Here is a 1) a great article and 2) a rather lengthy ( one hour) video from Union Pacific Lance Fritz on trade disruptions and putting the Nations economy at risk. Of course the same applies to us up here in much the same way.
Just came back from grocery shopping and I purchased Strawberries, Raspberries and Blueberries all from California. The prices seemed within a normal range of usual but I don’t think the effects have trickled through yet. I look for point of origin more than I do for price. I’m always leery of some produce from 3rd world. Ontario grown fruit and veggies are best but hard to get up here… go fiqure.
Our own wild blueberries and Saskatoons will be available early fall in abundance. A Saskatoon is a very large blueberry type fruit with a much tougher skin, makes great jam.
Saskatoonians— two oo’s , aka basket of deplorables, OR the nicest people on the planet, depends on which side of the fence you are on!
Oil and gas, cattle ranchs, endless fields of wheat and canola, potash miners, cowboys and Indians, lots of rail lines going every direction of the compass.
Calgary is your Dallas, Edmonton is Denver, Saskatoon is Kansas City
Last thing Lance wants is the possibility of any production of consumer goods actually moving back to the US. If it would happen, facilities would probably locate close to the large population centers. Where the majority of consumers would be. Long haul intermodal would become short haul and probably go by truck. Just my opinion
Thats an interesting take however quite transformative. The New World Order took some time before everything was in place. Perhaps a more fair and equitable balance of trade will be the next step.
The railroads have a huge advantage in efficiency and environmental concerns. Also any country needs to develop its own natural resources and some base line of industrial production for its own survival and security. This again requires railroads.
Less defective junk at the dollar store is a good thing.
Well one thing is for certain and that is we live in very interesting times.
I think things are moving to a better end. The railroads have adapted remarkably before and will again.
There are many ‘large population centers’ in the USA, unless the product is ONLY popular in the population center where it is manufactured there still is the need to ship the finished product nationwide. Who transports the traffic is open to question.
By the same token the commodities required as raw materials for manufacture of finished products are rarely located in the immediate vicinity of the point of manufacture.
Businesses when they get to the point of having a nationwide market for their products factor in all the factors of raw materials, available workforce, land acquisition costs, major sales destinations, transportation options of their products and try to make the best, most informed decisions they can.
You hit the nail on the head. For all of their flaws, successful market driven businesses change as their markets change. And the times are always changing.
How much of railroad revenue is tied to moving containers that originate from overseas? And guess what’s inside those containers. Railroads will be hard hit, at least over the short term, as they’ve become the conduit for cheap stuff out of Asia…
Your typical big box discount store could be reduced in size to an 8 ft X 8 ft room if all they sold was “proudly made in the USA” stuff. Take out all the “farn” stuff and there’s not much left… and Cletus will need to pay “made in America” prices the next he buys a hammar or a shirt at Walmart… Fun times ahead… It will certainly be an adjustment for railroads and their shareholders who will miss those longhaul container moves and regret that 50 years ago the rails pulled up most of their branches and sidings, rendering them unable to do much other than longhaul bulk moves… Oh well… might be better news for the trucking industry.
It’s true there are many major population centers. But I would say that future facilities would be more decentralized, instead of a few very large facilities trying to supply the whole country. And any new facilities would probably be highly automated as much as possible. To be sure, there would still be some long haul movement of goods, but not as much.
I think production moving to within 5 or 6 hundred miles of consumption is a bigger
If the new tariffs cause a trade war, it will slow down the whole economy worldwide. Everybody will lose. The effect will be all encompassing, and not just related to the cheap products that are made offshore. It will negatively affect all of the rail traffic, all business, and all quality of life.
If you look at the world and see a slightly unleveled playing field, it’s best to just leave it alone. If you try to level it, there will always be others who thought it was level in the first place, and now you have made it unlevel. That is why it always leads to a trade war, which is far worse than a playing field that is slightly out of kilter.
And as if that is not bad enough, the new tariffs amount to a federal tax increase that takes money out of everyone’s pocket and grows government (Economics 101).
I wouldn’t hold my breath either. A 25% tariff wouldn’t make many products expensive enough to make production in the USA (or in my case Europe) economical especially with union wages.
Jason Shron, the owner of the model railroad manufacturer Rapido Trains Inc. in Canada, once made up the calculation for an HO scale passenger car. The China made car was sold for around CAN $100. Produced in Canada with non-union workers the needed to cost CAN $400. And with union workers? Who would buy at that price?
That might be an extreme example with a lot of assembly work but it shows the tendency
The rising wages in China might change the picture over time. But the companies will move on to othe low wage companies like India, Bangladesh, or Vietnam to keep costs in check for consumer and maximise their profit.
I think the railroads might suffer because less is imported and exported leading to a downturn of the economy. And railroads might suffer from the relatively small difference between shipping cost from China to West and East Coast.
A 40 ft container from Shanghai to Long Beach costs about $1,600, to New York $2,800 changing daily. To Rotterdam, Netherlands it is $1,300. That is the influence of the 20,000 TEU mega carriers.
Regards, Volker
One thing to remember in a trade aka Tarrif war it is the country running the defict that normally wins the thing. Why that nation stops sending cash instead of goods overseas to the other nation. Which is more important to other nations goods or cash. Which is easier to spend. The nations the USA is in tariff battles over are all nations we are running massive trade debts with. Just think about that for a minute. Where else is China going to sell over 500 Billion a year in goods to one nation Germany over 150 Billion a year in cars to. Canada over 15 billion in Lumber to. No other single nation can consume what the USA does and the rest of the world is about to find out they better open up their markets to our goods really fast or face the facts that our money will no longer be coming to their countries anymore.
I might remember you of the failure of the Smoot-Hawley Tariff Act of 1930 which didn’t cause the great depressing it prolonged it and hurt the USA’s and the world’s economy.
In March 2002 President George W. Bush imposed steel tariffs. He lifted them in December 2003 after the WTO ruled them illegal. The results of the tariffs were at best neutral.
The current tariff system was decided on in 1998 in a conference with the USA. And not only other countries tried to protect some of the products. The USA did it too. The often cited automobile market is a good example. The EU has tariffs for all US cars including SUVs of 10%. The USA has tariffs for EU cars of 2.5% and EU SUVs and light trucks of 25%.
You say Germany exports cars worth 150 billion to the USA?
Here are the numbers from the official German trade statistic for 2017: Exported to the USA 494,000 cars worth 28 billion EUR ( about $33,6 billion). At the same time German car manufacturers built 850,000 cars in American factories empoying about 50,000 Americans. About 25% of these cars were exported to Europe.
Both EU and China had offered negotiations but not with a gun at the had. Before Mr. Trump became president the Transatlantic Trade and Investment Partnership was negotiated*.* He stopped the negotiations*.*
[quote user=“Shadow the Cats owner”]
No other single nation can consume what the USA does and the rest
Volkner the total includes all the cars imported into the USA from the EU the Volvo’s from Sweden all the Italian sports cars the British cars plus all the parts. That figure listed was for all makes and models and included all parts shipped overhere for assembly and or repairing cars. Could Europe stand to lose that much out of their economy risking that many jobs. It is not just finished cars I was talking about the parts also add up.
As for agriculture if China decides to buy the 40% of the worlds exported soybeans from someone else where is that crop going to have to come from. Other countries are going to have to BUY them from the USA we are the largest exporter of them in the world. Along with rice pork and other items they hammered us with. You see the problem they are hitting us with tarrifs on things their country needs to even FEED their over 1 billion people with. We instead are hitting China with tariffs on goods they sell us that people can choose to buy elsewere. We have a choice China really does not when it comes to where it is going to buy enough soybeans rice and pork to feed its population. Not to many nations grow an estimated 200 million tons of excess soybeans. China last year bought 97 million metric tons of them from the USA alone. Just were is the rest of the world going to make up for what they need. That is a huge hole in the global market.
You should be correct with your numbers. The whole EU-USA trade deficit is only $120 billion not 150 billion. Car exports to the USA are about $55 billion. If you take services into the equation the trade with the is balanced
And yes we can afford this. The German car manufacturers built 16.5 million cars in 2017. The Export to the USA was about 3%. For other EU countries it is not much different. German cars are kind of a status symbol in USA I think. The biggest market for German cars is China.
We’ll see where they’ll get the agricultural goods. It is not that China will not buy from the USA. It will be less and at lower income for the farmer as others are now competetive that don’t bear the tariff.So the farmers need to adjust their prices
Take pork: The USA exported 2.45 million tonnes to China in 2017, Germany 1.86 million tonnes. We have a surplus of about 4.5 million tonnes. There are a lot of countries in Africa that would be glad if our cheap pork wouldn’t overflow their markets anymore so that their agriculture can recover.
China tries to hit were it can hurt the USA and especially Mr. Trumps supporters most. This is not a game and the USA started it. The EU did the same when it imposed tariffs on products from states were Republican leaders come from.
Trade is not a two party negotiation like a real estate deal. There are multiple suppliers of the products subject to tariff penalties. Targeting specific countries for specific products is a laughable action.
So China wants soybeans - if they are not supplied from the US at a price China is willing to pay - there are other sources. The money that would have come to the US for the beans now goes elsewhere and benefits agricultiural industry there. If a tariff creates a void in the market - the marketplace will fill the void.
The President of the USA had not waivered an iota when it comes to his America First policy, starting right off at the inauguration speech. So to brush this off as bluff is very dangerous for those countries with massive trade surpluses. Justify whatever you want but in the end those countries will suffer the most.
Of course there are a myriad of political factors being played off here and must also be taken into account.
If countries like Germany and most of the EU, including my own (Canada) actually owed up to their NATO commitments that would mitigate things.
The play with China is more about all the Chinese official and sanctioned shenanigans going on with theft but more than half a trillion dollars of deficit really cannot continue.
The much touted Canadian tariff on American dairy of 275% is to protect primarily Quebec dairy farmers and would cause new ripples of separation if it was removed. No way our government goes through that again. Yet on the other hand, not only are our NATO commitments far in arrears but our Prime Ministers insistence on tying together trade with gender equality issues and climate change is nonsense.
I think the US President is a reasonable man and a move toward fairness and more market orientated policies by other trading nations would be a very positive move and be welcomed.
If not then the world will indeed start feeling some pain. The US at this point could easily be self sufficient, even if the Union Pacific Railroad handles less containers in stack trains.
Right. And the United States does not subsidize its farmers. I’m no fan of supply management either, but it is what it is… Most countries subsidize their agricultural sector. Even the United States does.
About our “commitment” to NATO…the 2% of GDP is a target…and not a contract we have with anyone. How about we all serve for a year or two in the military? I’d be all for that…I did, and would certainly encourage anyone who enjoys the freedoms we enjoy to enlist and serve in order to really appreciate what we have. I’m wondering who made Trump the czar of NATO… who gives a dang what he wants or thinks… Members of NATO are sovereign nations, and Trump can say whatever he wants… If he wants to commit X% then go right ahead… we keep Y and don’t need to apologize for it given our past in defending our freedoms in every major war.
Over the long term this trade disagreement is going to help us going forward. Clearly, we have put all of our eggs in the NAFTA basket… to our detriment. But, the good news is that this too shall pass, and we wil soon be on good trading terms again. AND… We’ve got CETA… and we’ve got the TPP… and… we’re close on a number of agreements with other countries. As a nation Canada needs to trade… we’re a relatively small country with an efficient economy that generates far more than our small population can consume on its own… Thus the need for markets elsewhere… The US will remain our close friend and trading partner whether Trump likes it or not… due to our close proximity and our very similar cultures. But, if there’s anything at all that needs to be learned from this it is this: DO NOT PUT ALL YOUR EGGS IN ONE BASKET… its bad for a business to have only ONE customer… and its even worse for one country to have only ONE dominant trading partner. Imagine owning a beautiful home, but the switch for the electricity is in the neighbour’s house… that’s pretty much the situation we’
+1 Bingo. Get out of equities now. Stagflation (remember that from the 1970s?) is coming in a year or two. The new world order will be everyone else doing okay and the US isolated, in a recession, with inflation. Fun times!