11.21.16

Tariff terrors?

Posted in Culture of Lickspittle, Made in China, Rock 'n' Roll at 2:31 pm by George Smith

From the Dept. of Just Sayin’: In the dollar store, almost everything is from China. I shop at the dollar store for almost everything! Like tens of million in the rigged US economy.

If President Trump slaps a 47 percent tariff on everything from China, the dollar store becomes the buck and a half store. Ten crappy plastic disposable razors for 99 cents becomes five or six crappy plastic disposable razors for the same.

I’m talking about the fact that multiplying a very small amount by a percentage equals still a small amount. (100 pennies x 50 percent = 50 pennies. 100 pennies plus another 50 equals $1.50)

Now, if you buy at Target, where it’s all from China but more high-button, your pair of Chinese-made plastic fake leather, call them pleather, shoes for 30 bucks is now about 45. If they last only two weeks before cracking this may give you pause.

Expensive luxury items made in China, think Apple, become more exclusive and the company takes a hit. Or maybe it doesn’t.

Apple, the corporate tax dodger, is innovative. It will attempt to shift manufacturing to another serf labor country. Also, consider that America’s shoeshiners, the detail workers for the plutocracy, like the brand. They can afford to be soaked for another two or three hundred dollars.

During the election, Trump attacked Apple. Of course, who knows what his position will be tomorrow? You could always ditch your iPhone for a 10 buck LG smart burnphone and a pay-as-go card at the supermarket.

Across the pond at the Guardian, a curious article on Brexit and the rise in price of American-made goods like Gibson and Fender guitars due to devaluation of the English pound:

British guitar buyers could soon be playing the Brexit blues as price rises caused by the slump in the value of the pound feed through to music stores.

Prices are increasing by double digits as top US brands such as Gibson and Fender increase list prices to make up for the weaker purchasing power of sterling.

Anthony Macari, co-owner of Macari’s on London’s Denmark Street, said: “We are seeing increases of 10-15%, not just on American guitars but on guitars coming in from Europe and China. Everyone is catching up.”

Who in the working class in England could afford to buy new Gibsons, though? They’re largely high end pieces. Zero or bad credit? Forget it.

It’s part of the reason the guitar rock industry is flat. Think that wonderful term from teh Great Recession, delinquent or non-performing assets.

Well, there are always “Chibsons,” Chinese counterfeits sold through Alibaba. (Furthermore, are counterfeits subject to tariff?) Or Epiphones and Squiers, still cheap from China.

Here, if Trump actually implements a 47 percent tariff on them the rock bottom models only rise from 80-110 dollars to 160. It’s the Mexican-made Fenders where such a tariff would really begin to bite into Fender’s business since they’re the mid-level price instruments. A tariff shoves their prices up into the lower range of an American-made Fender, rendering the Mexican manufacturng facility uncompetitive.

But the American-made guitar industry has been in the doldrums for a long time. Classic rock is no longer hip with young people; neither is playing the electric guitar. Rising prices due to trade war just might not mean that much for the industry domestically.

A newspaper piece, fresh today:

“The industry’s challenge — or opportunity — is getting people to commit for life,” said Andy Mooney, Fender’s chief executive officer. “A pretty big milestone for someone adopting any form of instrument is getting them through the first song.”

The $6 billion U.S. retail market for musical instruments has been stagnant for five years, according to data compiled by research firm IBISWorld, and would-be guitar buyers have more to distract them than ever. So how do you convince someone to put down the iPhone …

“Fender says it hauls in about a half-billion dollars a year in revenue and is on track to grow in the high single digits this year,” continues the piece. “That’s still down from its $700 million in revenue in 2011 …”

What do do? What to do?

There’s not a lot that can be done. The electric guitar, the basic models, anyway, are as near perfect in design as possible. Adding software and chips to them has been sngularly meh. Largely, no one cares, who already plays.

Fender thinks development of tuning apps may be one answer. I’m not sold but I’m the old white coot.

What’s left is to curry and maintain the high-end snob market, embracing the American-based artisanal business model for the few left with any money, now that the middle class is largely gone. “[The] most devoted … evolving into collectors, their walls hung with high-end instruments,” is how the newspaper puts it.

The paradox, or tragedy, which I’ve mentioned before, is that Leo Fender made his instruments and amplifiers for that middle class. And it is in the hands of that class, here and in England (where the musicians were working class) that the instruments rode to into the history books.


“But what about Wal-Mart?” someone from the old hoosegow screamed on my Facebook timeline. “Who is going to pay for all of this? WE ARE …”

I don’t entirely agree and am not actually opposed to potential trade wars with China or Mexico.

Hard as it is to currently believe, classical economics, as explained by a guy like Dean Baker used to call for rich nations like the US to perhaps run a trade surplus and export capital, while the emerging nations use the money to make things bought by their own people.

From Baker, last week:

In the economic textbooks, rich countries like the United States are supposed to be exporting capital to the developing world. This provides them the means to build up their capital stock and infrastructure, while maintaining the living standards of their populations. This is the standard economic story where the problem is scarcity.

But to justify trade policies that have harmed tens of millions of U.S. workers, either by costing them jobs or depressing their wages, the Post discards standard economics and tells us the problem facing people in the developing world is that there is too much stuff. If we didn’t buy the goods produced in the developing world then there would just be a massive glut of unsold products.

In the standard theory the people in the developing world buy their own stuff, with rich countries like the U.S. providing the financing. It actually did work this way in the 1990s …

Startlingly, I didn’t know this until I read his book, Rigged. Here in America, the received wisdoms have been just the opposite.

As a personal example, I can use five plastic crap razors from the dollar store instead of ten, twice as long. Now I won’t look so good on many days when they dull out but who cares?

What does happen if Wal Mart takes a hit?


From the archives — Fender.

Guitars made in China — the counterfeits.

Comments are closed.