LG Raising Prices Due to New Trump Admin Taxes

[Brad_ATX 13,654]

LG raising prices on washers and dryers due to new import taxes.  This is a perfect illustration as to why many of us are in favor of free trade.  It's ultimately better for the consumer by offering more choice and lower-priced products.  As I stated in a free trade discussion a few months ago, corporations aren't going to lower their profit margins.

http://money.cnn.com/2018/01/24/news/companies/lg-raising-prices-washing-machine-tariff/index.html?iid=hp-stack-dom

As mentioned in the article, LG is building a plant in Clarksville, TN.  That was announced early last year, long before these taxes were announced.  Clarksville had actually started pushing for the plant while Obama was in office, as the article notes discussions had being going since June 2016.  Article here, published on Feb 28, 2017:

http://www.theleafchronicle.com/story/news/local/clarksville/2017/02/28/haslam-250-million-lg-plant-bring-clarksville-600-jobs/98475568/

[TitanTiger 20,511]

Playing devil's advocate, would this action not encourage more foreign companies to build more of their products here to avoid the import taxes?

[Proud Tiger 4,261]

14 minutes ago, TitanTiger said:

Playing devil's advocate, would this action not encourage more foreign companies to build more of their products here to avoid the import taxes?

Yes and we have has big trade deficits with some countries under free trade.  Import taxes help to offset that.

[Brad_ATX 13,654]

28 minutes ago, TitanTiger said:

Playing devil's advocate, would this action not encourage more foreign companies to build more of their products here to avoid the import taxes?

Potentially.  There's a cost/opportunity analysis that would have to be done for each company.  It would also potentially drive up prices because it's generally more expensive to produce things here than in other countries.

 

12 minutes ago, Proud Tiger said:

Yes and we have has big trade deficits with some countries under free trade.  Import taxes help to offset that.

There's almost always going to be a large trade deficit when it comes to the US.  We consume many times more worth of products than countries like, say, Mexico.  It would actually be impossible to balance that because Mexico doesn't have the economy to support a balanced trade effort, dollar for dollar.  Still the free trade offers us the ability to purchase products there at a cheaper price, which is good for consumer wallets.

[homersapien 11,453]

6 minutes ago, Brad_ATX said:

There's almost always going to be a large trade deficit when it comes to the US.  We consume many times more worth of products than countries like, say, Mexico.  It would actually be impossible to balance that because Mexico doesn't have the economy to support a balanced trade effort, dollar for dollar.  Still the free trade offers us the ability to purchase products there at a cheaper price, which is good for consumer wallets.

Exactly.

It is overly simplistic to consider trade balance only in the context of dollars spent or earned without valuing the benefits acquired.

[Proud Tiger 4,261]

10 minutes ago, Brad_ATX said:

Potentially.  There's a cost/opportunity analysis that would have to be done for each company.  It would also potentially drive up prices because it's generally more expensive to produce things here than in other countries.

 

There's almost always going to be a large trade deficit when it comes to the US.  We consume many times more worth of products than countries like, say, Mexico.  It would actually be impossible to balance that because Mexico doesn't have the economy to support a balanced trade effort, dollar for dollar.  Still the free trade offers us the ability to purchase products there at a cheaper price, which is good for consumer wallets.

Maybe for consumers, maybe not for American workers.

[Brad_ATX 13,654]

17 minutes ago, Proud Tiger said:

Maybe for consumers, maybe not for American workers.

American workers are also American consumers.  They still need to buy goods and produce too, and one would think the lower the prices, the better.

One other thing to consider.  Unemployment is at 4%.  That's considered full employment by most mainstream economists.  If you keep bringing in manufacturing jobs, eventually there won't be enough people to fill those roles.  The problem right now isn't so much that jobs are hard to find.  It's that wages, particularly on the bottom end of the spectrum, haven't increased with the average cost of living.

[Proud Tiger 4,261]

11 minutes ago, Brad_ATX said:

American workers are also American consumers.  They still need to buy goods and produce too, and one would think the lower the prices, the better.

 

Not if they are out of work. unemployment is low now but hasn't been for a long time and free trade deficits hurt us during those times. I am not very knowledgeable in this whole trade area so I better quit at this point.

[alexava 6,973]

I’m with the tarriffs but not fell swoop. There are ways to go about it more progressively and more effectively without causing huge price jumps. He missed a golden opportunity with the tax breaks. You could have limited the tax reductions only to Companies who don’t use cheap foreign labor. The 4% unemployment is good but the quality of employment could improve greatly. That could be improved by bringing back more value added manufacturing jobs. 

This is the area of Trumps platform I agreed with. I just don’t believe him or his motives. 

[AuburnNTexas 7,174]

On 1/25/2018 at 12:57 PM, Brad_ATX said:

Potentially.  There's a cost/opportunity analysis that would have to be done for each company.  It would also potentially drive up prices because it's generally more expensive to produce things here than in other countries.

 

There's almost always going to be a large trade deficit when it comes to the US.  We consume many times more worth of products than countries like, say, Mexico.  It would actually be impossible to balance that because Mexico doesn't have the economy to support a balanced trade effort, dollar for dollar.  Still the free trade offers us the ability to purchase products there at a cheaper price, which is good for consumer wallets.

You are correct to a point. But when companies are dumping to get market share or not following other agreed upon rules like meeting certain environmental standards, work standards, etc. that have been agreed to in trade agreements sometimes you have to balance that with Tariffs. I don't know all the details of why Trump felt this was needed but the fact that it was limited to one company and only certain products make me feel there may have been a legitimate reason for it.

Free/Trade agreements can be good or bad as the old saying goes the devil is in the details.

[Brad_ATX 13,654]

3 minutes ago, AuburnNTexas said:

You are correct to a point. But when companies are dumping to get market share or not following other agreed upon rules like meeting certain environmental standards, work standards, etc. that have been agreed to in trade agreements sometimes you have to balance that with Tariffs. I don't know all the details of why Trump felt this was needed but the fact that it was limited to one company and only certain products make me feel there may have been a legitimate reason for it.

Free/Trade agreements can be good or bad as the old saying goes the devil is in the details.

Well LG is the first to react to this.  There still could be more companies raising prices (like Samsung) on these products.  But you are correct, the details matter.  I'm a bottom line consumer and like paying for well-made products at a cheaper price point, so this is the start of bad news for people like me.

[AuburnNTexas 7,174]

On 1/25/2018 at 1:28 PM, Brad_ATX said:

American workers are also American consumers.  They still need to buy goods and produce too, and one would think the lower the prices, the better.

One other thing to consider.  Unemployment is at 4%.  That's considered full employment by most mainstream economists.  If you keep bringing in manufacturing jobs, eventually there won't be enough people to fill those roles.  The problem right now isn't so much that jobs are hard to find.  It's that wages, particularly on the bottom end of the spectrum, haven't increased with the average cost of living.

Also as was mentioned by those who did not like Obama but that is still true now. Employment rates are only based on those looking for jobs not those who could be working but have quit looking.  Labor Participation rate is a little more accurate number to see where we are. But there are so many factors even that is not clear many Baby Boomers retired whether they were forced to or able and wanting to is another issue. Bottom line statistics are only good if you understand all the underlying issues. Part Time / Full time employment. Salary scale of workers, etc.