That last tariff post sparked an interesting comment thread so I thought it would be appropriate to throw in my $.02 on the subject.
For those who may not know, I own an HVAC distributor, which is a subset of industrial distribution.
Almost all residential and light commercial HVAC products sold in the USA are touched by Mexico (if not made there entirely), and all are touched by other countries. No vendor in the space will be immune.
So far I have a bunch of letters from a bunch of vendors saying “hey man, we might have to do something about this” blah blah. I had one vendor that announced a price increase since a lot of their stuff is made in China, but they called me on Friday and said “nah”. One vendor gave me a “tariff surcharge” three weeks ago. I called them up and gave them the riot act and they removed it (since none of the tariffs had even taken effect).
Speaking of surcharges, we won’t accept them. We must have a general price increase to keep our costing and accounting in order.
I imagine most of the rest of the industrial distribution world will be facing these same issues.
We will have a mix of responses from our vendors. Some manufacturers will absorb part of it, some all, some none, etc. I’m expecting some supply chain issues as I imagine some manufacturers will “slow walk” production outside of the US if they sense a solution to the tariffs will be coming.
This is about the last thing my industry needed after covid, the onset of A2L refrigerants, and industry consolidation. But as always with any type of disruption, I look at this as an opportunity. But more hard work ahead.
But as always with any type of disruption, I look at this as an opportunity.
That’s it.
The last time the US had “balanced trade” was back in the mid-1970s — about two generations ago. The US was then a manufacturing powerhouse. Today, we are de-industrialized and consequently running unsustainable Trade Deficits. Since it took us 50 years to dig this hole, it is going to take decades to climb back out of it.
Yes, there will be lots of opportunities involved in rebuild manufacturing capabilities in the US and balancing trade through higher US production. But first we need to deal with the major obstacle to doing that — the thoroughly unrepresentative US Congress.
I think the purpose is to reshore American industry, which has been been ofshore for a good period of time
” But first we need to deal with the major obstacle to doing that — the thoroughly unrepresentative US Congress.”
And not only on the issue of tariffs and trade; over the last decade or two I’m getting the strong impression that what we call “Congress” is merely a moderately organized rabble of bunco artists.
To reply to responses from my comment on the last tariff posting. I mentioned California almond growers as a specific instance mentioned in the WH summary of the new tariff regime. It could have US air conditioner manufacturers or maple syrup producers.
While I have nothing against California almond producers, there is a general danger in allowing national trade policy to become dictated by a small, highly motivated special interest. I’d be happy if they found lucrative foreign markets for almonds opened to them but we’re not doing this for just almond growers – we need to be sure that the whole of the country, on balance, benefits.
Not saying I see this happening with the Trump Administration, but fights over who got what protective tariffs have been innumerable over American political history.
There was an article in a recent WSJ about Mercedes-Benz and how they thought that some of their vehicles – made in Alabama – would be exempt. But the drive trains – engines and transmissions – come from overseas.
In truth I don’t think there is a totally “American Made” car – But as other’s have said, the way we were going, it was an unlimited downside. I believe every country we trade with has had huge surpluses. And I heard someone say (Trump?) that we allowed this after WW2 to help devastated countries rebuild.
If we never get another thing from China that would make me happy – financing them to build up their military for a confrontation in the future.
I am old enough to remember the “ping-pong” diplomacy with Nixon – when China was really closed off to the West – and the proponents of trade said that as they get more prosperous, communism will wither away. How’d that work out?
I have wondered where would China be today had we not opened trade? Would a desperate China have started a war? Or would Communism have truly withered away?
But I believe too that this has always been an issue of globalism vs nationalism – and the early 70s were the advent of the globalism movement. No borders, “free trade”, etc.
But as a Facebook Canadian friend told us the other day, Pres Trump made the last trade deal with them (Canada) in his first term. No wonder they are angry.
Then Victor Davis Hanson was telling us about Mexico – allowing all these Chinese factories in to trade under “NAFTA” (or whatever it is called now) – to the tune of a $179 Billion deficit.
I think Trump’s implemation of this has had its flaws, but at the same time, it was necessary.
The normal approach to the problem would be to announce with great fan-fair the naming of a commission, or maybe a Blue Ribbon Commission. or even a Bipartisan Blue Ribbon Commission that would spend millions and at the end of six months or so release a voluminous document with nil semantic content and disband, never to be referenced again.
As the mule skinner said to the apprentice mule skinner after laying out a recalcitrant mule with a 2×4 ‘longside the head; “First you got to get their attention.”. Trimming around the edges with embroidery scissors accomplishes nothing.
…there is a general danger in allowing national trade policy to become dictated by a small, highly motivated special interest.
It seems to me that we’ve already had that for decades. That is, national trade policy has been dictated the relatively small special interest who own most US stocks.
Anything that makes stock prices go up, they will applaud- even if that actually leads to the destruction of the underlying enterprise.
Note how GE spent something like $45 billion on stock buybacks and then when nearly bankrupt they whined about the terrible pension liability of a similar magnitude that they didn’t want to pay.
…but fights over who got what protective tariffs have been innumerable over American political history.
The country was much better governed when were fighting that out via the political process instead of today when we just get endless lectures about how awesome free trade is without any mention of or concern for the downsides.
Via Instapundit:
https://x.com/vonderleyen/status/1909238427272307101
What everyone hasn’t figured out is that this is about trade, not tariffs. See the above, Europe will quickly reduce tariffs, then turn around and find other reasons not to import American goods, just like they’ve always done. What Trump is saying is that he will use tariffs to reduce imports until trade is balanced. If they want to avoid tariffs, they’ll need to increase their imports from us to match what they want to export to us. That will be the test, not whatever they may or may not charge on any particular item. This time, not wht they say, what they buy.
Can I dump a minor rant about an eleven-year-old Goodman service manual here?
“With Power On (and Door Interlock Switch closed):
4. Induced Draft Motor must run and pull in pressure switch.
5. If the hot surface ignitor heats and at the end of the ignitor warm-up period the gas valve opens and the burners ignite, the trouble is in the thermostat or wiring”
The thing is the gas valve opens momentarily even if the ignitor doesn’t glow, and when it doesn’t glow the control board doesn’t receive a signal from the flame sensor so it turns the gas valve off. The manual doesn’t jump to “If the ignitor doesn’t heat” section”, instead it jumps to testing limit controls and the gas valve, leading this simple-minded homeowner to spend way too much time fiddling around with a DVM instead of buying a $25 ignitor. In hindsight it should have been obvious that the ignitor was the culprit but for some reason I assumed I’d get a diagnostic error code if that component wasn’t pulling any current. Nope. The diagnostic light was showing that everything was hunky-dory.
Rant over. This was last Thursday with the temp dropping into mid-20’s, and of course the ignitor couldn’t wait to open up until this week when the lows are in the 40s.
P.S. I bought two identical Goodmans at the same time for a duplex. They’ve been reliable, easy to fix, and seem to have excellent parts availability. Made (or at least assembled) in the USA.