motors, Apple, or a Mexican drug cartel.

That said, I'm not aware of any "export tariffs" charged by the US on pork exported to China. Do you have any details? However, China is now imposing IMPORT tariffs on US farm exports, in retaliation for import tariffs recently imposed by the US.
 
MarkB has the whole tariff/ownership thing right. While a foreign company can buy land , grow crops, feed livestock, run a processing plant, and have ownership of the products, the production and exportation of any products belongs to the country of origin. In other words, China can?t come into the USA , and buy all the crop land in Iowa, plant it to corn to feed hogs, then take the hogs home. The USA has sovereign rights over the land and how it is used, and control over how it is used.
 
So China is imposing a tariff on US pork. It's the Chinese people who'll ultimately pay more for pork. Will they charge themselves a tariff on pork from the Smithfield plants that they own? If not,they could take the burden of their own people by sending all the pork processed at Smithfield plants,directly to China and not to US stores. Couldn't they?
 
Countries impose tariffs on import to protect their own industries.

As I understand, the US proposed (25 percent?) tariffs on $60 Billion of imports from China. China retaliated by proposing tariffs on $3 Billion of US goods including pork. The US expanded its proposed tariffs to another $100 Billion of imports from China. China then expanded its proposed tariffs to more imports from the US including soybeans. So far none of the proposed tariffs have been implemented yet, but there is a deadline when they will (might?) into effect and the markets are trying to anticipate how things will work out.

Has anyone heard a plan for how the new tariffs revenue would be spent and if there will be any help for the industries that will be hurt, or is it all just bluff and bluster?
 
The Chinese are threatening to put an import tariff on pork, none of these tariffs are yet in effect but the Chinese have been calling for the calf rope ever since they were proposed, they are now begging for trade talks. Ozero put tariffs on Chinese tires and a few other goods shortly after he took office and it was hailed as a brilliant strategy at the time, the media controls perception for the majority, unfortunately.
 

The US has had mixed results with tariffs. In the early 1800s industry was just getting started in the US and England, where the Industrial Revolution started, could manufacture goods cheaper than the US could. Tariffs were proposed to protect US industry which was just getting started in some Northern states. Southern states had little industry and wanted to sell farm products, chiefly cotton, to English textile mills and buy cheaper manufactured goods, including steel farming tools. On the other hand western interests wanted government money spent on "Internal Improvements"like roads and canals to improve transportation. Tariffs became ever higher ending with the so called "Tariff of Abomonations." Tariffs became one of the causes of the Civil War. After the Civil War the South became more industrialized and was more receptive to tariffs. About 1930 there was the Hawley-Smoot Tariff which charged very high tariffs and was one of the causes of the Great Depression. Since then the US has generally favored free trade.

KEH
 
(quoted from post at 08:40:51 04/17/18)
The US has had mixed results with tariffs. In the early 1800s industry was just getting started in the US and England, where the Industrial Revolution started, could manufacture goods cheaper than the US could. Tariffs were proposed to protect US industry which was just getting started in some Northern states. Southern states had little industry and wanted to sell farm products, chiefly cotton, to English textile mills and buy cheaper manufactured goods, including steel farming tools. On the other hand western interests wanted government money spent on "Internal Improvements"like roads and canals to improve transportation. Tariffs became ever higher ending with the so called "Tariff of Abomonations." Tariffs became one of the causes of the Civil War. After the Civil War the South became more industrialized and was more receptive to tariffs. About 1930 there was the Hawley-Smoot Tariff which charged very high tariffs and was one of the causes of the Great Depression. Since then the US has generally favored free trade.

KEH

This is correct. The single most recent use of a tariff to save a US manufacturer was when Reagan saved Harley Davidson in the 80s.

There are no new tariffs as of now. There is just talk, which is being used to prod the trade negotiations to favor the US. So far new tariffs are just a negotiation tactic and that is widely misunderstood. There are a lot of folks who are under the impression that the US has levied new tariffs, but so far it is just talk to spur trade negotiations. Of course if the Chinese fail to bend over satisfactorily the tariffs can be implemented for real. Even then though, the goal will be to make them short term and negotiations will continue until we could get rid of the tariffs. Over the long term they are not practical.
 
Yes,true enough,but if the Chinese wanted to take all the pork that they contract grow and process through Smithfield,home to China and not retail it here,the only way the US could stop them would be to put an export duty on it that was such a burden that it wouldn't be to their advantage. Correct or not?

Of course the usual suspects are going to take this post off in to political la la land instead of addressing the original specific topic,so better talk fast before the whole thing goes off the rails.
 
You're thinking too small again. Nothing china does will change the world supply of pork. If china takes their pork and goes home we will just eat someone else's.
 
I'm not going any farther with this,but all I'll say is,it will add transportation costs that US consumers will pay if all of Smithfield's pork leaves the country. Retailers will have to source it somewhere else. As a trucker you know that.

You guys want a fist fight when all I'm looking for is a conversation about the original topic.

I guess last Friday's cleansing of the site didn't get through to some of you,but it did to me,so I'm done with letting the political stuff risk my posting privileges.
 
I fail to see how my response was political in any way. You asked what would happen if china took their pork home and I said nothing. What makes you think there will be more transportation costs? China is not the only pork producer in the US. Also I don't believe China will do anything because it will also cost them. They have much more to loose than us.
 
Come on Jon,I didn't single you out. Read the original post though,then go straight to ALGs response and tell me what it has to do with the question. These things go straight off the rails in minutes. It's just inviting more comments that don't address the original topic. I can see why Larry always tried to change the subject.

If Smithfield provides all the pork to retailers in a certain area of the country and it's not available,they'll have to go farther out to source the product and that'll add cost,that's all I'm saying. It might not be a lot,but it'll be a cost that the retailers will have to bare or pass on to consumers. I'm not saying it'll effect wholesale prices.
The same thing happens when we talk about any ag product. No,it won't change the finite world supply,but selling things to a different country can change the port that it has to be shipped out of and changes basis,meaning the local elevator could be paying a lot less than they would have otherwise.
 
Its against federal law to impose an "export tariff" (might even be part of the Constitution). However many claim the high income taxes imposed on domestic corporations and individuals that rely on exports is in fact an export tariff.
 
(quoted from post at 06:58:48 04/17/18) I fail to see how my response was political in any way. You asked what would happen if china took their pork home and I said nothing. What makes you think there will be more transportation costs? China is not the only pork producer in the US. Also I don't believe China will do anything because it will also cost them. They have much more to loose than us.

China is at a real disadvantage in a tariff fight, simply since we export very little to China, farm products and airplanes being the 2 largest exports. The really, really need the planes, and probably the soybeans, at least for now. I think the result of this long term is for China to develop other sources for these products, they want certainty in their food supply, and Airbus is licking its chops over this in the Airplane market. Long term, this episode bites us in the butt.
 
Thank you Mark and others for trying to answer this hypothetical question.
And Thank You rrlund for trying to keep this on topic. Your questions is exactly what I was trying to ask.


I do not agree with Jon.
Yes I can understand we are buying pork A and you are buying pork B.
If you take all of pork A tomorrow we will just buy pork B because you no longer need it.
I think you fail to consider the growing demand for pork in china and just how big Smithfield is.
Also every thing does not go to plan when you start a war.
Be it with guns or just trading goods.
 
Why would you assume that when something goes wrong it will be wrong for us and not them? They have much more to loose than we do, and this negotiator on our side is very good at it.
 
That's the thing,when somebody proves to be an unreliable supplier,I find a different supplier. If they have an attitude about it and tell me I can't get along without them and that I'll be back,it only stiffens my resolve. And I'm just a hard headed Swede,not a proud Chinese with 5000 years of history behind me.
 
> Its against federal law to impose an "export tariff" (might even be part of the Constitution).

Well, whether or not it's against the law, it doesn't make sense to do so, which is the real reason we have no "export tariffs". No country wants to make its exports less competitive.
 
Just a comment on why China bought Smithfield and has been investing a lot of money in the US. When a country runs a long-term trade surplus with another country, sooner or later there is a day of reckoning, when the country with the surplus ends up with all the other country's money. In order to sustain a surplus, that cash has to get back where it came from. In the case of China and the US, China is using its dollars to buy companies and real estate in the US. Smithfield is a natural choice, since it produces a product for which there is high demand in China; not only can it use its surplus dollars to buy the company, it can use dollars to buy the company's products. And then use the profits to acquire more US assets.
 
The real question is "did China buy Smithfield to gain a supply of Pork for China?.. Or as a business investment to make and sell a product in the USA? I did not know the answer to that, but found a recent interview with the president of Smithfield and he said only 7% of Smithfild production goes to China.

A lot of folks are not aware that a Chinese company bought the USA General Electric Appliance division and operates it here in the USA and the sells of most of those GE appliances in the USA. (so no tariffs except imported steel and Aluminum.

Toyota has numerous plants in the USA and those products are mainly sold here. (so no tariffs)

Products made here and sold here will not have any tariff.

A Chinese company now owns Volvo cars and they will be made in Sweden, Belgium and China. Apparently the plan is to bring Chinese built Volvos to the USA as the first China cars imported to America. I think there are also plans to build a Volvo plant in So. Carolina.

In the 1920's and 1930" American companies owned factories all over the world. Today many foreign companies own
businesses and factories in America, a slow and steady but major global shift in ownership of industries. The Chinese apparently have so much investment cash available that they are searching the world for industries to buy.
 
first off each country can set up how they do tariffs as they see fit.

China's threat to tax pork had an exceptions for Chinese owned pork supplying companies. So Smithfield would not be hurt.

also in this case supply and demand will weigh in. when China threatened the bean tariff on the US, brazilian bean prices went up and ours went down a bit in the middle of the night due to time zone differences (12 hours to China). so 6 hours later when the Europeans woke up and saw US bean prices were a better deal than Brazil's they started buying US beans.. by the time we woke up we hardly noticed.

China cannot feed themselves that is our biggest advantage with them. yes, others like Brazil and Argentina and Canada can take up some slack but it's all in the same market. just shuffling things around

similar things with Steel. yeah it will help US companies some but will also help other companies not included in the tariff.
 
How difficult would it be for Smithfield to duplicate its US pork supply chain in another part of the world that also produces grain, like South America, Eastern Europe or China itself? The technology, genetics and business model are easily transferable. One of the biggest advantages US pork producers have is low cost of production, a 25 percent tariff would wipe out that advantage in the China market. Lower US grain prices might offset some of the profit squeeze.
 
Do have any idea how long it would take just to get breeding stock into those countrys the places for them to live and then feed then getting numbers like millions and processing plants. More to eating a pork chop than just talk.
 
My fear is,once we've proven ourselves to be an unreliable source that can be turned off in an instant because of the whims of just one person,not just now,but other single people's whims on down the road,the wheels will already be in motion. It took decades for trust to be restored after 1980. The reason to have that fear of relying on us was just highlighted all over again.

I pray that I'm wrong. I don't have that many decades left on this earth,much less that many years farming.
 
Here is what happened. The US said it would impose duties on imports of steel and aluminum. When the US announced its intention to put the duties in place, China announced a list of $3 billion in potential US products that could be hit with import duties as a response -- $2 billion in US ag products, of which $1.1 billion was pork.
The US duties on steel and aluminum went in place and China did put their duties in place. SO, there ARE duties in place, including on US pork. And, no Smithfield is not exempt from the duties. Even Smithfield officials say they are not.

The US has also announced its intention to impose duties on $50 billion more in Chinese exports to the US. China in turn announced a list of US products, including soybeans, that COULD be hit with duties. Neither the US threatened duties nor the Chinese threatened duties are in place. The US duties most likely would not happen until late May as there is a process that has to be gone through.
Just the facts.
 
My understanding is that most of our pork exports to China consist of parts we mostly don't use. Feet, entrails, and whatnot. We did, when I was a boy here in the backwoods, consume almost all of it but apparently not now. We at 20 plus trillion in debt, and China at 40 plus can neither afford risky trade policy. It is my understanding that China is and has been for some time exploring investment in farming in Africa and South America. I have been told that Brazil can produce huge amounts of grain but lack the infrastructure to get it rapidly to a port. Obviously that could be fixed. One thing that is apparent is the fact that China is not inhibited by our sort of capitalist system in making those sorts of investments, no matter the debt they incur. They may, as rrlund theorized, squirm for a while, but how long?
 
We have a huge export market built up over the years with China for soybeans. So if they buy our "25% tariff" beans for $10.00, when the ship arrives at the unload port in China the Chinese are charged $12.50 to pay for the tariff. Or they can buy "no tariff" soybeans from Argentina or Brazil for 10.00 , when the ship arrives at the unload port in China they are charged $10.00. Which soybeans do you think the Chinese will buy if they can get all they need for their population from South America. Then US market soybeans drop to $7.50 or $8.00 from lack of demand from China and oversupply here.
 
I don't think it works that way. If China can get all their beans from Argintina and Brazil then the countries that usually buy beans from A and B will be scrambling to find a source. We just happen to have some available for $10.00
 
But the development of more and cheaper production elsewhere may be the end game for the Chinese. I am not saying there is no trade imbalance. What I am wondering is if a dispute over steel and intellectual property may be costly to the American farmer.
 
There is more on this at

https://chiefio.wordpress.com/

Scroll down to the thread that starts

"- - - Tariff - Who Wins?

Direct links don't pass
 
I'm trying my best to keep politics out of this and hope I'm still succeeding. With that said,I don't think it's a good long term trade strategy to humiliate China and make them "come crawling" to trade with us. Any of you who have Direct TV,set your guide on All Channels then take it to channel 2119. It's China Global Television. Keep scrolling right and just see how many of their news shows involve Africa. They're investing in Africa economically and culturally right now.

In 1947,all but two or three African countries were colonies of six European countries,were quite productive and getting more productive all the time. In the past 60 years all African nations have become independent and have gone backwards. If China can invest in just a few of those countries that were the most productive and do it peacefully and without colonizing them,and can bring back that productivity and build on it,they won't need the US.

When they stop reinvesting the money they make off us through trade,back in to financing our massive national debt,we're done for. We can't print our way out of it.
 
You are making a valid point rrlund. China has been investing in Africa for some time now. Some of what they are doing is detrimental to the population at large, depending on nation and how citizens fare under that government. Many native peoples are driven off farmland and into squalor, however in some places people gain jobs and the benefits of modern society. But the point being, the Chinese are not shortsighted, they aim for the future, and may well be the dominant world power in our limited lifetime, and like you I mean my lifetime.
 
So you think that if we keep up the status quo and continue to let them take advantage of us on trade and steal intel actual property with impunity and all the other things they have been getting away with in the last 2 decades at least, they will give up on that African devopement?
 
Exactly. They're a 5000 year old people. They've been over run and colonized in the past,but have always survived. These current events are just a fly speck on the calendar of their existence. They'll survive and thrive. It wasn't long ago that Great Britain was the most dominant country in the world. The Pound Sterling was the monetary standard of the world. It's been our turn for a while now,but with our debt and division,I fear we can't hold that dominance much longer. Remember,the enemy of my enemy is my friend. If we tick off the entire world with our arrogance and they band together against us,China will rise to the top in a heartbeat. By banding together against us,I don't mean militarily,I mean in just ignoring us and acting like we don't exist. The TTP went on without us. Those countries have essentially said "Fine,take your ball and go home,we don't need you.". It's just the TT Tip of the iceberg.
 
No,I don't,but I think it will speed it up to warp speed. I believe they'll double down on solving whatever problems stand in the way and get them taken care of. We'll become a supplier of last resort instead of a preferred supplier. Our markets won't die completely,but they'll slow down and eventually to a trickle. Not just to China,but to every country when they see how unreliable we are.
 
I think we need to take a more thoughtful approach. We need to put our desire for retribution and immediate gratification behind us, seek a long term approach. But democracy as we have it does not always allow for that. And I am not criticizing any political party. And I want a real democracy. But changing policy every 4 to 8 years produces limitations. Of course one might think it produces a more reasonable balance. I am not sure that the very simple idea that trade imbalance is always a losing proposition. If we were still on the gold standard that would be a very different concept.
 
America has been and will continue to be the most reliable food producer in the world for the foreseeable future, and a spat with China won't change that. You fail to acknowledge that unlike when Carter tried this there is no glut so the results won't and can't be the same. And I think you are too worried about Brazil, Africa, and China. None of those have the land, climate, and infrastructure to be a serious threat. If you want to worry about someone, worry about Russia. They have the quality land in large quantities with good climate as well as a caspable work force just waiting for infrastructure. If you want to worry about competition it's there.
 
At this particular point, I don't think American farmers are making much profit from Russia. You are right, they do have a great deal of land, but a somewhat sparse population, and at this time they are pretty much landlocked. Makes the Crimea, and Syria more valuable.
 
They are the only remaining place with significant amounts of fertile soil and the climate to make use of it. And with today's farming equipment how many people would it take? And they are an industrious people who only need to be let loose to do it. And that government is moving that way very quickly.
 
They lack sea access. Makes Turkey a very important factor in Russian development. They are pursuing escape through their northern seas since the ice is melting. But what nation can achieve trading dominance without the power of sea shipping or military dominance without a great navy.
 
If I remember correctly, China is the one imposing tariffs on pork. We are taxing stuff we import from China. All the press is smoke and mirrors.
 
So you think if they grow the grain they won't be able to get it to market? I would bet that some country would rent them space at a dock at a warm port. Their biggest problem will be transporting it to the shore, not shore facilities. But all that will be a lot easier to achieve than it will be in africa.
 
Don Surber did a good job of covering this last week. http://donsurber.blogspot.com/2018/04/oh-hurt-us-some-more-china.html
Basically,we have a trade imbalance with China to the tune of 365 Billion Dollars. That is $1 Billion a day that we spend in China that they in turn spend elsewhere.
Put it in terms of the local Coop. If they sell you your seeds and fuel, then buy your grain, you should make a little money. Hopefully a lot of money. Suppose though that the price they charge you for the seed and fuel is greater than what they pay for your produce. Then suppose they "loan" you the money to make up the difference at a nice rate of only 2% or so. Would you last long farming that way?
What it boils down to is this, If we got into a mega trade war with China, and a complete embargo was the result, we would win to the tune of $365 billion.
We won the soybean war no matter what commie news tells us. Europe is now buying from US and paying more than China paid. President nnalert didn't become a billionaire by making dumb deals. The guys who are career politicians who went to law school and never worked a day at a real job are the ones who made the dumb deals. Then they got people who had never worked a real job but looked good in front of a camera to sell the notion to us working class folks that it was the best deal out there.
 
That is why Russia moved on Ukraine and took back the regions along the black sea. Also the reason for interference with Georgia and friendly ties with Iran. Russia has good access to Europe via rail as well.
 

As usual jon f mn has the calm, adult approach and is correct. Let the Chinese double down on Africa. Hard to come up with a good analogy, but I guess if a rapist (China) gets a girlfriend (Africa) and stops raping my daughter (USA), that is a good thing. If there is an economic hit we will adjust as we always have. It is all fluid and flexible and constant adjustments are made all the time. Like the ocean, the global economic scene will never just be calm and flat.
 
The Chinese haven't even tapped in to their own potential. The reason they have hundreds of millions of tiny farms instead of adopting modern agricultural practices is simply that they don't want to displace all of those families in to the cities and have to create jobs to employ them. They find it more beneficial to leave them where they are and import food. They could change that in a hurry if they needed to.
 
Nixon and Kissinger were the first to go to China and Case was right there with them making big sales so China could grow larger crops. We farmers would have been more profitable selling them raw and finished ag products but do think farmers would get that free ride. The only free ridde we get is going to war where the 5% monied people just make more money. I say if put tariffs on any one, let it be Nike, Delphi, etc that left the US and import back to the US even the nnalert family enterprises.
 

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