US companies are preparing for pain ahead of tariff hike: 'I can't sit here and cry'

[艹艹艹]

US companies are preparing for pain ahead of tariff hike: 'I can't sit here and cry'

• Management teams at a range of American companies bemoan the effect the U.S.-China trade spat is having on business and supply chain costs.
• The disputes are "something we have to manage. I can't sit here and cry," says Emerson Electric CEO David Farr. His stock is down 6% this week.
• But it's not only manufacturers and durable goods makers. Semiconductor executives, too, are critiquing the trade war.

Timothy Aeppel | Reuters
Workers produce some of the specialized valves at Emerson Electric Co.'s factory in Marshalltown, Iowa, July 26, 2018.


Executives at some of the largest U.S. companies are steeling themselves for higher prices and worried customers ahead of a stricter tariff regime on $200 billion of Chinese imports.

Management teams including those at industrial equipment manufacturer Emerson Electric, semiconductor developer Microchip and toolmaker Snap-On all lamented the impact the U.S.-China trade dispute has had on their business this week.

And now, with President Donald Trump threatening to hike the tariff rate to 25% from 10%, they're hoping to pass nearly all of the burden on to the American consumer.

In a tweet that took many on Wall Street off guard, Trump said Sunday the U.S. would increase levies on $200 billion of Chinese imports starting Friday. Those tariffs, which the administration first implemented in 2018, are set to jump to 25% from 10% Friday morning.

The taxes impact a wide variety of goods, ranging from pumps and turbines to electrical and computer components.

The announcement stunned many investors, who'd expected the U.S.-China trade deliberation to finish on a positive note this week after months of tamer dialogue. Traders punished equities in turn, sending the Dow Jones Industrial Average down more than 650 points so far this week.

The broad S&P 500 index was down about 2.5% week to date at the time this article was published.

The week's losses — currently the worst since the 2018 Christmastime plunge — were likely the impetus for a number of comments by and questions for a slew of S&P 500 companies that reported financial results this week. While many CEOs took the opportunity to explain to shareholders the plans to soften the blow on their post-earnings conference calls, others were more blunt.

The trade disputes are "something we have to manage. I can't sit here and cry and hold my breath. I've got to deal with them," Emerson Electric Chairman and CEO David Farr said Tuesday on his company's earnings conference call. "I still believe we'll get a deal done. I think the issue really boils to — I think both parties are testing each leader on the give and take."

"I'm glad to hear they are going to go ahead and meet this week. But I think this is going to go back and forth a couple more times," he added.

Emerson Electric, which manufactures products and provides engineering services for a wide range of industries, said its global manufacturing end markets saw slower growth in part thanks to inventory rebalancing in the U.S. from last year's tariff impacts and price increases.

Toolmakers Stanley Black & Decker and Snap-On said they're taking steps to ease the pain of higher supply costs as a result of the Trump administration's tariffs. Stanley Black & Decker CEO James Loree said his company's been raising prices for consumers to help offset steeper input expenses.

"When you finally add it all up, I mean, the price recovery against the tariffs only amounted to about 40%, or between 40% and 50%," he said on April 24. "So there was a big chunk of inflation-related cost that was not covered by the price as well as some of the tariffs."


Luke Sharrett | Bloomberg | Getty Images
Wrenches dry on a hanging rack after receiving a chrome finish on the production line at the Snap-on Inc.

Snap-On Chairman and CEO Nicholas Pinchuk echoed those sentiments, saying the Kenosha, Wisconsin-based company is facing materials headaches.

"Look, the last quarter, we had a bunch of headwinds; tariffs were one of them," he said Tuesday. "U.S. steel costs went up by 25%. U.S. plastics went up by 10%."

"I would say this about tariffs: The longer tariffs are on the horizon, the more you get to avoid them. And that's our job," he said. "So, even if you're being dinged a little bit by tariffs, you figure out how to mollify them."

Emerson Electric, Stanley Black & Decker and Snap-On are down 6.1%, 7.2% and 2.1%, respectively, this week.

Meanwhile, Polaris Industries CEO Chairman Scott Wine told CNBC earlier this week that the planned tariff hike would be "catastrophic" for American industry.

"At 25% it's downright catastrophic in terms of impact on the company and employees," Wine told CNBC's Morgan Brennan.

Polaris has continued to pursue an exemption from the U.S. government on China tariffs, and Wine said he remains hopeful that will still happen.

But it's not only manufacturers and durable goods makers that are feeling the pressure. Semiconductor executives, too, bemoaned the trade war for its crippling effect on the industry's ability to forecast sales and tweak pricing.

Executives at Microchip Technology, a $21 billion semiconductor company based in Chandler, Arizona, said earlier this week that the latest trade developments have people wondering whether to shift where they do business.

"Just imagine if you were a supplier. And you didn't know whether you'll be able to pass on a 25% tariff increase to your customers. Whether your customer will then choose to buy that product from Korea or Taiwan or somewhere else and not from the Chinese supplier," Microchip CEO Steve Sanghi said.

"A lot of our U.S. customers are impacted because of the same trade issues," he added. "Industrial customers build a lot of their products in China and are having to pay the tariff costs."

The VanEck Vectors Semiconductor ETF, which tracks a variety of U.S.-listed chip stocks, is down more than 5.7% this week, on pace for its worst week since December.

 

[Kiss_of_the_Dragon]

The best outcome is looking for a win-win solution on this trade issue, China and US as first and second economic power can manage their trade relation to preserve their current status as world leading 1st and 2nd economic power for decades or centuries to come. Trying to prevent China's rise with coercive measures such as making trade war or military threat will bring US nowhere but to hurt itself as well, China will certainly not going to make US's life any easier.

Despite how Americans politician are bragging that Tariff will hurt China more than US, but it's normal American consumers, merchants and farmers are the ones to feel the pain of this trade war and shoulder all the burden. I don't think it's any better on China's side but unlike Americans which are greatest consumers and spender on earth, most Chinese citizens have made alot of saving that they can use it to survive on this period of crisis. If the trade war prolonged, one can ask who will be the first to collapse and bring chaos to their nation, I don't think US has the upper hand, Chinese people had withstand two centuries of poverty, misery and suffering, are Amercians ready to give away their luxury life and downgrade their standard of living?.

 

[gangsta_rap]

whitey can't take them heats

 

[xyxmt]

whitey can't take them heats

well they are against the first non caucasian power

 

[nahtanbob]

US companies are preparing for pain ahead of tariff hike: 'I can't sit here and cry'

• Management teams at a range of American companies bemoan the effect the U.S.-China trade spat is having on business and supply chain costs.
• The disputes are "something we have to manage. I can't sit here and cry," says Emerson Electric CEO David Farr. His stock is down 6% this week.
• But it's not only manufacturers and durable goods makers. Semiconductor executives, too, are critiquing the trade war.

Timothy Aeppel | Reuters
Workers produce some of the specialized valves at Emerson Electric Co.'s factory in Marshalltown, Iowa, July 26, 2018.


Executives at some of the largest U.S. companies are steeling themselves for higher prices and worried customers ahead of a stricter tariff regime on $200 billion of Chinese imports.

Management teams including those at industrial equipment manufacturer Emerson Electric, semiconductor developer Microchip and toolmaker Snap-On all lamented the impact the U.S.-China trade dispute has had on their business this week.

And now, with President Donald Trump threatening to hike the tariff rate to 25% from 10%, they're hoping to pass nearly all of the burden on to the American consumer.

In a tweet that took many on Wall Street off guard, Trump said Sunday the U.S. would increase levies on $200 billion of Chinese imports starting Friday. Those tariffs, which the administration first implemented in 2018, are set to jump to 25% from 10% Friday morning.

The taxes impact a wide variety of goods, ranging from pumps and turbines to electrical and computer components.

The announcement stunned many investors, who'd expected the U.S.-China trade deliberation to finish on a positive note this week after months of tamer dialogue. Traders punished equities in turn, sending the Dow Jones Industrial Average down more than 650 points so far this week.

The broad S&P 500 index was down about 2.5% week to date at the time this article was published.

The week's losses — currently the worst since the 2018 Christmastime plunge — were likely the impetus for a number of comments by and questions for a slew of S&P 500 companies that reported financial results this week. While many CEOs took the opportunity to explain to shareholders the plans to soften the blow on their post-earnings conference calls, others were more blunt.

The trade disputes are "something we have to manage. I can't sit here and cry and hold my breath. I've got to deal with them," Emerson Electric Chairman and CEO David Farr said Tuesday on his company's earnings conference call. "I still believe we'll get a deal done. I think the issue really boils to — I think both parties are testing each leader on the give and take."

"I'm glad to hear they are going to go ahead and meet this week. But I think this is going to go back and forth a couple more times," he added.

Emerson Electric, which manufactures products and provides engineering services for a wide range of industries, said its global manufacturing end markets saw slower growth in part thanks to inventory rebalancing in the U.S. from last year's tariff impacts and price increases.

Toolmakers Stanley Black & Decker and Snap-On said they're taking steps to ease the pain of higher supply costs as a result of the Trump administration's tariffs. Stanley Black & Decker CEO James Loree said his company's been raising prices for consumers to help offset steeper input expenses.

"When you finally add it all up, I mean, the price recovery against the tariffs only amounted to about 40%, or between 40% and 50%," he said on April 24. "So there was a big chunk of inflation-related cost that was not covered by the price as well as some of the tariffs."


Luke Sharrett | Bloomberg | Getty Images
Wrenches dry on a hanging rack after receiving a chrome finish on the production line at the Snap-on Inc.

Snap-On Chairman and CEO Nicholas Pinchuk echoed those sentiments, saying the Kenosha, Wisconsin-based company is facing materials headaches.

"Look, the last quarter, we had a bunch of headwinds; tariffs were one of them," he said Tuesday. "U.S. steel costs went up by 25%. U.S. plastics went up by 10%."

"I would say this about tariffs: The longer tariffs are on the horizon, the more you get to avoid them. And that's our job," he said. "So, even if you're being dinged a little bit by tariffs, you figure out how to mollify them."

Emerson Electric, Stanley Black & Decker and Snap-On are down 6.1%, 7.2% and 2.1%, respectively, this week.

Meanwhile, Polaris Industries CEO Chairman Scott Wine told CNBC earlier this week that the planned tariff hike would be "catastrophic" for American industry.

"At 25% it's downright catastrophic in terms of impact on the company and employees," Wine told CNBC's Morgan Brennan.

Polaris has continued to pursue an exemption from the U.S. government on China tariffs, and Wine said he remains hopeful that will still happen.

But it's not only manufacturers and durable goods makers that are feeling the pressure. Semiconductor executives, too, bemoaned the trade war for its crippling effect on the industry's ability to forecast sales and tweak pricing.

Executives at Microchip Technology, a $21 billion semiconductor company based in Chandler, Arizona, said earlier this week that the latest trade developments have people wondering whether to shift where they do business.

"Just imagine if you were a supplier. And you didn't know whether you'll be able to pass on a 25% tariff increase to your customers. Whether your customer will then choose to buy that product from Korea or Taiwan or somewhere else and not from the Chinese supplier," Microchip CEO Steve Sanghi said.

"A lot of our U.S. customers are impacted because of the same trade issues," he added. "Industrial customers build a lot of their products in China and are having to pay the tariff costs."

The VanEck Vectors Semiconductor ETF, which tracks a variety of U.S.-listed chip stocks, is down more than 5.7% this week, on pace for its worst week since December.

I thought China was a powerful state. it looks like you are counting on Americans to bail your asses out

 

[Wa Muhammada]

American firms will soon have to relocate to countries such as Vietnam to dodge the tariff war

 

[sinait]

I thought China was a powerful state. it looks like you are counting on Americans to bail your asses out

Some Indians are THICK SKINNED experts at twisting the narrative.
The report is from CNBC, a US news outlet, reporting on US COMPAINIES CRYING.

Or Maybe you need to brush up your Inglish Comprehension.
.

 

[Han Patriot]

I thought China was a powerful state. it looks like you are counting on Americans to bail your asses out

Counting on Americans? Dude are you sane? You are the ones starting the war in the first place. This shows you the war has an effect on the US, both sides will face problems, but China can adapt easily because of our command economy and adjust to sufferings easier. Not sure the Americans can do the same.

 

[jetray]

I thought China was a powerful state. it looks like you are counting on Americans to bail your asses out

sshh they will dump the dollar and make america collapse.......in..........err..... i dont know.

 

[Han Patriot]

sshh they will dump the dollar and make america collapse.......in..........err..... i dont know.

Yah and Indians are still starving and pooping in the streets...=)

 

[master_13]

I thought China was a powerful state. it looks like you are counting on Americans to bail your asses out

apparently you don't understand english, it says US is crying.

 

[Menthol]

I don't think USA government care about small problems in business, because for them this is a cold war.

A long term strategy to destroy China or to reduce China power.

Since a long time, USA want the wealth and power of China to be divided with India.

What USA do now, is trying to divided with small countries like Indonesia, Mexico, etc.

It's a long term strategy. Just remember that the first and most important USA request is not about trade war, but to ask China for not to embrace high tech sector.

 

[OIO]

The best outcome is looking for a win-win solution on this trade issue, China and US as first and second economic power can manage their trade relation to preserve their current status as world leading 1st and 2nd economic power for decades or centuries to come. Trying to prevent China's rise with coercive measures such as making trade war or military threat will bring US nowhere but to hurt itself as well, China will certainly not going to make US's life any easier.

Despite how Americans politician are bragging that Tariff will hurt China more than US, but it's normal American consumers, merchants and farmers are the ones to feel the pain of this trade war and shoulder all the burden. I don't think it's any better on China's side but unlike Americans which are greatest consumers and spender on earth, most Chinese citizens have made alot of saving that they can use it to survive on this period of crisis. If the trade war prolonged, one can ask who will be the first to collapse and bring chaos to their nation, I don't think US has the upper hand, Chinese people had withstand two centuries of poverty, misery and suffering, are Amercians ready to give away their luxury life and downgrade their standard of living?.

forget it!
win-win between CN-US has become past.

 

[nahtanbob]

https://www.nytimes.com/2019/05/10/...tion=click&module=Top Stories&pgtype=Homepage



By Mark Landler and Ana Swanson

• May 10, 2019

WASHINGTON — When President Trump had finished mocking the field of Democratic presidential candidates at a rally in Florida this week (“Sleepy Joe,” “Crazy Bernie” and “Boot-edge-edge”), he pivoted abruptly to his intensifying trade war with China. The segue was no accident: Mr. Trump is determined to present himself as tougher on the Chinese than any of his potential challengers in 2020.

“Representing us against President Xi of China?” a sarcastic Mr. Trump said of Pete Buttigieg, the young mayor of South Bend, Ind. “That’d be great.” Taking aim at former Vice President Joseph R. Biden Jr. earlier in the day, he said that China had pulled back from a trade deal because it wanted to wait him out and negotiate with a President Biden or “one of the very weak Democrats, and thereby continue to rip off the United States.”

Election-year politics have crept into Mr. Trump’s trade policy.

For months, the prospect of a landmark trade agreement with China has tantalized Mr. Trump. But now, according to analysts and several former aides, his political calculus seems to have flipped. His recent statements suggest he now believes that demonstrating his toughness with the Chinese and walking away from a deal might well put him in a better position politically than signing one.

Imposing new tariffs on China is likely to hurt American farmers, rattle the stock market and possibly damage the economy. But signing an agreement could expose Mr. Trump to attacks by Democrats, particularly if it is perceived as weak. A hard line, on the other hand, would allow the president to cater to his political base while heading off any Democratic attempts to outflank him as the great protector of American workers.

Mr. Sanders has vowed to label China a currency manipulator — something Mr. Trump had promised to do during his campaign but was talked out of by advisers. And he has criticized Mr. Biden for voting for permanent normal trade relations with China and for saying, during a recent campaign stop in Iowa: “China is going to eat our lunch? Come on, man.”

“It’s wrong to pretend that China isn’t one of our major economic competitors,” Mr. Sanders said in a tweet. “When we are in the White House, we will win that competition by fixing our trade policies.”

Several of Mr. Trump’s current and former aides — including Mr. Bannon and Peter Navarro, his trade adviser — have long argued that being tough with China and never accepting a deal is the right course. They were countered by more mainstream figures like Treasury Secretary Steven Mnuchin and Larry Kudlow, the president’s chief economic adviser, who warned Mr. Trump that a prolonged trade war would buffet both the economy and financial markets.

In recent weeks, however, Mr. Trump’s campaign advisers have also started to echo the no-compromise approach, according to a former official. That, combined with Mr. Biden’s potential political weakness on China, has shifted Mr. Trump’s thinking away from those who urged a deal.

At his rally this week in Panama City Beach, Fla., Mr. Trump claimed that Mr. Biden was telling supporters that foreign leaders told him they hoped he would defeat Mr. Trump in 2020. “Of course they do,” the president told his crowd, “so they can continue to rip off the United States.”

For Mr. Trump, the decision on whether to abandon trade talks with China will hinge on more than politics. Trade is one of the few issues where he has deeply rooted ideological convictions, dating back to the 1980s. Mr. Trump views his aggressive tactics with Beijing as a way to break a pattern of Chinese dissembling that he contends has characterized China’s negotiations with the last three American presidents.

From the earliest days of Mr. Trump’s presidency, he has viewed a deal as a major political victory and made it one of his top priorities.

By the beginning of this year, he had grown impatient with the pace of negotiations and began pressing his advisers for a deal. In February, as negotiators were still early in the process of drawing up a text, he broached the idea of a “signing summit” with President Xi Jinping at Mar-a-Lago, his club in Palm Beach, Fla.

Mr. Trump’s eagerness for a deal encouraged Mr. Mnuchin and Robert Lighthizer, the United States trade representative, to give him overly optimistic reports about their progress, according to a person familiar with the talks, to avoid both his anger and an impulsive tweet or statement that might complicate the talks.

Last Friday evening, after yet another visit by Mr. Mnuchin and Mr. Lighthizer to Beijing, the Chinese sent the Americans a diplomatic cable containing a heavily redacted version of the text that the two sides had been working on, with modifications to all seven chapters of the 150-page document. Among other things, the changes walked back commitments to codify some parts of the agreement in Chinese law.

The administration’s hawks saw the changes as proof that China never intended to keep its promises, and the revisions seem to have given Mr. Trump a genuine change of heart that he expressed repeatedly this week.

On Sunday, Mr. Trump fired off a pair of tweets criticizing the Chinese and pledging to increase tariffs, and by Friday he had increased the tariff on $200 billion worth of Chinese imports to 25 percent from 10 percent. And he said he would start a process to levy a 25 percent tariff on virtually every other Chinese export.

It is not clear whether Mr. Trump has reverted from the eager deal maker to the anti-China hawkishness of the 2016 campaign. The risks of an all-out trade war are considerable. Political analysts said voters were likely to judge the president’s actions by how they affected their economic fortunes, not by whether he looked tougher than the Democrats. To some extent, that is true even of Mr. Trump’s supporters.

“They have been willing to give him the benefit of the doubt because he is addressing the issue,” said David Winston, a strategist who advises Republicans. “Their attitude is, ‘We’re with you in wanting to do this, but ultimately, it’s got to produce a positive impact for the country.’”

Yet there are also political risks for Mr. Trump in agreeing to a deal, particularly if he ends up with an agreement that has the same lack of teeth as those of his predecessors. Democratic candidates would most likely pounce on that as evidence that Mr. Trump’s blustering style does not produce results.

“A weak deal, including one that does not stop cybertheft by China, will be another proof point for Democrats to say that at the end of the day, Trump just doesn’t get the job done,” said Geoff Garin, a veteran Democratic pollster.

Mr. Garin said his firm had conducted research for Democrats that showed undecided and independent voters were troubled by the decline in the income of farmers because of Chinese retaliation for Mr. Trump’s tariffs.

“The China trade situation is particularly important because it ties his impulsive and erratic nature to real-world consequence for Americans, in terms of leaving many workers and farmers worse off than before,” he said.