A Presidential Suggestion to Trump on Tariffs

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tariffs may be rolled back

Anonymous Editorial by a 12 Volt Manufacturer

 

As a 12 volt businessman who carefully tracks recent tariff policy, I believe it is time for the US to do more than impose tariffs on Chinese goods.  I suggest the US government create an agency that helps small businesses to move their supply chains out of China.

Last week, China reacted to President Trump’s statements on tariffs by escalating taxes on US goods and Trump immediately followed by declaring even more tariffs on Chinese products that will include car audio speakers, radios and amplifiers, as well as automotive mirrors, speaker baskets, and cameras.

Amplifier tariffs will increase from the current 25 percent to 30 percent as of September 1.  Speakers will see a tariff, not at 10 percent, as stated earlier, but of 15 percent.

It seemed President Trump was already starting to backpedal on his declaration this weekend.  But despite the ups and downs of tariff negotiations, there is a way to move forward on trade in a way that would benefit small business.

This Trade War and its continual battle with higher than standard taxable goods is not without its casualties.   It’s no secret to many small business owners that times are tough.   Being nimble and adaptive has always been a focus of any successful business owner.   However, with the Trade War with China showing no end in sight, we are forced to learn a new skill….,global trade and world sourcing.   And with no current, readily available support mechanism for teaching this skill set, today’s US businesses are feeling the impact.

Right now what is happening is our supply lines are being suffocated with no immediate relief to offer.

One way to support and help small businesses that are not “globally savvy” is to institute a government agency designed to teach and guide the small businessman. It’s one thing to impose a tariff that punishes sourcing in China, it’s another to actively help small businesses move their business elsewhere.

This agency would hire specialists in each of the respective fields to provide guidance, resources and pre-established communications to smooth the transition process from China to elsewhere.   Even for those of us that ARE familiar with global trade, it is not convenient to jump on a plane for 16 hours just to see if the proposed supplier is legitimate.    This government agent/agency would have a list of “Suggested or Pre-approved ” suppliers, fully vetted and confirmed reliant with the possibility of a discount or tax relief incentive to enhance their decision further.

Additionally, the agency might provide a path for businesses to network. Those seeking a manufacturer of a certain speaker component, for example, in the US, could be directed to others looking to set up manufacturing of that part in the US.

Although Trump stated that he would ask that interest rates on business loans be lowered again to help offset these tariffs, 1 to 2 percent off a business loan will not outweigh the scale of the heavily sided tariff costs.

It is true that this plan for an agency is not without its flaws for a few reasons.  Historically, government agencies tend to move at a snail’s pace. Also, China has been a manufacturing powerhouse to the US small businessman for more than a few decades, with proven reliability, cost effectiveness and a blind determination to get the job done.  These are tough traits to match overnight as Trump’s cabinet representatives are suggesting going to Malaysia, the Philippines, Vietnam or Thailand, which seem to lack the robust capabilities China possesses.

But now that we are in the middle of a Trade War with no quick end in sight, something must be done to reduce the collateral damage. Although, it seems as if this has become a battle of pride with the US market absorbing the larger share of the blows, it is not without a potentially positive outcome for the US assuming a swift solution is implemented.

Photo via CNN: Donald Trump and Xi Jinping

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11 Comments

  1. You solution is to make the government bigger? And give yourselves tax breaks? Probably not gonna happen.
    My solution is: the 12 volt industry needs to end the rivalries and infighting, form a trade group, and help each other look for manufacturers in southeast Asia. I have JDM component speakers in my car and they were made in Vietnam; so the factories exist

  2. China plays dirty on every level. The fact is they have been screwing us for years and years and if anybody thinks they are going to just stop, then you don’t understand just how dirty they are. The only way to even begin to fix this is to BLOW IT UP! I support President Trump on this…I wish it could go smoother and easier of course, just like everybody else, but the bottom line is pay now or keep paying forever! The Trump administration has moved quicker than any administration that I have ever seen on key areas, like the Veteran administration. If you look at what they have accomplished in such a short time, and considering it’s Government, it truly is amazing! There are ZERO easy answers to the China gig, however I do agree with the author of the plan, as long as the administration goes at the plan like they went at the Veteran changes, it can and even will work! China will never change, they lie, cheat and steal and remember their goal is to take over and lead the world in every major category by 2025! The best thing we can do as a country is GET OUT OF CHINA! I say cut them off 100% as soon as we possibly can!

  3. LOL…




    Can we just get a massive subsidy like the farmers?

    End the stupid trade war so we can get back to our regularly scheduled programming. And if we can’t do that, can someone who has any clue about how to negotiate in China take over?

  4. While I support the idea behind this proposal, I have doubts that our government can efficiently develop and run such a resource in a reasonable period of time. Especially since the damage is already being done.
    I hate to bring it up, but what happens when America declares a trade war on Malaysia? On Viet Nam? On Indonesia? OK. Unlikely. But not impossible. The truly strategic thinking is to realize that in a global economy, trade wars are a lose-lose situation. That is the challenge. To find new ways to enforce international trade laws and to protect intellectual property in an age where nothing is secure. Step one in my book is to engage our global alliances. Something the current administration has handily unwound.

  5. If history is any guide, once a tariff regime takes root it becomes difficult to dismantle. The Smoot-Hawley tariff act of 1930 which was supposed to be a protectionist measure, eventually worsened the great depression by leading to tit for tat tariff actions worldwide. It would be naive to expect a “swift solution” at this point as negotiations have been deadlocked for many months, and now any perceived rollback would require a swallowing of egos by decision makers on both sides. Unfortunately, today’s decision makers lack such rationale as they do not have to deal with balance sheets and other pressing issues of this industry…. which any business must face to remain solvent.

  6. All,
    Thank you. I am reassured to realize that I am not the first to realize that as far as business is concerned, government is generally not a good answer.

    To the writer of the letter, give me a call 949-228-2153 I’ll be glad to help guide you FOR NO CHARGE to alternate suppliers in alternate countries. That said, it is simple to find sup[pliers. It is another thing to successfully manage suppliers in China or anywhere. Of course there about 1,000 other guys who can provide this same insight.

    Ray Windsor

  7. This Administrations default ‘genius’ is to abandon the collective benefits of larger member group, as in the Trans Pacific Partnership (‘TPP’), Trade Agreement, to better leverage the numerous member trade-partners, as a ‘coalition’ — to help pressure PRC harder, to behave as a ‘developed’ nation should. The US withdrawing from that agreement was inane.
    Nope. That would require actual ‘strategic thinking,’ as in ‘Chess’ type perspective, which is clearly beyond the ability of this Administration, given their repeated reactionary and obviously ego-based decision making. China should be held accountable, but this misguided, ‘simpleton’ tactic, is clearly no solution to those larger, important issues, as we are now paying subsidies to help our now distressed US farmers etc. That makes no sense.
    The fact that this absurd Tariff War is obviously now nothing but a needless punitive tax on US importers and Consumers is manifest, despite the ridiculous disinformation campaign the WH continues to wage, that claims “China is paying Billions.” It’s just unfathomable…

  8. Great idea. I mean, I can think of dozens of well run agencies within our government at present. You know, those that use their resources wisely and waste no time getting things done. Oh wait – those are privately owned businesses. Yeah, no. And how are “times tough” for small business owners? I sure don’t know any reporting that. I digress, things will always be tough for those that think they can circumvent the system and swoop in to make a few bucks off of the backs of companies that have created the space. Eventually, their business model (or lack thereof) comes full circle.

  9. This is a nice idea, but I worry that in general these kinds of agencies (and many countries already have them) are very general in nature, while finding the right supplier is quite specific. I do not see that government has the talent pool or ability to closely align. Once again, large firms have sourcing and supply chain talent in house or on hand and so the strain typically is on small business. I would rather tell the administration that #tariffsaretaxes and to find another path to reform we agree is needed.

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