25%Tariffs

[tromboneVan]

People here cannot handle the slightest question of their perspective... why can't people voice a different perspective without offending you? Many double standards here. It's called hypocrisy when you always resort to attacking people just because of a difference in outlook, but then say stay on topic when those people you disagree with are on topic, but just saying things you don't like. People can think for themselves. It would be a great favor, since you're already on my ignore list (most of you are).

[Bach5G]

So as of today, March 6, items covered by the USMCA trade agreement (and potash, a fertilizer) will be exempted from tariffs for another month. It’s not clear whether Canadian reciprocal tariffs will be paused. DoFo is still pushing an export tax on electricity. BC and Ont are still removing US alcohol from the gov’t liquor stores. (Ont is a big customer for Kentucky bourbon.) The mid-west states buy a bunch of potash from Canada and it’s planting season.

DJIA down another 500 today.

Clown show.

[musicofnote]

So as of today, March 6, items covered by the USMCA trade agreement (and potash, a fertilizer) will be exempted from tariffs for another month. It’s not clear whether Canadian reciprocal tariffs will be paused. DoFo is still pushing an export tax on electricity. BC and Ont are still removing US alcohol from the gov’t liquor stores. Ont is a big customer for Kentucky bourbon. The mid-west states buy a bunch of potash from Canada and it’s planting season.

DJIA down another 500 today.

Clown show.

As Ford should. As should the other provinces. They should all simply go on the offensive, shut off oil, electric to the US. Shut off the supply of autoparts to the US. Shut off the minerals and such things. THEN enter into negotiations to end once once and for all, not just for 30 days, but for at least 4 years, any tariff originating in the US. And only then incrementally restoring deliveries of the above to the US. And if Canada is shut out of "5 Eyes", all the export stops go into effect again. The only way to stop a bully is to out-bully him.

But that's just me the Ex-Ami, now Swiss. While not in the EU, nor in Canada, I for one do support both as a member of Schengen Raum. And don't start with your "what about..." nonsense, I'll just block it.

[Bach5G]

“And don't start with your "what about..." nonsense, I'll just block it.”

What’s that about?

[chromebone]

Look, this conversation is going to be moot anyway, because we’re about to head into a recession so bad, buying a trombone is not going to be anyone’s priority.

[hornbuilder]

Yeah. Fabulous..

[chromebone]

The art of the deal indeed.

[hornbuilder]

I did hear that he was talking about 25% on EU, too.

[BGuttman]

I really wish somebody would clue Trump about Smoot and Hawley. They basically sabotaged Herbert Hoover's presidency creating the Great Depression.

Those who ignore the lessons of History are condemned to repeat them. (I believe that was attributed to Winston Churchill.)

[CharlieB]

There was an old farmer with his mule hitched to a plow, getting ready to plow a field.
He walked up to the mule and hit him on the head with a heavy stick.
A bystander said, "Why did you do that?"
The farmer said, "He's a really good mule, and he'll do anything I ask of him, but first I need to get his attention."

[Burgerbob]

People here cannot handle the slightest question of their perspective... why can't people voice a different perspective without offending you? Many double standards here. It's called hypocrisy when you always resort to attacking people just because of a difference in outlook, but then say stay on topic when those people you disagree with are on topic, but just saying things you don't like. People can think for themselves. It would be a great favor, since you're already on my ignore list (most of you are).

Ignore the chaff, address the very real questions people have for your positions. There are many still left hanging.

[JTeagarden]

With regards to tariffs being meant to counteract VAT (which by the way is not the main stated reason), it's important to note that it is the US who chooses to not have VAT. This is because neither party can politically afford to impose one; the mere idea of taxation is repugnant for too large a chunk of the country. That is not the fault of the rest of the world, however. The US chooses to have a tax policy it knows puts it at a trade disadvantage with 150+ other countries. They can't then play victim.

We do not pay VAT on products imported from the EU at all, it’s a de facto export subsidy, but one blessed by the WTO when the issue has been raised (as it has multiple times).

VAT rebates are not an export subsidy. Quite to the contrary, VAT that is only partially-rebated effectively act as an export tax! The misconception stems from thinking the rebate is a tax break.

It is not technically designed as an export subsidy, but that is effectively what it is, it allows manufacturers to sell goods to customers outside of the VAT zone at a lower cost than to customers in the zone.

In fact, the end consumer bears the entire VAT, as a manufacturer gets a credit against the VAT that it has to pay against the VAT that it has to remit, and gets to cross credit their input VAT across all of its sales, whether the supply is made within the VAT area or not.

I know a lot more about taxes than I do about Bruckner

[LeTromboniste]

With regards to tariffs being meant to counteract VAT (which by the way is not the main stated reason), it's important to note that it is the US who chooses to not have VAT. This is because neither party can politically afford to impose one; the mere idea of taxation is repugnant for too large a chunk of the country. That is not the fault of the rest of the world, however. The US chooses to have a tax policy it knows puts it at a trade disadvantage with 150+ other countries. They can't then play victim.



VAT rebates are not an export subsidy. Quite to the contrary, VAT that is only partially-rebated effectively act as an export tax! The misconception stems from thinking the rebate is a tax break.

It is not technically designed as an export subsidy, but that is effectively what it is, it allows manufacturers to sell goods to customers outside of the VAT zone at a lower cost than to customers in the zone.

In fact, the end consumer bears the entire VAT, as a manufacturer gets a credit against the VAT that it has to pay against the VAT that it has to remit, and gets to cross credit their input VAT across all of its sales, whether the supply is made within the VAT area or not.

I know a lot more about taxes than I do about Bruckner

Well, not at a lower cost, but a lower price for the foreign consumer compared to the domestic consumer. That price difference is the amount of the tax, which the manufacturer doesn't normally pay anyway. And when selling into the US, that makes no difference on the US consumer. They're not paying less for the German made product than an identical US made product since the US made product would also never have 19% tax on it...they're paying less than a German consumer would, but that's merely the fact that Germany taxes sales and the US doesn't. The German consumer also pays 19% more on imported American goods than the American consumer does.

Where it does make a small difference in certain cases, as you note, is the fact that all input VAT can be deducted from the owed VAT, whether they could actually charge VAT on every sale or not. So in my simplified earlier example with the trombones, yeah, the German maker actually gets to deduct the VAT on its expenses for the trombone sold in the US from the VAT on the profit of their EU sales. So if fully rebated, there could be scenarios where the input VAT entirely cancels out the owed VAT, giving the exporter somewhat of a financial benefit compared to selling only domestically, which would in a way amount to a small export subsidy. However, there's two important caveats here.
1) the VAT isn't always fully-rebated, which raises the threshold where that scenario would be applicable
2) you can't claim more VAT deductions than the VAT you owe. So the company needs to have enough domestic sales to actually owe VAT, against which their input VAT can be deducted. If a company sells majoritarily abroad, then they have less owed VAT than input VAT (or eventually, if they sell only abroad, owe no VAT at all), in which case they'd be the hook for the balance of their input VAT that couldn't be deducted, and therefore at a serious disadvantage. That is, unless it's rebated.

[LeTromboniste]

(by the way I'm by no means an expert on this, and I'm sure there's some details of it I don't understand correctly, but being active as an independent service provider almost entirely in countries that have VAT, I've had to read up on that subject a bit. Of course every jurisdiction does things a bit differently)

[tromboneVan]

Good overview. Reuters 2/21:
Why Trump has thrown VAT into the trade stand-off
https://www.reuters.com/world/us/why-tr ... 025-02-21/

[dembones]

There is nothing trombone-specific about tariffs. They will affect everything.

Disagreement is fine. But this thread has devolved into the vitriolic and devisive noise that is found on social media and that I avoid as much as possible.

If the goal of this site is to bring the trombone community together, then this thread is undermining that goal.

I wish admins would close this thread. Can we talk about trombones now?

[officermayo]

I wish admins would close this thread. Can we talk about trombones now?

Talk about trombones on TROMBONE CHAT?
Perish the thought!

I just love hearing the political opinions of such experts.

[TomInME]

I really wish somebody would clue Trump about Smoot and Hawley. They basically sabotaged Herbert Hoover's presidency creating the Great Depression.

THIS. Free markets need predictability to thrive, and Trump-lovers praise his unpredictability.

De-regulation and indiscriminate cutting don't make things more predictable either...

[timothy42b]

I'm not a VAT expert. So I might have misunderstood.

I lived in Germany for five years. VAT was included in anything that was purchased. It was automatically part of the price, so no additional calculation was needed to add tax at the register. If it cost 3 Euro, I paid 3 Euro, not 3.18 like in the US.

That was true if it was a US product or a German product. A German buying a German car paid VAT. Buying an American car, paid VAT.

There was a loophole for US citizens in a special category. Because of a clause in the SOFA (Status of Forces Agreement), we could exempt a limited number of purchases during our stay. Our passport had to have the SOFA stamp, and we had to submit a form to the vendor. It was a hassle, and only worth doing for a large purchase.

[LowBrassJunkie]

Lots of aggressive European opinions on American positions... I get it you, you have a wedgie about it, ultimately i'm just giving you a different perspective. You'd rather just insult people than provide any valuable information or opinions, and like your fascistic tendencies of many of you suggest, you just prefer to silence, we know that, and have seen it many times.

Unfortunately I'm entitled to be an American and have opinions, too, despite your preference to belittle me on every thread... sorry, we live in a new paradigm. The USA that caters to you, but you don't pay your fare share (NATO perfect example) doesn't exist anymore.

The hypocrisy of calling tariffs extortion, and then having no issue with the tariffs being used against the USA is proving my point, but that's par for the course with this one .

Again, Tariffs are not the end game, as I recommended before, read the Art of the Deal. How many deals have you won by antagonism? Does that get you very far? We won't always see things the same way,

We are entitled as Americans to be dense fools, you are correct.

[tbdana]

Well, someone quoted Van's post for me to see. It's funny that he antagonizes forum members with statements like:

Lots of aggressive European opinions on American positions...

...I get it you, you have a wedgie about it...

...You'd rather just insult people than provide any valuable information

...like your fascistic tendencies

...you just prefer to silence, we know that.

...despite your preference to belittle me on every thread...

...you don't pay your fare share (NATO perfect example)

...The hypocrisy of calling tariffs extortion, and then having no issue with the tariffs being used against the USA is proving my point, but that's par for the course with this one.

All that from just one post! And then with an impressively ironic lack of self-awareness he says,

"How many deals have you won by antagonism? Does that get you very far?"

Both Van's and Trump's approach are all antagonism and playing victim. Van talks about imposing tariffs as the start of negotiations, but really tariffs are meant to be imposed only when all attempts to negotiate have failed. To do them up front is...wait for it...incredibly antagonistic. And the antagonist approach from Trump just harms innocent consumers merely looking for trombones and trombone-related products, and doesn't exactly help the stocks and commodities markets, either.

However, I have really been enjoying getting an education on the Value Added Tax. And I, personally, greatly respect and enjoy hearing the perspectives and opinions of non-Americans, and particularly Canadians and Europeans. I've heard from plenty of Van-Americans at this point. I'd like to continue to hear from some others, please.

[tromboneVan]

"Chess speaks for itself"
-HN

[JTeagarden]

There are of course a lot of components to the composition of our current economy:

- the substantially increased productivity of manufacturing labor through technology in the last 40 years;
- a focus, especially in the US, on consumption as opposed to labor as the basis of economic policy;
- the explosion of consumer credit to fund consumption if you can't afford it;
- a general, triumphalist view of history that concludes that trading with people will make them more more like us.

It was easy to convince US companies that establishing operations in China was somehow in everyone's interest, and while it has increased consumption, and wealth on average, it has come at a cost to blue-collar workers in the US, who have very little job security these days.

We have basically created our own geopolitical adversary (China) by allowing it to make all our goods, and to finance our government debt.

But ... you can't put this genie back in the bottle with a few tariffs.

[TomInME]

A sensible post! Trump won by telling blue collar workers that he would bring those jobs back. But corporations won't bring those jobs back unless they can do it more cheaply long-term (impossible without a gigantic recession) or if Walmart shoppers (often blue collar) start buying more-expensive US products (also impossible without huge increases in the cost of everything).

But it's easier to sell extravagant dreams than build functional realities.

[tromboneVan]

UAW statement on Tariff Action

[LeTromboniste]

UAW statement on Tariff Action

I'm not a supporter of unbridled free trade, I'm very much pro-unions and workers' rights, and I'm definitely of the opinion that big corporations are not paying anywhere near their fair share (when they're paying anything at all). I think invoking free-trade to move jobs to third-world and developing countries in order to maximise profits is disgusting (but that ship has unfortunately pretty much sailed, with corporate America at the helm – the very corporate America that's living its biggest fantasy right now).

But I'll point out, for this one particular case, that Canadian auto workers have better compensation and better conditions than their US counterparts. In fact they split from the UAW to form their own Canadian union back in the 80s because the UAW was agreeing to too many concessions. So, as far as Canada and its auto industry go, the UAW's argument that corporations are killing blue collar jobs in the US by "exploiting some poor worker in another country and paying them poverty wages" simply doesn't hold water. In a lot of cases, yes, but not in the case of auto plants in Canada.

[Bach5G]

Chapter 23 of the USMCA sets out minimum labour standards. According to US Dept of Labour:

The United States-Mexico-Canada Agreement (USMCA) has the strongest and most far-reaching labor provisions of any trade agreement. The agreement contains a labor chapter that prioritizes labor obligations by including them in the core of the agreement and making them fully enforceable. This is a major change from NAFTA, which only contained a side agreement on labor, and it greatly benefits American workers and businesses by holding Mexican manufacturers to the same labor standards as employers in the United States.

[tromboneVan]

Would someone please explain to me why reciprocal tariffs would be unfair? Wouldn't the end result be negotiating away tariffs altogether? Wouldn't that result in lower costs and prices across the board? Am I missing something here?

Yes, you're missing something: the fact that they're not reciprocal. Canada overall didn't have tariffs on US goods – we have a free trade agreement (that Trump himself renegociated). [edit for clarity: there were small tariffs on both sides on a few specific industries, but those amounted to less than 1% on average overall. And again, on both sides.] The US put this 25% tariff on Canadian goods for reasons they themselves don't seem to be sure of and seem to depend on what mood one particular person is in on any particular day. One day it's about fentanyl and the border, one day it's about putting "reciprocal" tariffs in place – but "reciprocal" to what? – and one day it's about a trade deficit and sticking it up to people who've supposedly been abusing the US through "unfair deals". By the way, the legal basis for the tariffs (because tariffs do have to be legally justified when they go against a trade deal that has been signed into law by Congress!) is the national emergency of uncontrolled influx illegal aliens and fentanyl, not "reciprocal" tariffs. If they had justified them as reciprocal tariffs, they could have been struck down by US courts because it's easy to demonstrate they violate the law. Invoking the national border emergency makes it impossible to challenge because that emergency is also declared by the executive, even when it's really obvious that at least on the Canadian side, the claim is bogus.

I don't know what the official justification for tariffs on European imports will be, but whatever it is, the real reason won't really be about "reciprocal" tariffs: there are currently very small tariffs on both sides, and already more tariffs on European imports into the US than on American imports the EU (the US has about 1.4% tariffs on average, the EU 0.9%). Putting 25% tariffs on EU import is not going to be "reciprocal" to anything, whatever the guys in power claim.

[Bach5G]

From Reuters:

‘Most of the $1.6 trillion in two-way U.S. trade with Canada and Mexico crosses borders duty free under terms of the U.S.-Mexico-Canada Agreement on trade, which Trump signed in 2020.

Among the few exceptions are Canada's high tariffs on dairy products that are part of its decades-old Supply Management system to protect Canadian dairy farmers. The system also includes import quotas and domestic production constraints to support prices.

The USMCA deal provided limited duty-free quotas for U.S. dairy products, but for anything above these levels, tariffs on specific products can exceed 200%. Washington for years has unsuccessfully challenged the way that Ottawa has allocated the USMCA dairy quotas.’

I recall the negotiations on dairy being very contentious but ultimately an agreement was reached.

[timothy42b]

There are of course a lot of components to the composition of our current economy:

Two significant ones you missed:

The gradual adoption of the mindset that there is only one metric: value/profit to shareholders. This is relatively new, mostly post-Jack Welch at GE, but it is so thoroughly ingrained that it's now just a basic assumption everyone shares. (Jack was one of the first to really move overseas in a big way, and also to realize he could make lots more money in finance than in manufacturing.)

Second, an economy that depends on growth to function requires the assumption of infinite growth. We know that isn't possible but "it will last our time."

[JTeagarden]

There are of course a lot of components to the composition of our current economy:

Two significant ones you missed:

The gradual adoption of the mindset that there is only one metric: value/profit to shareholders. This is relatively new, mostly post-Jack Welch at GE, but it is so thoroughly ingrained that it's now just a basic assumption everyone shares. (Jack was one of the first to really move overseas in a big way, and also to realize he could make lots more money in finance than in manufacturing.)

Second, an economy that depends on growth to function requires the assumption of infinite growth. We know that isn't possible but "it will last our time."

Valid points

[Dennis]

The gradual adoption of the mindset that there is only one metric: value/profit to shareholders. This is relatively new, mostly post-Jack Welch at GE, but it is so thoroughly ingrained that it's now just a basic assumption everyone shares. (Jack was one of the first to really move overseas in a big way, and also to realize he could make lots more money in finance than in manufacturing.)

Actually, the idea that value/profit to shareholders being the sole function of business goes back a lot farther than that. In its modern incarnation it is attributable to Milton Friedman and the Chicago School of Economics. Friedman published a piece in the NY Times in 1970 pronouncing the so-called Friedman Doctrine. The title says everything that needs be said: A Friedman Doctrine: The Social Responsibility of Business is to Increase Its Profits. Under the Friedman Doctrine, a business owes no social responsibility to the public or the greater society. Its only responsibility was to its shareholders.

In the 1980s, Jack Welch took that idea and ran with it. I don't know if Welch was a devotee of Friedman or if he came up with idea on his own.

[Bach5G]

Ontario is set to impose a 25% export tax on electricity tomorrow (March 10).

A local academic, Joel Bacon, maintained corporations are similar to psychopaths in that they act solely in their own interest. He had a film out, The Corporation, that investigated this idea a few years ago.

[Posaunus]

Canadian elections are over.

Best wishes to our northern neighbors.
[Or to our ten new States and three new Territories?
Wonder how they'll vote? ]

[Bach5G]

Canadian elections are over.

Best wishes to our northern neighbors.
[Or to our ten new States and three new Territories?
Wonder how they'll vote? ]

No. The party currently holding the most seats in parliament selected a new leader who will become the prime minister. It is expected he will call a federal election although he doesn’t have to any time soon.

[Posaunus]

Canadian [Liberal Party] elections are over.

Best wishes to our northern neighbors.
[Or to our ten new States and three new Territories?
Wonder how they'll vote in the upcoming federal election?]

[CalgaryTbone]

I would guess that in the extremely unlikely event that Canada became part of the US, the new states would vote overwhelmingly Democratic. It is also worth mentioning that Canada is a larger country (geographically) than the US - the 2nd largest in the world after Russia, with 6 time zones.

We've been told that the tariffs are in response to fentanyl crossing the border - a couple of figures provided from customs/border services regarding seizures in 2024:

Fentanyl:

Mexico to US - 21,148 Lbs.
Canada to US - 43 Lbs.
US to Canada - 882 Lbs.

So just skipping the Mexico figure for now, I just want to point out that the figure for the seizures of Fentanyl from the US to Canada is roughly 20 times the size of the reverse.

Also, since this is all about potential loss of life, I feel like I should include this other statistic, also from border seizures:

Illegal gun seizures at the border:

Canada to US - 3,000
Mexico to US - 16,000
US to Canada - 30,000

In all the years that I've been an American living/working in Canada, most of the time I had a slight dilemma deciding who to root for in sporting events, etc. There is no such problem with this situation.

Jim Scott

[2bobone]

I remember political discussions destroying the old "Trombone Forum". Would a moderator be willing to "Pull The Plug" on this one ? If all our displayed talent were redirected towards discussing the role of the trombone in the works of Dvorak, Tschaikovsky and Sibelius, we would all be the better for it. We can find plenty of other places to discuss politics. This is NOT the place.

[Doubler]

There sure is a lot of discussion about tariffs these days, both on TB and elsewhere. Speculation ranges from approval as a necessary evil to alarmism. Results will become clearer over time, and I believe that they will be far less dramatic than feared, especially since all parties involved continue to adjust to new and rapidly changing policies that negotiations demand. In the meantime...

[Posaunus]

Illegal gun seizures at the border:
Canada to US - 3,000
Mexico to US - 16,000
US to Canada - 30,000

Not to mention the huge quantity of U.S. firearms smuggled to Mexico (with the tacit approval / encouragement of U.S. gun manufacturers)!

"The Bureau of Alcohol, Tobacco, Firearms and Explosives has released records detailing the origin of guns smuggled from the United States to Mexico and Central America, marking just the second time in more than 20 years that the agency has disclosed the contents of its firearms tracing database.

The records form the basis of a new report from Stop US Arms to Mexico, a nonprofit in Oakland, California, that works to prevent gun trafficking. According to the report, more than 50,000 firearms were smuggled over the U.S. border into Mexico, Guatemala, Honduras, and El Salvador between 2015 and 2022. The weapons traced back to nearly every U.S. ZIP code, indicating that the sources of crime guns trafficked to Mexico and Central America are not as heavily concentrated along the southern border as previously thought."

This is more than a disgrace. We (the U.S.) supply most of the weapons to the Mexican drug cartels to carry out their ruthless business.

[Bach5G]

Canadian [Liberal Party] elections are over.

Best wishes to our northern neighbors.
[Or to our ten new States and three new Territories?
Wonder how they'll vote in the upcoming federal election?]

Thank you.

After leading the polls for the past three years, the Conservatives and their Trump acolyte suddenly find themselves on the wrong side of a rising tide of Canadian patriotism.

The new guy has an impressive resume: born and raised in N Alberta, Harvard, Oxford PhD (economics), Goldman Sachs, Gov of Bank of Canada, Gov of Bank of England, UN climate change guy. Plays goal. Received 85% of the votes cast in the election. I have high hopes for this guy.

[Slidennis]

"When the going gets tough, the tough get going"
Trump believes he is, but he is not.
He just makes the real tough guys come into action.

[tromboneVan]

Make that 50%

[BGuttman]

This is not going to help the auto industry, for these reasons:

1. Canada provides subassemblies for auto production that the US does not make.

2. Canada has assembly plants that use American subassemblies to produce autos both for US and Canadian consumption.

3. The production that Trump thinks can just go to US plants will require retooling and/or new facilities that can take years to build. It's not like we have this unused pool of equipment just waiting to have the switch turned on.

Also, the design cycle of automobiles takes around 5 years. A change in design requirements won't take place until the 2030 model year.

[Bach5G]

So the next step is for DoFo to increase the tariff on electricity exports to 50%?

Given the rhetoric (“I will shortly be declaring a National Emergency on Electricity within the threatened area. This will allow the U.S to quickly do what has to be done to alleviate this abusive threat from Canada”) does Trump start marshalling the invasion force on the border a la Putin in Feb 2022? Should Canadians prepare to blow up the Ambassador bridge?

[BGuttman]

Wait until he realizes that the reason we are importing power from Canada is because we don't have enough domestic generators. Want more? Even if the permitting process were bypassed (something he seems to like) we are still looking at 2-3 years (more for a Nuke) to build the plants. I really don't think Dear Leader understands how this works.

[slidesix]

Man, 25% tariffs?!? There goes my dream of buying a Courtois tenor trombone!! (420 or 440)

[JMcV]

FWIW, I am expecting Monday delivery of a new K&H .527, from Thomann USA. No VAT, just a $70 shipping fee. I will be glad to receive it before any new tariffs go into effect. I've purchased a number of Josef Klier mouthpieces through Thomann USA, no VAT, and very quick, efficient service.

[LeTromboniste]

FWIW, I am expecting Monday delivery of a new K&H .527, from Thomann USA. No VAT, just a $70 shipping fee. I will be glad to receive it before any new tariffs go into effect. I've purchased a number of Josef Klier mouthpieces through Thomann USA, no VAT, and very quick, efficient service.

There never is VAT when importing a product into the US.

[JMcV]

Wouldn't you know it....I spoke too soon. Just got a notification from UPS on import duties due on my incoming K&H. Fortunately just $79, or around 3.5% of the purchase price. I know it isn't VAT, so it must be pre-existing tariffs that were already in place on EU imports? Still a lot better than the threatened 25%.