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If you import from China, this may be relevant.

Discussion in 'General Entrepreneur Discussion' started by 404profound, May 7, 2019.

  1. 404profound
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    404profound Gold Contributor I've Read UNSCRIPTED Speedway Pass

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  2. Frank H.
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    This is another policy that makes my blood boil! I know that there are more important issues, however, this one is painful for my business. A friend and I did a lot of research on a niche and found ten products that we took risks on and made a lot of innovations on. We ordered many samples and it took us a lot of time and energy to innovate the products. Now we have to import from other countries because the labor costs are too expensive in North America.
     
  3. Kak
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    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    This is raising taxes. Pure and simple.

    Not sure why Republicans cheer him on and Democrats get mad. I am never in favor of the government seizing money out of the economy.

    And for what? What is that money going to go to? Not American manufacturing jobs. Just the black hole.
     
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  4. AgainstAllOdds
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    AgainstAllOdds Legendary Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    It's negotiation and game theory at its finest.

    China wants to wait off closer to the election to figure out whether or not Trump is getting re-elected. Meanwhile Trump is forcing them to make a decision now. Either they take the deal that he's offering, or they risk being screwed for 5 more years assuming he wins in 2020.

    Personally, I'm 100% behind the tariffs. China will cave before the U.S. (Trump) does.



    An individual whose opinion I admire on the topic is Marty Davis from Cambria. Essentially, his main point is like all economists, that economics supports free trade. However, you cannot have free trade without fair trade (lack of subsidies, excess of government loans, free electricity, currency manipulation, etc.).

    What Trump is doing is enforcing fair trade in order to allow for free trade. Tariffs are an enforcement tool, and Trump is using it as such.

    These tariffs are really low risk, really high reward in terms of getting China to do what the U.S. wants.
     
    Last edited: May 8, 2019
  5. AgainstAllOdds
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    AgainstAllOdds Legendary Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    You've positioned yourself wrong.

    In my business, the Trump tariffs are going to add around $100,000 in tariffs to machinery we want to import, and affect 15% of the products we're selling.

    For the other 85%, we're going to kill it. Why? Because we built a business that's not reliant on China - especially when the president has week after week said that he's going to put tariffs on China. There's individuals that source solely from China... and now they're F*cked. Meanwhile we're going to bite away at their market share bit by bit until Trump takes away the tariffs.

    Note: My take is that this is a phantom trade war. The 25% tariffs won't go into effect for long.

    For your business: Ask yourself where everyone is buying from. If it's China, then your innovations will allow for a 25% revenue increase. If it's not China, then you better start searching for another supplier - and quick.
     
  6. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    @AgainstAllOdds I couldn't have said it better myself.

    If I may be permitted to boast a little, I have been several years ahead of the game. My sourcing and importing book editions 2017, 2018 and 2019 have all promoted the desirability of sourcing from countries other than China, and provided genuine B2B links to many exporting countries.

    Unfortunately, complacency and laziness have kept thousands wedded to China suppliers, and they are now paying the price.

    I posted this in Oct. 22, 2014 in my AMA thread:
    I have directed many people to other countries where they have been able to obtain better quality at the same price as in China, or sometimes they have bought similar quality but at a lower price. In some cases they have found unique products not produced in China.

    Sourcing from China is easy, although many people get burnt for that very reason. They think it is so easy that they can be careless about sourcing. They treat it as casually as buying from their local store and they blindly accept everything they read on B2B sourcing sites.

    Sourcing from other countries will require greater expertise, but I have taught many people how to do it. Those who do begin sourcing in other countries may well be one step ahead of the competition in a few years’ time.

    Walter
     
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  7. AgainstAllOdds
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    To build on that, sourcing from China is laughable without the tariffs.

    The opportunities for most products aren't in China anymore. China's just "easy".

    Take the tariffs away, and I can still source non-subsidized goods 20% cheaper outside of China.
     
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  8. Kak
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    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I understand that a lot of folks think that it is all about negotiation. It very well could be an exercise to make trade more free. If that is the case, ok. I fully agree with making trade more free.

    The problem is, he hasn't explicitly said it because it would ruin his negotiating leverage.

    Call me old fashioned, but I tend to believe the words that come flying out of a POTUS mouth with no teleprompter against his advisors' strong suggestions to tamp it down...

    Trump shooting from the hip "I am a tariff man." Me listening "I guess he likes tariffs." Getting this elaborate negotiation narrative out of what he has said is putting words in his mouth.

    Now there is a fork in the road here.

    You either trust the government knows what is best for us.
    -or-
    Question it because they have given us every reason to.

    I do know there is nothing as permanent as a temporary government program.

    What do tariffs really do? They intentionally add 1:1 inneficencies to the supply chain of importers in order to "make domestic companies more competitive."

    What is the ripple effect? They put US companies on the government tit. They aren't built to withstand global competition and they aren't forced to innovate or improve processes. Why? Because they don't have to. It stagnates growth of the very industries it is designed to help letting the rest of the world pull further and further ahead. Isolating us totally backfires.

    If it is all a negotiating scheme... I will be happy to see all of this roll back to some very favorable terms of international trade.

    In the interim. Tariffs are taxes and I am never going to believe direct government created inefficiencies are pro-business policy. It makes government richer at the direct expense of business.

    By the way... For those of you wondering, yes I am a Trump supporter. My wife and I go to an event at his home once a year... This isn't coming from a "Never Trumper" or a Democrat.

    I totally agree with @Walter Hay about how China is maturing and there is opportunity elsewhere. When I was primarily importing, it was out of Mexico.
     
    Last edited: May 8, 2019
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  9. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Admin Post
    I don't think China will cave.

    The beauty of communism is all they have to do is be patient and wait for a new president, either D or R. That will be in 20 months or in 4 years. If they watch American news, they probably think the chances of DJT being reelected is slim and none. So why bother when they can just delay, delay, delay...
     
  10. The-J
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    Rep+++ for being willing to say when the president/party you support is doing things that you disagree with and thus being consistent with what you actually believe.

    Tariffs hurt businesses by raising costs, plain and simple. The proper response by US businesses is to find another place to source from, and the proper response by Chinese businesses is to find ways around the tariffs. They will, and they will.

    Not saying that paying the 25% tariff is bad if you're unable to source from elsewhere and you can still make it work. If you can't, though, you're going to either find another sourcing country or you're going to have a bad time.
     
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  11. Kid
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    Kid Bronze Contributor Speedway Pass

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    and patient they are.
     
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  12. Kak
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    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I filmed this video for the forum because I wanted to show an example of where value goes to die. What starts as a pretty lucrative deal becomes....



    This is close in numbers to a deal was recently considering. The one thing I have made in China. The tariffs would have popped up during the production process. It would have already been in motion. I would have also had to carry nearly 50 grand of this gross deal for 120 days if everything went smoothly. For 6 grand that I would get to keep. This deal died on timing, the client drug feet on a down payment to the point where I wasn't comfortable with their delivery schedule... I am sure glad that happened.

    That 25% doesn't sound like much, but it is HUGE when it is slapped right in the middle of a supply chain. My effective tax rate on this deal would have been 70%.

    You get 6 thousand dollars for your hard work and risk.

    The government gets 14 thousand because you'll go to jail if you don't.
     
    Last edited: May 9, 2019
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  13. 404profound
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    404profound Gold Contributor I've Read UNSCRIPTED Speedway Pass

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    Holy shit, that's worse than the mob.
     
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  14. AgainstAllOdds
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    AgainstAllOdds Legendary Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    For me, one of the easiest ways to understand Trump was reading his books - especially The Art of the Deal.

    He lays out exactly how he negotiates and thinks page by page. The negotiation narrative is aligned with his books, so I wouldn't call it "putting words in his mouth". He simply acts how he historically said he would act.
     
  15. Ocean Man
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    Ocean Man How may I provide value? Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    Wow... Thanks for breaking it down @Kak. That's outrageous. $60,000 of value, what's your return? $6,000...
     
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  16. socaldude
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    socaldude Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    The optimal strategy in game theory is always tit-for-tat.

    At this point we are heading for a trade war.

    Remember China is communist, I'm not entirely familiar with china but based off my experience the politics there are very machiavellian.
     
  17. Kak
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    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Not only that... The big issue is that we started with a 20k spread! That is actually pretty great on a 60k order.

    It really just shows how ugly tariffs are relative to other taxes. They are arbitrarily slapped on a number in the middle of a supply chain.

    Had the landed cost been 50k and expected profits had been 10k... Our effective tax rate would have been 125%... What does that mean for the bigger picture? A voluntary, capitalistic, exchange of value couldn't take place... Only because of the government.

    I can show this on video too if it will help understanding.

    When you really think about it... What is the difference?
     
    Last edited: May 12, 2019
  18. Walter Hay
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    @Kak, it's a pity you don't write for CNN. You made it all much clearer than the rather amateurish article linked by the OP. It was obvious that she knew practically nothing about importing.

    Walter
     
  19. Kak
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    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I'd love for CNN to call and give me a show.
     
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  21. 404profound
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    404profound Gold Contributor I've Read UNSCRIPTED Speedway Pass

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    Well, at least it got the convo started!
     
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  22. Frank H.
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    Good posts! I strongly disagree with this policy because North American Manufacturing died 35 years ago, the big companies will still source from their pals in other countries, and the tariffs disproportionally hurt entrepreneurs and small businesses. The first point has been said a billion times, however, I could find sources if needed. Secondly, the big companies will simply network with other countries (Philippines, India, Taiwan) and source from there. Also, there should be a progressive tax on the tariffs, so goods that are worth 25k should have a tariff of 5%, 50k, 10%, 100k, 15% 250k, 25%.

    Furthermore, we should put more effort into having stronger bonds with China. We all know they are mediocre with human rights, however, they outnumber us 4-1 and will be an economic powerhouse in 10 - 15 years. My brand makes a lot of risky innovations that the big companies are afraid to make and it is difficult to find manufacturers in North America that will make these risky innovations for a reasonable price. I am looking forward to original and creative counterpoints. If it has been said before, please do not say it.
     
  23. Kak
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    Screenshot_20190512-081229_Messages.jpg

    Should I assume he likes tariffs yet?
     
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  24. AgainstAllOdds
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    I just watched your video and had to create my own response.



    What your video is missing is the opportunity that was created by these tariffs. Companies that have been better prepared will gain more market share and knockout the competition. This is every entrepreneur's wet dream. The entrepreneurs that know how to source, and are willing to put the work in to create a new supply, are the ones that are going to dominate the market.

    The ones that are going to lose are the ones that are scared of change, ignorant, lazy or busy, and stuck in their ways.

    On top of that, this tariff is something that everyone could've prepared for. It wasn't out of the blue. Trump has been saying that he'll put taxes on China for at least 8 years now. Here's a video of him from 2011:



    These tariffs are a matter of perspective. The perspective I choose is that they're an opportunity. Whether you consider this an opportunity or "extra tax" is up to you.
     
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  25. Kak
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    You are absolutely 100% correct. They are a matter of perspective. We both have a different angle we are viewing it from, but when I stand by you, I agree 100%.

    From a managerial side... Yes, this is a massive opportunity. Yes, our response to tariffs needs to be quick and unfettered. Yes, that is what can shift things up and put different firms in different places.

    The smart entrepreneur needs to navigate shit like this, and often times this can be very good for the people that do.

    Now, stand over here by me. I have been looking at the policy perspective.

    I am NOT a big importer, but I do import from time to time and it sits as a tool in my tool box. I can easily look in other countries. Not a big deal for me, but I would have been pretty pissed off to be caught in a deal like the one in my video, and it could have been worse.

    My issue is that not all bigger stable companies have the option to switch crap around. They might have a really great supply chain, a value forward business and are now bending over for this. It may take months for a medium sized company to heal or learn to like the way it feels. That may be fun for the little guy to watch, but we all hope to be the big guy some day. Government punishing business makes me ill.

    What is this from my policy sided view? A destruction of value, a very high tax, and a strongly anti-business policy.

    We are both right. You are glass half full and I am glass half empty. The opportunity this brings is subsidy so I’m not going to cheer it on.
     
    Last edited: May 12, 2019
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