The New Tariff Conversation

[Samson]

I haven’t seen any evidence that Walmart, or for that matter any company, has successfully engaged in what is called predatory pricing.

From wikipedia:

• In AKZO v Commission, AKZO were fined €10 million for abusing its dominant position in the organic peroxides market by reducing its prices to loss-making levels, preventing English firm 'ECS' from competing on the polymer market.
• In Tetra Pak v Commission, Tetra Pak were fined €75 million for abusing its dominant position by reducing prices of non-asceptic cartons.
• In Wanadoo Interactive, a €10.35 million fine was imposed on France Télécom's subsidiary, Wanadoo Interactive.[79] Based on AKZO, high-speed residential broadband internet services were priced at levels below AVC until August 2001, and later at around AVC but below ATC.
• In ACCC v Cabcharge Australia Ltd, Cabcharge were fined $3 million for engaging in predatory pricing conduct by supplying taxi meters that were below cost and fare schedule updates at no charge. This breached section 46(1) of the Trade Practices Act 1974.
• In MCX v NSE, the NSE abused its dominant position in the currency derivatives segment by waiving transaction and admission fees, thus preventing MCX from competing in the market.[82] This breached section 4 of the Competition Act, 2002 and amounted to a Rs 55.5 crore penalty.
• According to an AP article[83] a law in Minnesota forced Walmart to increase its price for a one-month supply of the prescription birth control pill Tri-Sprintec from $9.00 to $26.88.
• According to a New York Times article[84] the German government ordered Walmart to increase its prices.
• According to an International Herald Tribune article,[85] the French government ordered amazon.com to stop offering free shipping to its customers because it violated French predatory pricing laws. After Amazon refused to obey the order, the government proceeded to fine them €1,000 per day. Amazon continued to pay the fines instead of ending its policy of offering free shipping. After a law was created explicitly banning free shipping, Amazon started charging one cent for delivery.
• In a period known as Darlington Bus War in Darlington, England, Stagecoach Group offered free bus rides to put the rival Darlington Corporation Transport out of business.
• Some have accused Amazon of using predatory pricing to undercut competitors such as Quidsi before offering to buy them out at low cost once their financial future had become bleak.
• Sir Freddie Laker, founder of Laker Airways, sued IATA member airlines British Airways, BCal, Pan Am, TWA, Lufthansa, Air France, Swissair, KLM, SAS, Sabena, Alitalia and UTA for conspiracy to put his airline out of business by predatory pricing. They settled out of court for US$50 million, with British Airways later agreeing to contribute a further $35 million. British Airways also reached a separate out-of-court agreement with Sir Freddie personally for £8 million.

 

[Moriarte]

Last few days Trump, more and more, is coming back to the original narrative he was often mentioning during election rallies: that he is using tariffs as a bargaining tool, or an extortion tactic, depending on how you look at it. And there won't be tariffs eventually between China and USA, at least not crazy tariffs imposed right now. Here's one example: the video is fast forwarded to the relevant moment:

Spoiler Barron’ article :

President Donald Trump appeared to soften his stance in his trade war with China, saying U.S.-imposed tariffs of 145% on imported goods from China will come down "substantially" after the two sides negotiate a deal.

The tariff levels "won't be anywhere near that high," Trump said, answering questions in the Oval Office. "It will come down substantially but it won't be zero."

Trump's more conciliatory tone follows remarks by Treasury Secretary Scott Bessent earlier on Tuesday. Bessent expects the U.S. and China to begin de-escalating their trade hostilities in the "very near future," he said at an event in Washington, D.C., on Tuesday organized by JPMorgan, a person in the room told Barron's.

Stocks have fallen sharply in the wake of President Donald Trump's decision to impose tariffs of up to 145% on China; China has retaliated with its own 125% tariffs. The S&P 500 fell 8% since the beginning of April through Monday's close, though stocks have been rising today.

Those tariffs are "an embargo on both sides" that effectively ends trade between the U.S. and China, Bessent said, according to the person.

But Bessent added that the goal isn't for the U.S. and China to decouple their economies. Rather, he believes the unsustainable tariff situation is likely to drive both the U.S. and China to recalibrate their trade relationship. That would begin a potentially difficult set of negotiations.

Trump said in the Oval Office that "we're doing fine with China," and suggested the U.S. won't play hardball or raise the issue of Covid-19. "We're going to be very nice," he said. "Ultimately they have to make a deal."

Markets would welcome a successful start to trade talks between the U.S. and China that lowered the political temperature. But engagement with China has yet to begin, Bessent said, according to the person.

The U.S. faces complicated negotiations with as many as 90 trading partners. White House press secretary Karoline Leavitt said on Tuesday that "18 proposals on paper" have been brought to the administration's trade team, a group that includes Bessent, Commerce Secretary Howard Lutnick, National Economic Council Director Kevin Hassett, and senior trade adviser Peter Navarro. The team is meeting with 34 countries this week.

When asked specifically about China, Leavitt said the administration is "setting the stage for a deal with China" and that "the ball is moving in the right direction."

Investors' expectations that the talks may be prolonged, especially with major trading partners such as China, the European Union, and Japan, have led to downgraded growth negotiations and worries about a potential recession.

Finance ministers from around the world are meeting in Washington this week for the spring meetings of the International Monetary Fund and World Bank. The JPMorgan event where Bessent spoke was organized on the sidelines of those talks. Investors see the week as a crucial moment for Bessent and others in the administration to show that they are making progress.

Bloomberg reported Bessent's comments earlier Tuesday.

 

[Akka]

Not me.

Wait, aren't you the one who claimed that regulations are bad and that free market is the answer ?

 

[EnglishEdward]

I am not against regulations on food safety as such.

However inappropriate regulations designed to protect markets and exclude customer choice are bad.

 

[Akka]

How many of you actually want free trade, that is the question.

Not me.

At the tail end of the 18th century the industrial revolution took place in England and free trade was advantageous to Britain.

However that critical mass is long gone; it is now in China and free trade is disadvantageous to the UK.

But alas the political class here still worship their free trade fetish.

I am not against regulations on food safety as such.

However inappropriate regulations designed to protect markets and exclude customer choice are bad.

You seem to be contradicting yourself here, saying you don't want free trade because of the need to protect markets in the first quote, to then switch to saying you're against regulations that are designed to protect markets.

 

[EnglishEdward]

My first post that you quoted does not mention "protect" or "markets".

 

[Moriarte]

President Donald Trump said he plans to be “very nice” to China in any trade talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility.

“It will come down substantially but it won’t be zero,” Trump said Tuesday in Washington, following earlier comments from Treasury Secretary Scott Bessent that the standoff was unsustainable. Trump added that “we’re going to be very nice and they’re going to be very nice, and we’ll see what happens.”
Trump also said he didn’t see the need to say he’d “play hardball” with Chinese leader Xi Jinping and that during discussions he wouldn’t raise Covid-19 — an issue that is politically sensitive in Beijing. The White House recently launched a website that suggested the virus came from a lab in China, irking the nation’s diplomats.
“Trump is panicking due to the markets plummeting and still very high US Treasury yields,” said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis. “He needs a deal and quick. China does not need to offer anything big in such circumstances.”

Chinese stocks traded in Hong Kong closed 2.1% higher on optimism that tensions with the US may soften, while the offshore yuan was last up 0.2% at 7.2953 versus the dollar. The Bloomberg Dollar Spot Index advanced as much as 0.6%, rebounding after slumping to the lowest since 2023 on Monday.
Trump’s comments come as US stocks and Treasuries have been battered since he rolled out sweeping tariffs on April 2, later announcing a 90-day reprieve for most nations. The 145% duties Trump has placed on Chinese shipments this year remain in place, though he’s made exceptions for computers and popular consumer electronics.

In response, China has been intensifying its outreach to other countries in recent weeks, even warning them not to strike trade deals with the US that hurt Beijing’s interests. During a meeting with Azerbaijan’s President Ilham Aliyev on Wednesday, Chinese leader Xi Jinping reiterated that tariff and trade wars undermine the rights and interests of all countries.
Foreign Minister Wang Yi told his counterparts in the UK and Austria that China’s stance toward the US aims at not only “safeguarding its own interests, but protecting international rules and multilateral trade system.” China’s premier, Li Qiang, reportedly wrote a letter to Japanese Prime Minister Shigeru Ishiba this week, calling for a coordinated response to Trump’s tariffs.
Foreign Ministry spokesman Guo Jiakun repeated his nation’s line that trade wars didn’t have winners. “The door for talks is wide open,” he added at the regular press briefing in Beijing.

The Chinese media outlet Cailian called the US president’s latest remarks “a sign Trump is already softening stance on his signature tariff policies.” Trump “chickening out” was among the top trending topics on China’s Weibo social media website on Wednesday.

China had indicated earlier this month it wants to see a number of steps from the Trump administration before agreeing to any discussions, especially reining in disparaging remarks by members of his cabinet. Beijing had earlier expressed displeasure with comments Vice President JD Vance made about “Chinese peasants,” with one diplomat calling them “ignorant and disrespectful.”

Bessent told a closed-door investor summit that the world’s two largest economies will have to find ways to de-escalate, which would come in the near future. He also said that it was not the US’s goal to decouple from China, according to people who attended the session.
Still, the Treasury chief said a comprehensive deal could take two to three years to hammer out. He also reiterated his view that China has stifled its consumer economy and favored manufacturing at the US’s expense, saying that any agreement would require a rebalancing of trade that allowed the US to increase manufacturing.
Negotiations with China over such a deal haven’t started yet, he said.

Beijing has sent People’s Bank of China Governor Pan Gongsheng, his deputy, Xuan Changneng, and Finance Minister Lan Fo’an to Washington, which this week will host meetings of the World Bank Group and International Monetary Fund. That could create an opening for top Chinese and American officials to exchange views and open the door to trade talks.
Also, one key member to the Chinese team that will negotiate with the Trump administration was likely put in place last week, when Li Chenggang was appointed vice commerce minister and trade envoy.
Henry Wang Huiyao, founder of the Center for China and Globalization research group in Beijing, said Li’s appointment showed “China is ready to talk,” and Trump’s comments signaled a “more reasonable” tone.

“I’m sure this would get a response from China, so hopefully we’ll have a stabilizing, cooling period and we can continue our relationship as normal as possible with President Trump,” Wang said.

bloomberg (c)

 

[EvaDK]

China won, Trump blinked. Again.

 

[Akka]

My first post that you quoted does not mention "protect" or "markets".

It does specifically say that you don't support free trade because it's not advantageous for the UK, that's the textbook definition of "protecting market". What actually IS your position here ?

 

[danjuno]

A loss leader is not something that is exclusive to a chain trying to monopolize a market, it’s a business strategy at getting customers in the door to spend money on other items.

Yes, but in this case it is also that.

On your second point I will refer you to @Samson's post.

 

[Lexicus]

The fact that the tariffs are implemented, then cancelled, implemented again, changed, cancelled again, paused for 90 days, all at the unaccountable whim of one man, is a far bigger problem than the design of the policy itself.

 

[EnglishEdward]

It does specifically say that you don't support free trade because it's not advantageous for the UK, that's the textbook definition of "protecting market". What actually IS your position here ?

There is a distinction between protecting a supply capability and protecting a market.

Now any chance of posting your own position?

Rather than misinterpreting my own.

 

[amadeus]

Yes, but in this case it is also that.

On your second point I will refer you to @Samson's post.

The list that @Samson provided, it’s a really weak list that shows I’m right: if it was a profitable, workable strategy, why are the entries here so underwhelming?