Immediate 5% across-the-board Mexican tariffs

Other discussions not related to the Permanent Portfolio

Moderator: Global Moderator

User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Immediate 5% across-the-board Mexican tariffs

Post by ochotona » Thu May 30, 2019 8:28 pm

Where the heck did this one come from? This is a black swan if ever there was one.

Image
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kriegsspiel » Thu May 30, 2019 8:33 pm

"On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed. Details from the White House to follow."

- DJT
You there, Ephialtes. May you live forever.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Thu May 30, 2019 8:45 pm

In the details it looks like it will go all the way up to 25% by October 1st. Seriously, this is all just because I'm vesting for a very large chunk of company stock on Monday. FML... seriously... I swapped to a PP so I wouldn't have to stress about stocks anymore, and Trump is hitting me with this 2 trading days before the biggest vesting I am likely to ever have when the market has already been puking. Worst. President. Ever.
Last edited by pmward on Thu May 30, 2019 8:48 pm, edited 1 time in total.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: Immediate 5% across-the-board Mexican tariffs

Post by ochotona » Thu May 30, 2019 8:47 pm

I fail to see how stepping on numerous supply chains for companies large and small by having a tax collected in the US by US Government agents helps the immigration issue at all.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Thu May 30, 2019 8:51 pm

ochotona wrote:
Thu May 30, 2019 8:47 pm
I fail to see how stepping on numerous supply chains for companies large and small by having a tax collected in the US by US Government agents helps the immigration issue at all.
It doesn't. It also doesn't help his re-election any.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Thu May 30, 2019 9:20 pm

Yeah I'm really stressing now. Trump just lost my vote. I am so over the whole nightly Tweet dropping the market thing. I've been planning on selling this stock the day it vests and moving it over to my PP for months now. I had the thought earlier this week to take some profits on my stocks or use some of my cash to buy some puts to hedge my large vesting just in case. I didn't do it though because the company stock seemed to be catching support the last few days. I'm really regretting not doing that right now. It will be pointless to sell any stock or short tomorrow too because it's going to be a bloodbath right at the open. I'm at the mercy of what the stock does between now and Monday when I can finally sell it and move on. All of my vestings after this will be 1/4 the size and spread out every 3 months, so it won't be this stressful. I'm just in awe of how bad my luck in timing is for this.

The only thing I'm thankful for is that I moved over to the GB a couple months back. I would be in much worse shape if I didn't have the bonds, gold, and cash, so I guess there is a sliver of silver lining.
Last edited by pmward on Thu May 30, 2019 9:23 pm, edited 1 time in total.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: Immediate 5% across-the-board Mexican tariffs

Post by ochotona » Thu May 30, 2019 9:21 pm

pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Thu May 30, 2019 9:30 pm

MangoMan wrote:
Thu May 30, 2019 9:26 pm
pmward wrote:
Thu May 30, 2019 8:45 pm
In the details it looks like it will go all the way up to 25% by October 1st. Seriously, this is all just because I'm vesting for a very large chunk of company stock on Monday. FML... seriously... I swapped to a PP so I wouldn't have to stress about stocks anymore, and Trump is hitting me with this 2 trading days before the biggest vesting I am likely to ever have when the market has already been puking. Worst. President. Ever.
Maybe I don't fully understand, but isn't it better if the stock is worth less on the day you vest? = lower taxes?
No, because I only pay 25% of it in taxes... it's much less money I see as the stock goes down. The higher the price, the more money I will get.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Thu May 30, 2019 9:31 pm

MangoMan wrote:
Thu May 30, 2019 9:24 pm
Kriegsspiel wrote:
Thu May 30, 2019 8:33 pm
"On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed. Details from the White House to follow."

- DJT
This is Trump making good on his campaign promise to 'make Mexico pay for the wall'. There may be some short term pain, but my prediction is that it works to reduce illegal immigration. Time will tell.
Mexico doesn't pay for Tariffs, we do. He just passed the border wall funding off on the American public with the bill due starting in less than 2 weeks. And neither the wall nor the tariffs are going to do squat for illegal immigration. It's a joke.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: Immediate 5% across-the-board Mexican tariffs

Post by ochotona » Thu May 30, 2019 10:09 pm

Tarriffs won't cost me anything because I'll just buy less. That'll be good for the economy
User avatar
Tortoise
Executive Member
Executive Member
Posts: 2751
Joined: Sat Nov 06, 2010 2:35 am

Re: Immediate 5% across-the-board Mexican tariffs

Post by Tortoise » Thu May 30, 2019 10:18 pm

pmward wrote:
Thu May 30, 2019 9:31 pm
Mexico doesn't pay for Tariffs, we do. He just passed the border wall funding off on the American public with the bill due starting in less than 2 weeks. And neither the wall nor the tariffs are going to do squat for illegal immigration. It's a joke.
A tariff on imports from a foreign country makes them more expensive, so the idea is that citizens will shift away from them in favor of alternatives, and the overall amount of imports from that foreign country will decrease. (I.e., "If you want less of something, tax it.") This hits companies in the importing country (in this case, Mexico) in the pocketbook and thus reduces prosperity and tax revenue in that country.

It's an indirect approach, and in this case Trump is apparently using it not primarily to "pay for the wall," but to pressure Mexico's government into changing things on their side of the border that we can't just walk over and change ourselves.
Kbg
Executive Member
Executive Member
Posts: 2815
Joined: Fri May 23, 2014 4:18 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kbg » Fri May 31, 2019 12:18 am

Economics word of the day: Elasticity

And... https://en.wikipedia.org/wiki/Customs_d ... ted_States

So reality is that who pays what is almost certainly a product by product thing. Could be the exporter, the importer or you and me. Mexico's (and China's) problem is that we live in a globalized world where supply chains will move to lowest cost.

In essence, Trump is raising the cost of Mexico not really doing much of anything at preventing people from entering their southern boarder to then transit here.

Final point about trade restrictions of any sort...economically speaking they are less efficient and more expensive at a macro level. However, they can be very advantageous at a micro level. Funny historical anecdote...in the early days of China's switch to a more market based system they did a study on the two great historical industrial powers and how they rose (UK and US were the countries studied) and guess what a key finding was: Raise barriers really high to protect emerging industries.

I'm not advocating for anything...just pointing out life (economics) is complex.

My personal opinion is Trump's Foreign Policy team is nationalistic for sure, but also believes the US is losing essential industry due to unfair trade practices that is necessary to long term US strength. I think they sorta understand we need to continue to make actual tangible stuff and financial power only has severe limitations in terms of power politics.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kriegsspiel » Fri May 31, 2019 6:59 am

Tortoise wrote:
Thu May 30, 2019 10:18 pm
It's an indirect approach, and in this case Trump is apparently using it not primarily to "pay for the wall," but to pressure Mexico's government into changing things on their side of the border that we can't just walk over and change ourselves.
I think this is the case also. I could see Trump using tariffs to either cause the Mexican government to get the cartels under control, or to expose how weak and corrupt it is to cause the Mexican people to get it under control. In this paradigm, we can expect increasing levels of unrest down there whichever way it goes.
You there, Ephialtes. May you live forever.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kriegsspiel » Fri May 31, 2019 7:06 am

Kbg wrote:
Fri May 31, 2019 12:18 am
Funny historical anecdote...in the early days of China's switch to a more market based system they did a study on the two great historical industrial powers and how they rose (UK and US were the countries studied) and guess what a key finding was: Raise barriers really high to protect emerging industries.

My personal opinion is Trump's Foreign Policy team is nationalistic for sure, but also believes the US is losing essential industry due to unfair trade practices that is necessary to long term US strength. I think they sorta understand we need to continue to make actual tangible stuff and financial power only has severe limitations in terms of power politics.
Japan (the former MITI) would have been a good case study for them also. It's clear that Trump is aware of their role.
You there, Ephialtes. May you live forever.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Fri May 31, 2019 7:09 am

Guys, people are not going to swap away from Mexican goods, especially in the near term. Do you have any idea how much produce we get from them? It's too late in the season to change to anywhere else or to pick up more growing here (not that we have tons of people dying to take up farming here to begin with...). Are Americans just going to "choose" to not eat? Increased food prices are also going to make it much harder for the Fed to ease.

What about autos? Lots of AMERICAN autos and parts are assembled south of the border. It's very, very capitol intensive and time consuming to move those operations elsewhere. We already have the public scared of recession, this is throwing fuel on the fire.

He is essentially shooting the American people in the foot and praying it will harm Mexico. It's absolutely ridiculous. There is no merit or no good that comes from tariffs. Trying to justify them or downplay their severity is ridiculous. I live in a border state, trust me when I tell you these things will not do squat for illegal immigration. It's going to wind up being a permanent tariff / sales tax until Trump leaves office and we get someone sane in that removes it. Trump is not trying to actually fight illegal immigration, he is trying to put on the appearance that he is fighting illegal immigration. It's doesn't matter what the end result is so long as he can say he was "tough on Mexico" at Trump rally's. Really, Trump's only desire is to cram his junk down the throats of as many countries as possible, just so he can say he did. We are all being jerked around so he can publicly stroke his own ego, nothing more.
WiseOne
Executive Member
Executive Member
Posts: 2692
Joined: Wed Feb 16, 2022 11:08 am

Re: Immediate 5% across-the-board Mexican tariffs

Post by WiseOne » Fri May 31, 2019 8:14 am

As an immigration control measure, this is somewhere between crazy and a 5 year old's temper tantrum. But, I wonder if this is really more about Trump being pissed off at GM for laying off 14,000 people in the US while building a new plant in Mexico. That makes perfect business sense if you're trying to minimize costs given the environment that existed at the time the decision was made, but that's a pretty crappy deal from the national point of view. Basically it increases our costs (e.g. unemployment for 14,000 people, reduced taxes paid by them etc) in exchange for GM making a bit more money and a particular car model maybe being a bit less expensive.

Not to mention that imported avocados, tomatoes and berries are going to be more expensive. I have noticed those prices coming down in the past couple of years and especially since several months ago because suddenly most of them are coming from Mexico rather than California. Not sure what's happened to the California farms but hopefully they can be resurrected. I don't like the Mexican avocados as much as the California ones anyway (they're kinda gooey, flavorless, and don't last as long).
User avatar
moda0306
Executive Member
Executive Member
Posts: 7680
Joined: Mon Oct 25, 2010 9:05 pm
Location: Minnesota

Re: Immediate 5% across-the-board Mexican tariffs

Post by moda0306 » Fri May 31, 2019 8:45 am

I've always thought and still do that if we're going to have a tariff system, or barriers to free trade, the most substantial ones should be built around the status of the labor and environment in the country in-question.

You can sort of have your cake and eat it too. You protect American workers, to the degree that you can, but you're doing so by helping avoid the race-to-the-bottom that encourages countries to present the most exploitable labor pool and disgusting environmental degradation as a draw for outside capital.

I've never heard the idea floated but I'm sure it has to varying degrees... it would be interesting to see what would come of it. No promises of success here!... all I have is my "good intentions" likely paving the way to hell...
User avatar
drumminj
Executive Member
Executive Member
Posts: 319
Joined: Wed Jul 22, 2015 9:16 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by drumminj » Fri May 31, 2019 8:49 am

MangoMan wrote:
Fri May 31, 2019 7:57 am
Buy low, sell high. This is PP rebalancing in another context. Even if stocks tank, you pay less tax and buy at a lower price. Even if you sell the company stock immediately and buy VTI/SPY with the proceeds, it still seems like a win as long as all stocks drop roughly the same.
This only applies if you're looking to hold. For RSUs, most folks sell immediately (diversify your investments since the company also pays you, your insurance, etc), so generally one wants a low price at RSU _grant_ (usually allocated as $$$ and turned into # of shares based on current price), and wants a high price at vest, as one is likely selling.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Fri May 31, 2019 9:17 am

MangoMan wrote:
Fri May 31, 2019 7:57 am
pmward wrote:
Thu May 30, 2019 9:30 pm
MangoMan wrote:
Thu May 30, 2019 9:26 pm

Maybe I don't fully understand, but isn't it better if the stock is worth less on the day you vest? = lower taxes?
No, because I only pay 25% of it in taxes... it's much less money I see as the stock goes down. The higher the price, the more money I will get.
Buy low, sell high. This is PP rebalancing in another context. Even if stocks tank, you pay less tax and buy at a lower price. Even if you sell the company stock immediately and buy VTI/SPY with the proceeds, it still seems like a win as long as all stocks drop roughly the same.
But that's the thing... it wouldn't go straight into just stocks, that would throw my stock allocation through the roof. I don't count my unvested company stock in my asset allocation, so in reality I am actually more exposed to stocks than my AA, but since it's not technically mine yet I don't count it. I get ~25% of my yearly pay through company equity (at a base before gains/losses), this was my first year with the company so I get my whole first years worth at once. From here on out I will vest every 3 months at 1/4 the current amount, so it will be a bit more of a DCA kind of deal, so at least it will be much less stressful.

I work for a high growth tech company with a very high beta stock, so we tend to up and down faster than the market, so I was really stressed last night. Thankfully, today at least we are about in line with the market; I was really afraid we were going to open down 2-3% because usually when the market is down 1% we are down 2+%. So far damage is ok, if I vested today I would be less than 1% below the issued price from a year ago. We will have to see how things go between now and when I can sell Monday morning. In this case, it is such a large chunk of cash that I will wind up having to sell a ton of stocks low to buy bonds high. Bonds have been on a tear, I might just sit in cash for a few weeks with the bond portion of the funds to see if a pullback materializes because they are looking very extended to me right now.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Fri May 31, 2019 9:30 am

WiseOne wrote:
Fri May 31, 2019 8:14 am

Not to mention that imported avocados, tomatoes and berries are going to be more expensive. I have noticed those prices coming down in the past couple of years and especially since several months ago because suddenly most of them are coming from Mexico rather than California. Not sure what's happened to the California farms but hopefully they can be resurrected. I don't like the Mexican avocados as much as the California ones anyway (they're kinda gooey, flavorless, and don't last as long).
I know, avocados and berries are staples of my diet over here. They have been getting cheaper the last couple of years. Very sad. I've been tempted to try to put in an avocado tree, but they are very difficult to grow here in the desert. It's possible, but requires a lot of maintenance and a spot that has shade from the strong evening sun. This might just tempt me to actually try it, haha.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kriegsspiel » Fri May 31, 2019 11:19 am

moda0306 wrote:
Fri May 31, 2019 8:45 am
I've always thought and still do that if we're going to have a tariff system, or barriers to free trade, the most substantial ones should be built around the status of the labor and environment in the country in-question.

You can sort of have your cake and eat it too. You protect American workers, to the degree that you can, but you're doing so by helping avoid the race-to-the-bottom that encourages countries to present the most exploitable labor pool and disgusting environmental degradation as a draw for outside capital.

I've never heard the idea floated but I'm sure it has to varying degrees... it would be interesting to see what would come of it. No promises of success here!... all I have is my "good intentions" likely paving the way to hell...
I kinda think that the best course of action is what's best for one's country. It seems to me that it's not "global free trade" that's good, it's each country being "free" to negotiate a deal that's best for their citizens. IE, like the invisible hand that results from a lot of people's decisions within an economy, the results of each country's self-interested decisions results in an international invisible hand, not each country's agreement to have no self-interest (free trade). Which is why I equated your feelings with Tucker Carlson's before, because they're pretty similar. So when people dogmatically say "we shouldn't have any trade barriers, we should do free trade with everyone" and Trump says other countries are eating our lunch because they take advantage of us, it seems like he's right. Maybe what's in a country's best interests changes with the times.

I've mentioned it before, but AFAIK none of the OG economists like Keynes, Ricardo, or Smith were globalists where capital is concerned, only goods.
You there, Ephialtes. May you live forever.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kriegsspiel » Fri May 31, 2019 11:23 am

pmward wrote:
Fri May 31, 2019 9:30 am
WiseOne wrote:
Fri May 31, 2019 8:14 am

Not to mention that imported avocados, tomatoes and berries are going to be more expensive. I have noticed those prices coming down in the past couple of years and especially since several months ago because suddenly most of them are coming from Mexico rather than California. Not sure what's happened to the California farms but hopefully they can be resurrected. I don't like the Mexican avocados as much as the California ones anyway (they're kinda gooey, flavorless, and don't last as long).
I know, avocados and berries are staples of my diet over here. They have been getting cheaper the last couple of years. Very sad. I've been tempted to try to put in an avocado tree, but they are very difficult to grow here in the desert. It's possible, but requires a lot of maintenance and a spot that has shade from the strong evening sun. This might just tempt me to actually try it, haha.
I started growing vegetables last year, and it's going pretty well. Eating local, yo.

I'd think growing avocados in the desert would involve double/triple digging with liberal application of compost, then heavy mulch with some drip irrigation under it.
You there, Ephialtes. May you live forever.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by Kriegsspiel » Fri May 31, 2019 11:25 am

I remembered reading about growing avocados on Root Simple, so I found the article again. They're in LA, but I'd imagine a Med climate and a desert climate are fairly close.

EDIT that's not the original article (it might have been a video) I saw, because I remember them saying that avocado grew almost like a weed in SoCal, and everyone should have one in their yard. Sounds like rhubarb.
You there, Ephialtes. May you live forever.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Immediate 5% across-the-board Mexican tariffs

Post by pmward » Fri May 31, 2019 11:44 am

Kriegsspiel wrote:
Fri May 31, 2019 11:23 am
pmward wrote:
Fri May 31, 2019 9:30 am
WiseOne wrote:
Fri May 31, 2019 8:14 am

Not to mention that imported avocados, tomatoes and berries are going to be more expensive. I have noticed those prices coming down in the past couple of years and especially since several months ago because suddenly most of them are coming from Mexico rather than California. Not sure what's happened to the California farms but hopefully they can be resurrected. I don't like the Mexican avocados as much as the California ones anyway (they're kinda gooey, flavorless, and don't last as long).
I know, avocados and berries are staples of my diet over here. They have been getting cheaper the last couple of years. Very sad. I've been tempted to try to put in an avocado tree, but they are very difficult to grow here in the desert. It's possible, but requires a lot of maintenance and a spot that has shade from the strong evening sun. This might just tempt me to actually try it, haha.
I started growing vegetables last year, and it's going pretty well. Eating local, yo.

I'd think growing avocados in the desert would involve double/triple digging with liberal application of compost, then heavy mulch with some drip irrigation under it.
Yeah I currently have a tangelo tree, a pomegranate bush, and a random assortment of vegetables in a shaded planter. Avocados are tough. Lots of fertilizer, mulch, and water required. I have a drip system, so that would help, but I would probably still need to hit it with the soaker hose every so often, especially in the dry early summer months. I would also have to plant it in a spot where it gets the morning sun, but is shaded from the heavy evening sun. The tangelos and pomegranates love the strong desert evening sun. It beats avocado trees up though, haha. I'm also not sure if the soil on my property specifically drains well enough for them. I've read of some people being successful, but a lot more failures than successes, and the popular haas variety are a complete no go here.
User avatar
Ad Orientem
Executive Member
Executive Member
Posts: 3483
Joined: Sun Aug 14, 2011 2:47 pm
Location: Florida USA
Contact:

Re: Immediate 5% across-the-board Mexican tariffs

Post by Ad Orientem » Fri May 31, 2019 2:38 pm

I think a plausible argument could be made that this is the most incompetent president in US history. He is certainly the most corrupt.
Post Reply