OT: Tariff Economics Discussion

[fatpiggy]

The harder issue is if the item is even manufactured in America. Then there is the cost to build a factory, hire staff,train said staff etc. No matter how you look at it, in the immediate it will be higher prices.

Yes.

The immediate has been our problem. We are addicted to debt to meet our immediate needs and damn the consequences. We didn't care that we were crashing the economy. We didn't care that we were ruining our kids future and spending their money.

Our biggest competitor is China. They govern for the 100 year plan. We govern for the 4 year plan. Changes were desperately needed.

 

[uuuuuuuuuuuuuuu]

Yes.

The immediate has been our problem. We are addicted to debt to meet our immediate needs and damn the consequences. We didn't care that we were crashing the economy. We didn't care that we were ruining our kids future and spending their money.

Our biggest competitor is China. They govern for the 100 year plan. We govern for the 4 year plan. Changes were desperately needed.

The current Chinese government hasn't even been around for 100 years. The notion that they are substantially more capable of long term strategic planning than we are is nothing more than propaganda they'd love for you to buy. Their economy is debt ridden without the benefit of the yuan being the world's foreign currency reserve of choice.

Seeing the US debt as the product of immediate need is wrong. It's by design and has been an established monetary policy for 50 years now. That's a better example of long term planning than anything the Chinese have ever done.

If you and I have debt, we can't go out and print more money. The US government can. It doesn't have "debt" like we do. Our primary concern should be maintaining foreign reserve primacy.

America is addicted to debt, and the world is addicted to the dollar.

 

[fatpiggy]

The current Chinese government hasn't even been around for 100 years. The notion that they are substantially more capable of long term strategic planning than we are is nothing more than propaganda they'd love for you to buy. Their economy is debt ridden without the benefit of the yuan being the world's foreign currency reserve of choice.

Seeing the US debt as the product of immediate need is wrong. It's by design and has been an established monetary policy for 50 years now. That's a better example of long term planning than anything the Chinese have ever done.

If you and I have debt, we can't go out and print more money. The US government can. It doesn't have "debt" like we do. Our primary concern should be maintaining foreign reserve primacy.

America is addicted to debt, and the world is addicted to the dollar.

I agree with most of your post.

However, I will give you something to consider. "If you and I have debt, we can't go out and print more money. The US government can. It doesn't have "debt" like we do"

I disagree stongly with your statement, while understanding your sentiment. The answer has always been "We can print out way out of it."

Well, printing money causes inflation. Inflation reached the highest level in 50 years under Biden. Biden was soundly defeated at the ballot box, and inflation was the #1 issue on the docket.

So, I don't think the people were going to allow the printing to continue. They strongly disagree with inflation, as evidenced by the last election and the price of Bitcoin.

Printing money has real consequences

 

[uuuuuuuuuuuuuuu]

I agree with most of your post.

However, I will give you something to consider. "If you and I have debt, we can't go out and print more money. The US government can. It doesn't have "debt" like we do"

I disagree stongly with your statement, while understanding your sentiment. The answer has always been "We can print out way out of it."

Well, printing money causes inflation. Inflation reached the highest level in 50 years under Biden. Biden was soundly defeated at the ballot box, and inflation was the #1 issue on the docket.

So, I don't think the people were going to allow the printing to continue. They strongly disagree with inflation, as evidenced by the last election and the price of Bitcoin.

Printing money has real consequences

Inflation is caused by a lot of things, and some level of inflation is ideal. I don’t get the pissing contest over Biden printing money when Trump wanted his signature loud and clear on checks. Or his tax cuts for that matter. I do agree with you that Biden was far too willing to overlook the short term pain consumers faced. Trump wants to do the same with tariffs

Deflation is a lot worse for an economy. Japan managed to have deflation with a debt to GDP ratio of 2:1. Their lack of inflation made the debt more expensive. Your picture isn’t true

Why is our debt so bad when China and Japan have far, far more debt than we do, and we have considerably more ability to manage it? It’s not, but a lot of people live off of fear mongering.

 

[1Clemson]

Young guy I presume. While the recent inflation wasn’t pleasant, the 1970 and 1980’s inflation made the last few years look like nirvana, add the high unemployment and low GDP growth and you might understand why the older crowd is rightly concerned about the return of stagflation. It took almost a decade of pain to tame it. Fed may have been right, the last round was transitory, I am worried about the next round especially if the world gets in a tariff pissing contest. When jobs are forced back to the US, cost will skyrocket as US workers are not willing to work for reasonable wages for low value jobs. People want Silicon Valley wages for average manufacturing assembly jobs.. Many people could not afford a television made in the US. China has told Wally World that its companies will not make cuts to offset US tariffs— bad news for the MAGA voters not expecting to pay more. All jobs aren’t the same, some are better done in other countries for the sake of both country’s economy.

 

[fatpiggy]

Inflation is caused by a lot of things, and some level of inflation is ideal. I don’t get the pissing contest over Biden printing money when Trump wanted his signature loud and clear on checks. Or his tax cuts for that matter. I do agree with you that Biden was far too willing to overlook the short term pain consumers faced. Trump wants to do the same with tariffs

Deflation is a lot worse for an economy. Japan managed to have deflation with a debt to GDP ratio of 2:1. Their lack of inflation made the debt more expensive. Your picture isn’t true

Why is our debt so bad when China and Japan have far, far more debt than we do, and we have considerably more ability to manage it? It’s not, but a lot of people live off of fear mongering.

The fact you don’t get the sentiment that Democrats were in charge when they took over from Trump is problematic. Say what you want inflation was 1) 1.9% under Trump 2) we were told inflation was temporary by democrats when they took over. 3) democrats tried to pass BBB. Not one republican voted for BBB. 4) inflation is a direct result of government spending.

If democrats can’t step up and be honest about inflation and at least pretend they understand inflation, they are going to have a very hard time getting back in power.

They tried to sell everyone on Modern Monetary Theory and were soundly rejected by the public.

Our debt levels are unsustainable. This is evidenced by the rising inflation and rising interest rate environment that Biden left us with. We were headed for major problems without DOGE.

 

[fatpiggy]

Young guy I presume. While the recent inflation wasn’t pleasant, the 1970 and 1980’s inflation made the last few years look like nirvana, add the high unemployment and low GDP growth and you might understand why the older crowd is rightly concerned about the return of stagflation. It took almost a decade of pain to tame it. Fed may have been right, the last round was transitory, I am worried about the next round especially if the world gets in a tariff pissing contest. When jobs are forced back to the US, cost will skyrocket as US workers are not willing to work for reasonable wages for low value jobs. People want Silicon Valley wages for average manufacturing assembly jobs.. Many people could not afford a television made in the US. China has told Wally World that its companies will not make cuts to offset US tariffs— bad news for the MAGA voters not expecting to pay more. All jobs aren’t the same, some are better done in other countries for the sake of both country’s economy.

Inflation was not transitory the first time around. It was much higher for much longer than they expected.

At least you understand that the America.n worker was getting their wage stolen by illegal immigrants. What you really mean is “Americans won’t do that work at that price”

I’ll go pick strawberries if you pay me the right price. Instead some illegal is willing to do it cheaper than an American, suppressing American wages.

 

[fatpiggy]

Inflation is caused by a lot of things, and some level of inflation is ideal. I don’t get the pissing contest over Biden printing money when Trump wanted his signature loud and clear on checks. Or his tax cuts for that matter. I do agree with you that Biden was far too willing to overlook the short term pain consumers faced. Trump wants to do the same with tariffs

Deflation is a lot worse for an economy. Japan managed to have deflation with a debt to GDP ratio of 2:1. Their lack of inflation made the debt more expensive. Your picture isn’t true

Why is our debt so bad when China and Japan have far, far more debt than we do, and we have considerably more ability to manage it? It’s not, but a lot of people live off of fear mongering.

Case in point

 

[fatpiggy]

 

[TigerGrowls]

Inflation is caused by a lot of things, and some level of inflation is ideal. I don’t get the pissing contest over Biden printing money when Trump wanted his signature loud and clear on checks. Or his tax cuts for that matter. I do agree with you that Biden was far too willing to overlook the short term pain consumers faced. Trump wants to do the same with tariffs

Deflation is a lot worse for an economy. Japan managed to have deflation with a debt to GDP ratio of 2:1. Their lack of inflation made the debt more expensive. Your picture isn’t true

Why is our debt so bad when China and Japan have far, far more debt than we do, and we have considerably more ability to manage it? It’s not, but a lot of people live off of fear mongering.

Strongly disagree with your thinking here. The national debt is the biggest problem the US has right now. The citizens will become defacto debt slaves unless it's fixed imo. Elon Musk is a very smart guy and he considers it the biggest threat to the nation.

 

[1Clemson]

Inflation was not transitory the first time around. It was much higher for much longer than they expected.

At least you understand that the America.n worker was getting their wage stolen by illegal immigrants. What you really mean is “Americans won’t do that work at that price”

I’ll go pick strawberries if you pay me the right price. Instead some illegal is willing to do it cheaper than an American, suppressing American wages.

Inflation seems to be less (less than half) than it was at the peak just over 2 years ago, or is the present 2-3% number wrong or current administration lying to us? It went up due to the budget & deficit busting Trump/Biden Covid-cash giveaways then trends downward as the excess funds are spent. Sounds like the definition of transitory for inflation, not so much on the deficit

There are plenty of jobs that Americans just will not do. After the immigrants that do those jobs are deported we will find out which ones pretty quick.

No one is willing to pay for the strawberries you are paid "the right price" to pick. Immigrants tend to know that picking strawberries is not high tech so don't demand wages that are ridiculous, they just want to work. Wish everyone did, that used to be the American ethic.

Same with lots of other things. If they paid what you want, inflation is 10X the recent high and spiraling into Argentinian levels (think triple digits) as you would suddenly decide "the right price" needs to be higher.

 

[dpic73]

 

[ben_matt_ward]

I think you are going to see two affects. 1) You will see some jobs created. 2) You will also see a bunch of multinational companies swift their international production out of the US.

I am not sure that the net effect will be huge in either direction.

I strongly suspect your going to see a decrease in consume and industrial demand. Any important shift in supply is going to take 4 years to bring on a online. ( New Steel Plant, Pharma, Large Assembly Plants) Sort term uncertainty will cause people to hold spending and industry reduce capital investment.

The US election cycle is quicker than the time it takes build a steel plant. I believe companies are going to be very conservatives until they see it is a long term direction and not a short term fluctuation.

 

[firegiver]

ladies and gentlemen, we are about to hit a recession. Prices are about to explode, people will not have the currency to invest nor consume.

 

[uuuuuuuuuuuuuuu]

ladies and gentlemen, we are about to hit a recession. Prices are about to explode, people will not have the currency to invest nor consume.

View embedded media

On the good side of things, at least I get a laugh out of “conservatives” defending big government socialism in the form of tariff + subsidy

 

[ANEW]

Also on the good side of things, is the long-term national security implications of onshoring of critical industry. We need to do it.

The fact that we accepted help from russia Russia RUSSIA for things we needed to combat COVID, should have everyone on board for doing what we have to do to bring manufacturing / raw materials production etc. back to the US.

 

[fatpiggy]

I think you are going to see two affects. 1) You will see some jobs created. 2) You will also see a bunch of multinational companies swift their international production out of the US.

I am not sure that the net effect will be huge in either direction.

I strongly suspect your going to see a decrease in consume and industrial demand. Any important shift in supply is going to take 4 years to bring on a online. ( New Steel Plant, Pharma, Large Assembly Plants) Sort term uncertainty will cause people to hold spending and industry reduce capital investment.

The US election cycle is quicker than the time it takes build a steel plant. I believe companies are going to be very conservatives until they see it is a long term direction and not a short term fluctuation.

Why do you think multi-nationals will shift production out of the US? That seems counterintuitive.

1) If you produce here it is cheaper to sell here.
2) The United States is the biggest market

If they have the shareholders best interest in mind, they will produce here.

 

[fatpiggy]

ladies and gentlemen, we are about to hit a recession. Prices are about to explode, people will not have the currency to invest nor consume.

View embedded media

Hopefully you sold everything in your 401k. We will check back on you in 4 years to see how that works out for you.

 

[yoshi121374]

I think you are going to see two affects. 1) You will see some jobs created. 2) You will also see a bunch of multinational companies swift their international production out of the US.

I am not sure that the net effect will be huge in either direction.

I strongly suspect your going to see a decrease in consume and industrial demand. Any important shift in supply is going to take 4 years to bring on a online. ( New Steel Plant, Pharma, Large Assembly Plants) Sort term uncertainty will cause people to hold spending and industry reduce capital investment.

The US election cycle is quicker than the time it takes build a steel plant. I believe companies are going to be very conservatives until they see it is a long term direction and not a short term fluctuation.

Your final point is the biggest. Tariffs themselves aren't awful, but using them as Trump is to threaten, and then remove is just tanking our Stock Market, with none of the benefits of the tariffs since it wasn't in place long enough for any benefit.

We are also feeling the effects of massive layoffs of Federal workers. There is a huge tricky down effect of those post jobs and money being injected into the economy.

Moving this fast and with such poor communication is really hurting consumer confidence,and is terrifying companies who are fearing recession.

 

[dpic73]

 

[ben_matt_ward]

Why do you think multi-nationals will shift production out of the US? That seems counterintuitive.

1) If you produce here it is cheaper to sell here.
2) The United States is the biggest market

If they have the shareholders best interest in mind, they will produce here.

The important word in my original message. You will also see a bunch of multinational companies swift their international production out of the US.

Lots of the fortune 500 companies have plants worldwide. Not all products are made in every plant or every country . It is expensive and not efficient to tool up everywhere. The tariffs change the business case. Originally , I made all the Model A in the US. Now I may only make Model A in the US only for the US. I support the rest of the world from another country . Maybe you assemble in Mexico where your subcomponent come from today . Automotive companies may do this now. They may also stop offering certain models in the US.

Steel is going to be a short term issue. The US does not make enough steel to support all of the demand. Domestic Steel prices are going to rise. ( scrap , energy and ore all going to rise) New processing equipment typically comes from overseas. Forging presses are typically German, Japan or Turkey with a 2 - 3 year manufacturing backlog. They are also facing tariffs.

Shareholders do not like uncertainty . Large scale investment in new manufacturing is not a quick timeline.

 

[fatpiggy]

The important word in my original message. You will also see a bunch of multinational companies swift their international production out of the US.

Lots of the fortune 500 companies have plants worldwide. Not all products are made in every plant or every country . It is expensive and not efficient to tool up everywhere. The tariffs change the business case. Originally , I made all the Model A in the US. Now I may only make Model A in the US only for the US. I support the rest of the world from another country . Maybe you assemble in Mexico where your subcomponent come from today . Automotive companies may do this now. They may also stop offering certain models in the US.

Steel is going to be a short term issue. The US does not make enough steel to support all of the demand. Domestic Steel prices are going to rise. ( scrap , energy and ore all going to rise) New processing equipment typically comes from overseas. Forging presses are typically German, Japan or Turkey with a 2 - 3 year manufacturing backlog. They are also facing tariffs.

Shareholders do not like uncertainty . Large scale investment in new manufacturing is not a quick timeline.

"They may also stop offering certain models in the US" -

Isn't this the intended result? Trump essentially wants American workers to build American cars for American consumers. If others want to sell cars here, they must pay a fee to access the American market because our market is so deep. If a country wants equal access then they need to trade equally with us. That all seems fair to me.

This is not uncommon. Want to sell groceries at the grocery store? Well, you have to buy shelf space. You have to pay to access the grocery market. Want to trade stocks? You will have to pay the Exhange a fee to access the trades. Fees to access a market are not uncommon.

I agree that the changes will not be quick. Trump has acknowledged that and is saying that he is in it for the long haul. Maybe he is bluffing, maybe he is not. Our competitors have a much longer outlook than we do. China plans for the long term. Russia plans for the long term. But in America, we are focused on the next 4 years.

Trump is spending his political capital to disregard the historical short term focus in leiu of longer term security and results. It's shocking because it's the first time someone has stood up for the people and said enough is enough.

I agree shareholders do not like volatility. Volatility was coming whether you liked it or not in my opinion. The country was very sick financially. Inflation was rising. Interest rates were rising. $25 trillion of debt must be refinanced in the next 2 years. The Buffett value indicator was as high as it had been i think ever, and Buffet had accumlated $350 Billion in cash. So it's my opinion you were going to get volatility one way or another. We aren't going to pretend that if we kept Bidenomics going everything would be hunky dory. There is no evidence to support that theory.

The good news is that with volatility comes opportunity. The best managers will win, as it should be.