6 ms·

It will almost certainly contract more significantly into the second quarter as well. Many businesses remain reliant upon goods from China and are taken a mass

It will almost certainly contract more significantly into the second quarter as well. Many businesses remain reliant upon goods from China and are taken a massive financial hit on purchases now, but they are also waiting for the trade war to cool off before making future purchases. That will create a demand rush once the tariffs cool down and if they don't cool down these businesses will continue to have the same financial troubles but will also have inventory problems too. In short, it must get worse before it can get better irrespective of what happens next or when.

llm_nerd 2y ago
It isn't just China, and it isn't just goods. Tourist travel to the US has contracted, for instance. US service exports are suddenly extremely suspect and a lot of countries are finding alternatives. US goods exports are facing massive headwinds, and counter-tariffs in some other countries (China, where imports from the US have basically stopped, and Canada where $400B+ of US goods were sold last year, many of which now see a counter-tariff and boycotts/replacement). The situation is going to get much, much worse, and there is a serious sense of denial among both the market and many participants who seem to think Trump can retreat from his economic folly and everything will be good again. It won't. There is a massive structural shift that is going to linger for decades.
- FollowingTheDao 2y ago
  Yes, everyone is whistling past the graveyard about this. You will see panic in two weeks. I was talking to two truck drivers here in Lincoln, Nebraska I met at a Flying J. They are already talking about layoffs and job insecurity and they are wondering why no one cares. One of them asked where his bail out was. The market, I think, is driven by AI and will be reactive, not predictive. All you need to do is be the quickest person out. All the under millionaire suckers will be wondering what happened to their 401k's.
  - deleted 2y ago
    [deleted]
  - deleted 2y ago
    [deleted]
  - azinman2 2y ago
    If the millionaire has most money in the market, won’t they be wondering what happened to their money as well?
    - FollowingTheDao 2y ago
      They do not make up the majority, and most of them have other assets: "only about 12% of U.S. households have a net worth over $1 million." https://finance.yahoo.com/news/guess-percent-people-1-million-203249715.html https://finance.yahoo.com/news/guess-percent-people-1-millio...
      - azinman2 2y ago
        I’m in that 12% (fortunately). But I’m far from the 0.5%. The 0.5% have complex diversified assets. “Normal” millionaires like me are mostly real estate and market. We are vulnerable both to market losses and, if the economy crashes, much lower property values.
- throwawaymaths 2y ago
  To steelman it, the US has a far lower dependence on trade as a percentage of GDP than just about any other country, so if any country will be likely to (raw-economic-numbers) survive a shock like this, it's the US. Of course this is a generalization, there could be critical single/multi item goods that make this not a thing (note: it's not lithium or "the rare earth"). It's worth asking and doing a deeper analysis on the question: Are the goods not being traded to the US "things that Americans can do without"? I think for a large portion of that, the answer is "yes". No, you do not need dropshipped junk or an electronic device with a 50% chance of working from amazon. Even for bulk conumer goods american alternatives are not substantially more expensive. I was shopping for cookie cutters recently and a US cookie cutter is $2 more than the chinese cookie cutter. Without even amortizing over the number of uses I'll get out of this, the marginal increase in cost is ~0, but I am certain that the way that online retailers sort sales by price, the number of buyers of the american good is way lower. I think more likely problems are small electronic PCBs used for semi-bespoke controls in whatever manufacturing that actually {happens in/moves to} the us, hvac controls etc.
  - threeseed 2y ago
    It’s going to be similar to Brexit. It won’t cause the economy to collapse with alarms going off everywhere. It will instead be a quiet, slow and sustained shrinking of the economy.
    - throwawaymaths 2y ago
      > It’s going to be similar to Brexit. Agreed, this is the most likely outcome in the short term. In the long term there are going to be unexpeted knock-on effects. Even a modest definancialization of the American economy makes it more robust to demographic changes and the end of the population-driven growth era. Lowered imports from abroad (especially china) and decreased consumption writ large means lower carbon footprint. Maintenance of airplanes getting more expensive means people fly less (already happening), again, lower carbon footprint.
      - 2y ago
- deleted 2y ago
  [deleted]
- tim333 2y ago
  Plus the defense industry of course. You could drop the tariffs overnight but much of the world which trusted America for their defence needs no longer do.
FinnLobsien 2y ago
The problem is that factories take years to build, many forms of agriculture take years to yield results too. So when the tariffs can change every day and you don't know if they'll be around in 5 years, do you commit millions to building something that doesn't pay off until 5 years from now?
- toomuchtodo 2y ago
  You just stop imports or raise prices until regime change. Until then, economic uncertainty and pain.
  - xnx 2y ago
    > You just stop imports or raise prices until regime change Not a lot of domestic coffee production. I'm pretty sure there would be riots in the streets if coffee was $65/lb.
    - pc86 2y ago
      If it gets people to stop buying 1200 calorie starbucks drinks with 70g of sugar in them it will be worth it /s
      - nancyminusone 2y ago
        Nah, it'll just change to 100% sugar and 120000 calories.
    - chasd00 2y ago
      > riots in the streets if coffee was $65/lb. Well at least it would be a slow moving riot with lots of yawning.
      - ceejayoz 2y ago
        Have you seen one of us when someone's between us and coffee? We're sleepy if we need coffee. We're angry when we can't have coffee.
unbalancedevh 2y ago
I work for a major tier-1 supplier for the trucking industry, and the outlook is not good. This year was supposed to be a good year as customers pre-buy to avoid upcoming changes in emission regulations, but the drop in trade with China means that goods aren't coming into the ports, so trucks aren't needed. OEMs are dropping their forecasts and pushing out new development, which means our projects are getting cancelled. A couple months ago we were talking about how we're going to hit our variable compensation profitability plans; but just yesterday we were told that we're going to have to take a mandatory 2 weeks of unpaid leave this year. The damage has already been done, and the next couple years don't look promising.
- nemomarx 2y ago
  The gossip I'm hearing is that independent truckers and shipping companies might go out?
vkou 2y ago
The market is also optimistic that this madness will be reined in before it gets really bad.

llm_nerd 2y ago

It isn't just China, and it isn't just goods. Tourist travel to the US has contracted, for instance. US service exports are suddenly extremely suspect and a lot of countries are finding alternatives. US goods exports are facing massive headwinds, and counter-tariffs in some other countries (China, where imports from the US have basically stopped, and Canada where $400B+ of US goods were sold last year, many of which now see a counter-tariff and boycotts/replacement). The situation is going to get much, much worse, and there is a serious sense of denial among both the market and many participants who seem to think Trump can retreat from his economic folly and everything will be good again. It won't. There is a massive structural shift that is going to linger for decades.

FollowingTheDao 2y ago
Yes, everyone is whistling past the graveyard about this. You will see panic in two weeks. I was talking to two truck drivers here in Lincoln, Nebraska I met at a Flying J. They are already talking about layoffs and job insecurity and they are wondering why no one cares. One of them asked where his bail out was. The market, I think, is driven by AI and will be reactive, not predictive. All you need to do is be the quickest person out. All the under millionaire suckers will be wondering what happened to their 401k's.
- deleted 2y ago
  [deleted]
- deleted 2y ago
  [deleted]
- azinman2 2y ago
  If the millionaire has most money in the market, won’t they be wondering what happened to their money as well?
  - FollowingTheDao 2y ago
    They do not make up the majority, and most of them have other assets: "only about 12% of U.S. households have a net worth over $1 million." https://finance.yahoo.com/news/guess-percent-people-1-million-203249715.html https://finance.yahoo.com/news/guess-percent-people-1-millio...
    - azinman2 2y ago
      I’m in that 12% (fortunately). But I’m far from the 0.5%. The 0.5% have complex diversified assets. “Normal” millionaires like me are mostly real estate and market. We are vulnerable both to market losses and, if the economy crashes, much lower property values.
throwawaymaths 2y ago
To steelman it, the US has a far lower dependence on trade as a percentage of GDP than just about any other country, so if any country will be likely to (raw-economic-numbers) survive a shock like this, it's the US. Of course this is a generalization, there could be critical single/multi item goods that make this not a thing (note: it's not lithium or "the rare earth"). It's worth asking and doing a deeper analysis on the question: Are the goods not being traded to the US "things that Americans can do without"? I think for a large portion of that, the answer is "yes". No, you do not need dropshipped junk or an electronic device with a 50% chance of working from amazon. Even for bulk conumer goods american alternatives are not substantially more expensive. I was shopping for cookie cutters recently and a US cookie cutter is $2 more than the chinese cookie cutter. Without even amortizing over the number of uses I'll get out of this, the marginal increase in cost is ~0, but I am certain that the way that online retailers sort sales by price, the number of buyers of the american good is way lower. I think more likely problems are small electronic PCBs used for semi-bespoke controls in whatever manufacturing that actually {happens in/moves to} the us, hvac controls etc.
- threeseed 2y ago
  It’s going to be similar to Brexit. It won’t cause the economy to collapse with alarms going off everywhere. It will instead be a quiet, slow and sustained shrinking of the economy.
  - throwawaymaths 2y ago
    > It’s going to be similar to Brexit. Agreed, this is the most likely outcome in the short term. In the long term there are going to be unexpeted knock-on effects. Even a modest definancialization of the American economy makes it more robust to demographic changes and the end of the population-driven growth era. Lowered imports from abroad (especially china) and decreased consumption writ large means lower carbon footprint. Maintenance of airplanes getting more expensive means people fly less (already happening), again, lower carbon footprint.
    - 2y ago
deleted 2y ago
[deleted]
tim333 2y ago
Plus the defense industry of course. You could drop the tariffs overnight but much of the world which trusted America for their defence needs no longer do.

FinnLobsien 2y ago

The problem is that factories take years to build, many forms of agriculture take years to yield results too. So when the tariffs can change every day and you don't know if they'll be around in 5 years, do you commit millions to building something that doesn't pay off until 5 years from now?

toomuchtodo 2y ago
You just stop imports or raise prices until regime change. Until then, economic uncertainty and pain.
- xnx 2y ago
  > You just stop imports or raise prices until regime change Not a lot of domestic coffee production. I'm pretty sure there would be riots in the streets if coffee was $65/lb.
  - pc86 2y ago
    If it gets people to stop buying 1200 calorie starbucks drinks with 70g of sugar in them it will be worth it /s
    - nancyminusone 2y ago
      Nah, it'll just change to 100% sugar and 120000 calories.
  - chasd00 2y ago
    > riots in the streets if coffee was $65/lb. Well at least it would be a slow moving riot with lots of yawning.
    - ceejayoz 2y ago
      Have you seen one of us when someone's between us and coffee? We're sleepy if we need coffee. We're angry when we can't have coffee.

unbalancedevh 2y ago

I work for a major tier-1 supplier for the trucking industry, and the outlook is not good. This year was supposed to be a good year as customers pre-buy to avoid upcoming changes in emission regulations, but the drop in trade with China means that goods aren't coming into the ports, so trucks aren't needed. OEMs are dropping their forecasts and pushing out new development, which means our projects are getting cancelled. A couple months ago we were talking about how we're going to hit our variable compensation profitability plans; but just yesterday we were told that we're going to have to take a mandatory 2 weeks of unpaid leave this year. The damage has already been done, and the next couple years don't look promising.

nemomarx 2y ago
The gossip I'm hearing is that independent truckers and shipping companies might go out?

vkou 2y ago

The market is also optimistic that this madness will be reined in before it gets really bad.