Full Tariffs- future rates

Discussion in 'Freight Broker Forum' started by Dino soar, May 12, 2019.

  1. SteveScott

    SteveScott Road Train Member

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    It all depends on what you haul and where. In the short term, places that rely heavily on Chinese made goods like Walmart, Costco and Target will see some slowing. You have to realize that when a product they sell from China becomes too expensive, they find an alternative source for a similar product at a better price. It might come from India or Vietnam, so as soon as the new supplier is established, it's back to business as usual.

    China isn't paying for tariffs, the importer is. What's hurts China when we increase tariffs is that their products are less competitive on the world market and they lose sales which hurts their economy. In the past China has gotten around this by shipping their goods bound for the US to other countries like Mexico and Vietnam, relabeling them as if they were made there, then shipping them to the US. So far the tariffs don't effect electronics, but if they every do, Apple alone employs well over a million Chinese and that would be a huge problem for China. They worry about revolution when their people aren't happy.

    China has much more to lose with tariffs than we do. Their economy isn't very strong and they don't quite know how to deal with a US president who doesn't give them everything they want and then some. Past attitudes like that by all administrations is why we are in this situation now.
     
  2. Rideandrepair

    Rideandrepair Road Train Member

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    According to a news story I just heard, average American could pay $767.00 more a year for goods. I can live with that.
     
  3. Midwest Trucker

    Midwest Trucker Road Train Member

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    I’d love to see the herd get nice and thinned out immediately followed by a pent up boom where we get another year and a half of epic rates. That would be fantastic.

    I’m not going to comment on the tariffs and how it’s affecting things because frankly I just don’t know. I’m a supporter of it even if it hurts my business in the short term. My parents are farmers so they are getting hurt bad right now. They still support it. Unfortunately, since nobody would address it for decades it’s making it that much harder now.

    I’ll hope for the best and prepare for the worst. :)
     
  4. Dino soar

    Dino soar Road Train Member

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    There are a lot of interesting and intelligent responses.

    The resellers of Chinese products have had two years to think about this. I'm sure that already there has been at least some shifting of suppliers. If the full tariffs do go into effect even if they decide to do that, that will take I believe at least two months. So I don't think any of this is a surprise to anyone, and the purchasers have had time to research other avenues.

    If the economy stays strong, I don't think that consumers will stop spending if the cost of goods Rises a bit. Not unless the cost of General Goods double or triple or unless the economy really slows down. If prices don't go up by that much, Trucking will probably tend to be more steady, rather than boom or bust. Although if things tighten up a little and some of the cheaper carriers Fall by the wayside, maybe it can Boom again?

    I do Wonder though, if it is possible for our economy to do well and for Trucking to thrive if full tariffs go into effect and continue into some indefinite time into the future.

    Since we have an election coming in less than 2 years and China doesn't have to worry about such things, it's very possible China could try to Ride This Out
    To see if the new election could bring them a more favorable situation.

    I do agree that they have more to lose than we do.
     
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  5. tucker

    tucker Road Train Member

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    And we can live with the 15 billion bailout last year and the 16 billion dollar bailout for the farmers.

    Remember when 800 million to bail out the American auto industry was a lot of money??
    31 billion tax dollars spent because of the tariff that American families will pay.
     
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  6. TallJoe

    TallJoe Road Train Member

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    Tariffs at 25% (?) that's is insane. Of course, it will lower the rates in the short term. It will reduce the overseas shipments and there is going to be less containers to be handled in ports. It will first effect the intermodal trucking and then it will resonate further; as far as bull haulers and dump trucks too.
    I remember, in 2016 the LA port workers strike in February and March (?) created quite a disturbance in getting loaded out of there. I had to sit there 2 days each time to collect enough partials to be worth it to move out.
    As far as the tariffs helping out inland transportation as a consequence of boosting domestic manufacturing and such...unpredictable -at least not for another 20 years.
    if it stays...It will have a catalytic effect on the current overcapacity too. It will put many carriers out of misery much sooner. Maybe that's a good thing?
     
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  7. Kings Head Trucking

    Kings Head Trucking Bobtail Member

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    Let's just say we reach a trade deal with China. Does anyone think rates will begin to pick up again??
     
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  8. RET423

    RET423 Medium Load Member

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    China cannot afford to lose any portion of the United States Market, they will drop their prices to compensate for the tariffs on their imports. They will however attempt to replace their United States suppliers by buying elsewhere but they will find that they have to pay more for lesser quality if they do that.

    China basically has no hand to play beyond sounding resolute and hoping domestic pressure based on fear in the United States will force Trump to cave and let them keep their advantage.

    Trump will not cave and China will be forced to open their Markets to more United States competion; China cannot endure their current economic situation for very long so this will happen pretty soon.

    So the short answer is "much ado over nothing"
     
  9. RET423

    RET423 Medium Load Member

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    I just realized that I did not address the domestic rate question in my previous post.

    We just went through several years of a shortage in trucks compared to the number of loads that needed to be hauled, this caused the trucking rates to rise rapidly as shippers competed for the available trucks; this was great for Truckers but it was not a secret.

    Since it was a "Truckers Market" a lot of people bought trucks to capitalize on the "gold rush", this has caused there to be a reversal in the dynamic; now there are more trucks looking for loads than there are loads to haul.

    That means the Brokers now get a "gold rush" of their own, they can pay less and pocket a larger percentage as the Truckers now must compete for the work.

    The next phase is the "weeding out" phase where the guys with sharpest pencils who can eliminate most of the trucking "middle men costs" like repairs, accounting and high interest financing will survive and the guys who depend on others for everything beyond the driving will go bust.

    Then a short period of "balance" will come before another cycle begins; this is trucking and it has always been this way, my grandfather and father both summed it up with the same phrase; "Trucking is constantly drifting between feast and famine so don't get Okie Rich".

    My apologies to those from Oklahoma but that was their common term for guys who jumped in when the feast was going on and never used the prosperity to plan for the famine ;)
     
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