40% Tax on Goods Imported into the USA - What would it mean for guitars?

[linusâ„¢]

if prices will rise i'd rather see it happen because low paid foreign labor gets unionized..

[TeleFromHelly]

It will never happen. We are too dependent on goods from China given to us on credit

[DTrane]

All the coutries we trade with impose tariffs on american goods. I think we should match whatever tariffs they impose on american products.

[chqtarzan]

Suicide attempt, fail.

[TeleFromHelly]

My cat wrote his doctoral thesis on this exact topic, with more of an emphasis on the ways it would impact imported tuna.

 

That cat is sitting on a table, sitting at a table. That just blew my mind

[Bud M]

^ I remember the US govt trying to pass something similar for Harley Davidson and them saying they didn't need it.

 

 

Actually, they also asked for a tariff in 1952 but were denied.

They asked for another one in 1983 and it was enacted.

And whaddya know, HD is struggling again.

http://articles.moneycentral.msn.com/Investing/Extra/more-troubles-for-harley-davidson.aspx

[smorgdonkey]

depends what company is shipping stuff over. for guitars, most of the big companies are american, but make all their cash on importing. in canada there was an attempt to add a 30% tax to bicycles imported under $300 ($700 retail). this in addition to a 20% anti dumping tax that already exists on bottom end bikes (sub $100 i think). that tax of course was only in the interest of one quebec bike maker who was unable to compete on the merrits of their product (they sell junk). the hearing for the tax went something like this: canada: anyone oppose this tax? every canadian bike retailer: yes. canada: sucks to be you. giant bicycle: but we dont compete for the same customers, we dont sell at walmart. canada: sucks to be you. giant bicycle taiwan: thats ok, we'll drop our prices 30% to eat the tax, then another 30% to run the company your protecting out of business. canada: .... {censored}. nevermind! the result? the original anti dumping tax is now in process to be repealed. protectionism doesnt work. its political grandstanding to make certain groups of voters think the government is protecting their jobs. in reality they are just protecting the pockets of a few corporations who dont know how to run a profitable company.

 

 

The 'protectionism' that would work is like this: We don't need any of that product here. That's it.

 

Each country should really have a bunch of products that they choose to not import. Food is a really touchy one but there is no way that Canada (for example) should be importing any New Zealand beef product nor any tomatoes from Mexico.

 

The companies which make a product overseas solely for the North American market are a problem in my mind. Many of the under-developed countries make products with no regard to environmental issues so when there is a huge toxic spill of chemicals at the Chinese guitar factory's paint shop...I'm sure that it is cleaned up to the same standards as it would be here in North America.

[DaleH]

Some politician are pretty supid.
GM sold more cars and trucks in China last year than in the US. Maybe China would just up the tax on US goods and put those bums out of work.

[ihavenofish]

there are ways of encouraging production in your own country, taxing imports does not do this. taxing competitors is selectively favouring usually 1 or 2 specific companies who with eventually fail anyway because they simply arent competitive.

the way you encourage production is by offering incentives to any company that creates jobs for people. one of the best examples of this is the way film is done. if we hire someone, we get up to 40% of their wage back as a credit. if we dont hire them, we dont get anything. if we pay them minimum wage, we get a smaller credit. if we import workers we get a reduced credit. the system encourages hiring local workers and paying them well which at the same time making it easier to compete.

basically its a performance based subsidy. you only get the cash if you actually create the jobs. its something that could work for many industries, and doesnt punish the retail sector, the consumers, or other local businesses.

if environmental protections were a serious concern of the government and people (they arent right now), they could outright ban imports from countries with lazy regulations. simply taxing wouldnt help, it would only drive those countries to relax regulations further so they could lower prices.

[sammyreynolds01]

It want ever happen

[SGRocker30]

Huh, interesting. In my experience the best built guitars I have seen have come from America with a couple exceptions here and there. I believe that Fender has outsold Gibson for years, as FMIC is a much bigger company and their products have historically (no pun intended) cost less to build and have taken less time. I mean, I can make a Telecaster in my garage in a day and a half, but it would take me a week to build a Les Paul - and it would cost more too. I think Gibson and Fender have both done a great job at building 'lifestyle' brands over the years and I don't even really think of them as competitors. Many people own both. I couldn't see myself walking into a store to buy a brand new Les Paul and walking out with a brand new Stratocaster. I think that once someone wants one or the other that's pretty much what they buy. I could see myself buying a Les Paul then 6 months later buying a Strat.

 

 

While I agree with your post wholeheartedly, I went guitar shopping with a buddy who intended to pick up a 60's tribute lp and ended up walking out with a roadworn 60's strat. This was a week ago tops. There are always impulse buyers out there.

[noisebloom]

Huh, interesting. In my experience the best built guitars I have seen have come from America with a couple exceptions here and there. I believe that Fender has outsold Gibson for years, as FMIC is a much bigger company and their products have historically (no pun intended) cost less to build and have taken less time. I mean, I can make a Telecaster in my garage in a day and a half, but it would take me a week to build a Les Paul - and it would cost more too. I think Gibson and Fender have both done a great job at building 'lifestyle' brands over the years and I don't even really think of them as competitors. Many people own both. I couldn't see myself walking into a store to buy a brand new Les Paul and walking out with a brand new Stratocaster. I think that once someone wants one or the other that's pretty much what they buy. I could see myself buying a Les Paul then 6 months later buying a Strat.

 

 

I think there are a lot of people, like me, who put off getting a Gibson because the cost of ownership is much higher than with a Fender. To me personally, it's much easier to justify the cost of buying Fenders. I currently have two Fenders, one Epiphone, and one entry-level Gibson. To me, while I'd like to own other Gibsons, I'm comfortable putting it off, and I'm even willing to substitute a Gibson with another Fender or two. To me, Gibson is somewhat out of the range of my discretionary budget. I just don't covet Gibsons enough to be willing to "save longer" to get another one.

 

Squeezing out the imported brands means fewer manufacturers selling in the US, which both Fender and Gibson could exploit in their own ways. I think it benefits Fender more, because the market's equilibrium is not with high-cost products.

 

But it would also mean no more MIM Strats and Teles, so Fender would have to consolidate its manufacturing to the US. That would ultimately mean higher production costs and higher prices, as a result. Gibson would have no such problem, at least with their flagship brand.

 

Gibson would also get to play up the cachet of its "Made in the USA" motto, and perhaps the fact that Fender "used to make its guitars across the border."

 

There's also the probability that countries that import products into the US will impose their own tariffs on US-made products, which would result in a further narrowing of the market. It becomes a lose/lose for everyone, because now US companies won't be able to sell their guitars overseas. The door swings both ways.

 

And as someone mentioned earlier, demand in the used market would soar, especially in the early days after such a tax.

[DaleH]

^^ Didn't Gibson make more on their Eiphone line in the past couple of years. Gibson would go under if this happened. Many US companies would do the same as many of the parts they use in their manufacturing are imported and there are no US options to buy these.

Your gas and power bills will send you back to the caves.

[MONGOOZ]

let's see here....60% of US petroleum products come from foreign countries....so 40% increase at the gas pump......over $5.00 per gallon......yep....that'll fix the economy in a freakin' hurry......IN THE WRONG DIRECTION!!!

[BG76]

 

I think there are a lot of people, like me, who put off getting a Gibson because the cost of ownership is much higher than with a Fender. To me personally, it's much easier to justify the cost of buying Fenders. I currently have two Fenders, one Epiphone, and one entry-level Gibson. To me, while I'd like to own other Gibsons, I'm comfortable putting it off, and I'm even willing to substitute a Gibson with another Fender or two. To me, Gibson is somewhat out of the range of my discretionary budget. I just don't covet Gibsons enough to be willing to "save longer" to get another one.

 

 

I can't afford new Gibsons or Fenders so I buy used ones, which usually cost a little more then Epiphones. Fender doesn't make much new that I would actually want to own and Gibson cost too much so I just buy my stuff used:)

[bal704]

The same thing could be said of many things in our economy. I'm not sure how many flat screen TV's are built in the USA, but I bet it ain't many. What happens when the cheapest TV at walmart goes from $499 to $700 overnight? And that's for the cheap import. The USA built ones will come along later, selling for $1000. Even if they sold for the same $700, that means the average worker will have to make more money per hour just to afford what he was buying before. Sure we can brag about paying some guy $32/hour to watch a machine build the TV, and pat ourselves on the back for paying 'living wages'. But even that worker will have to work more hours to buy the same stuff he was buying before.

 

 

^^ Didn't Gibson make more on their Eiphone line in the past couple of years. Gibson would go under if this happened. Many US companies would do the same as many of the parts they use in their manufacturing are imported and there are no US options to buy these. Your gas and power bills will send you back to the caves.

 

[ihavenofish]

The same thing could be said of many things in our economy. I'm not sure how many flat screen TV's are built in the USA, but I bet it ain't many.

 

 

zero. most are from korea, the rest taiwan and china. if you taxed them 40%, youd just make tv's 40% more expensive, creat no jobs, put retailers out of business, and then take the little bit of tax revenue left after administrative waste to pay out welfare.

 

virtually nothing computer or electronics related is made in the US asside from some special purpose industrial gear.

[Sailorofdarknes]

Great conversation here! Lots of great views. I just want to give a few of my Opinions too. 1st it will never happen the economic impact would be outrageous. Second The other folks could def do the same to us. And third putting that high of a tax on stuff could be considered an act of war by many countries because it is a direct and hurt full act to their way of life. Further sine I am in the Military I am pretty sure I would end up out to sea for a long ass time if that were to happen. And last Wal-Mart would be a stupid expensive place to shop. And for the folks that rely on discount retailers to survive in this dim economy that would just suck. And as far as guitars go I would def just buy used from now on or until used guitars become hot and their prices skyrocket too and then I would have to take Beno for guitar gas. I am sure this topic will be out of the news soon.

[Grantus]

Just to be clear, a 40 percent trade tariff would violate the many free trade agreements the U.S. has made, it would lead to dozens of complaints against the U.S. at the World Trade Organization, it would create a huge and costly trade war, and it would lead to U.S. consumers paying a lot more -- at least 40 percent -- for many of the products we expect to be cheap and easily available.

 

The cost of gas, electronics, cars and trucks, and many household items would rise by 40 percent or more. Virtually all the clothing we buy is made overseas, children's toys, etc. etc. Food costs would go up drastically because fuel costs would go up.

 

How long would it take for U.S. car makers and guitar makers to raise their prices?

 

Such a move would cause a recession that would make this last one look like a walk in the park.

 

It is nowhere politically or legally feasible.

[darkmonohue]

Yes, protectionism never works. Except...

 

Except that no nation has ever successfully industrialized except behind substantial tariff barriers. England, the United States, France, Germany, Japan, South Korea all maintained significant tariffs during the period of their industrialization; they shifted to "free trade" (always more practiced than preached--note the massive subsidies that continue to sustain agriculture in almost all these nations) only once they had become dominant industrial powers--and "free trade" was a way to bludgeon trading partners into opening their markets. In recent decades, China's massive industrialization has occurred behind enormous barriers to market access, though often in forms a little more subtle than tariffs (currency manipulation, discriminatory rule-making, demands for "technology exchange").

 

Economists insist that protectionism never works. History tells a different story.

[adorduan]

Yes, protectionism never works. Except... Except that no nation has ever successfully industrialized except behind substantial tariff barriers. England, the United States, France, Germany, Japan, South Korea all maintained significant tariffs during the period of their industrialization; they shifted to "free trade" (always more practiced than preached--note the massive subsidies that continue to sustain agriculture in almost all these nations) only once they had become dominant industrial powers--and "free trade" was a way to bludgeon trading partners into opening their markets. In recent decades, China's massive industrialization has occurred behind enormous barriers to market access, though often in forms a little more subtle than tariffs (currency manipulation, discriminatory rule-making, demands for "technology exchange"). Economists insist that protectionism never works. History tells a different story.

 

 

+1000000 but you will never get the brainwashed masses to understand.

[Grantus]

 

Yes, protectionism never works. Except... Except that no nation has ever successfully industrialized except behind substantial tariff barriers. England, the United States, France, Germany, Japan, South Korea all maintained significant tariffs during the period of their industrialization; they shifted to "free trade" (always more practiced than preached--note the massive subsidies that continue to sustain agriculture in almost all these nations) only once they had become dominant industrial powers--and "free trade" was a way to bludgeon trading partners into opening their markets. In recent decades, China's massive industrialization has occurred behind enormous barriers to market access, though often in forms a little more subtle than tariffs (currency manipulation, discriminatory rule-making, demands for "technology exchange"). Economists insist that protectionism never works. History tells a different story.

 

 

I'm not particularly sold on free trade. However, I'm pretty certain than a 40 percent tariff on all goods coming into the U.S. would be devastating.

[c2rex]

What about non-Union manufacturing like we have down South? The quality on the non-Union built Toyotas (for example, I don't own/would never buy a Toyota) seem to have a reputation for high quality?

 

 

"...the latest recall may make it harder for Toyota to convince investors it has put its quality problems behind it." http://www.newsdaily.com/stories/tre70p2ec-us-toyota-recall/

[c2rex]

Not even getting into things like a trade war, etc.. the net effect would be much poorer Americans. Sure, we'd have more American made goods, but the prices on just about everything we buy would go up significantly. That means we'd have a lot less disposable income and the things we'd buy what that disposable income would cost a lot more. When you have little to no extra money to spend and the budget guitars now cost $600, how many are you going to buy? This will also hurt guitar sales and put people out of business and cost jobs too. Protectionism doesn't work out the way some people think it will.

 

 

(Referring to the bold part of your statement above). As opposed to the numbers that are out of work or under employed that have less disposable income now under the current scheme?!

[Verne Andru]

Just to be clear, a 40 percent trade tariff would violate the many free trade agreements the U.S. has made, it would lead to dozens of complaints against the U.S. at the World Trade Organization, it would create a huge and costly trade war, and it would lead to U.S. consumers paying a lot more -- at least 40 percent -- for many of the products we expect to be cheap and easily available.

 

 

Well, this is exactly what the US did a few years back over the softwood lumber dispute with Canada. The US was in the wrong and was continually ruled against by the NAFTA people but they just kept doing it anyway. The US government has a history of disregarding agreements when it suits their purposes and not really caring much about the consequences.