Tariff - aftermath

[Vish_ram]

 

 

A.  from my friend who is in Global procurement.
1. One part with unit price $54 was defective , to send it back it’ll cost them $80+, so company is scrapping it and absorbing the cost
2. ⁠subassembly for a major unit (15% of cost) comes from China. Rest made and assembled here and exported everywhere. Now final assembly and testing will be done in Germany. 

Even Boeing might assemble outside for export orders.

 

B. At my friends firm where they make some electronic devices that are exported to Canada etc, a chunk of production is shifting to Mexico. 
It makes perfect sense. You avoid tariff impacts on both cost and revenue side.

[Spekulatius]

The sole existence of tariffs creates a lot of friction, even the 10-20% ones. if you build complex machinery or equipment with hundreds of components, the part tend to come from all over the world. So to estimate the cost, you need to take tariffs into account which seems to be changing on a dime too.  We have not even seen counter tariffs for the most part yet. 
I personally noticed that supplier put tariff clauses in PO acknowledgements and lead time in general seem to have expanded. I thine very business with complex supply chains is going to be affected. We have seen this first hand with RTX which already had $850M in cost impact for 2025 and that was after substantial mitigations. It will be a while until the fallout from this becomes visible.

[DooDiligence]

2 hours ago, Spekulatius said:

The sole existence of tariffs creates a lot of friction, even the 10-20% ones. if you build complex machinery or equipment with hundreds of components, the part tend to come from all over the world. So to estimate the cost, you need to take tariffs into account which seems to be changing on a dime too.  We have not even seen counter tariffs for the most part yet. 
I personally noticed that supplier put tariff clauses in PO acknowledgements and lead time in general seem to have expanded. I thine very business with complex supply chains is going to be affected. We have seen this first hand with RTX which already had $850M in cost impact for 2025 and that was after substantial mitigations. It will be a while until the fallout from this becomes visible.

 

This could all be fixed by an executive order getting rid of high speed and mandating a return to dial up.

Also need to change the world's maps so all the other countries look really tiny in comparison to the US.

Oh, and no more international flights. I think they're already working on that one.

[Vish_ram]

Even with 10% tariffs we will end up having reduced trade, lower consumption and higher prices. 
 

the next 3 months will be interesting - empty shelves, higher inflation etc.

 

What would the Fed do for stagflation? 

[formthirteen]

6 minutes ago, Vish_ram said:

Even with 10% tariffs we will end up having reduced trade, lower consumption and higher prices. 
 

the next 3 months will be interesting - empty shelves, higher inflation etc.

 

What would the Fed do for stagflation? 

 

Hasn't something like this been tested in other countries? 10% tariffs doesn't sound as bad as 20% VAT. I don't think shelves will be empty. Maybe shelves in stores importing cheap stuff from China will be empty until a deal is made, I don't know.

[Spooky]

10% is higher than you think. It would put the US up there with places like Venezula and Iran.

[DooDiligence]

https://www.reuters.com/business/retail-consumer/walmart-warns-higher-prices-withholds-second-quarter-profit-guidance-2025-05-15/

 

Perfect phone call incoming.

 

Agent Orange: You guys need to suck it up and take the margin hit. Don't make me explain groceries to you.

Edited May 15, 2025 by DooDiligence

[Spekulatius]

On 5/11/2025 at 4:07 PM, Spooky said:

10% is higher than you think. It would put the US up there with places like Venezula and Iran.

Overall tariff are still up EVEN after the rollback. Tariffs for China are up from ~20% to 30%+, we have tariffs on many Mexican and Canadian goods , Aluminum, Steel, lumber, soon to be followed pharmaceuticals. Those are substantial increases that will put pressure on prices.

[mattee2264]

https://www.visualcapitalist.com/the-average-u-s-tariff-rate-since-1890/

 

This has quite a nice chart. Even if we do land on 10% universal tariffs for everyone including China (and Bessent suggested this is the floor and the UK trade deal seems to confirm this -for now at least) that would take us to levels not seen since WW2. And even with the increase in tariffs since Trump's first term end of 2024 the average US tariff rate was under 3%. 

 

If we look at a broad sweep of market history the last 45 years have had a lovely disinflationary tailwind that has allowed interest rates to come down and given central banks a lot more leeway to periodically bail out stock markets and given the US government a lot more leeway to increase government spending and cut taxation. To some extent that reflects technological advances and other productivity improvements. But it also reflects the opening up of the global economy and the availability of cheap inputs and other goods from the rest of the world. And the resulting large trade deficits USA ran with the rest of the world were compensated for by ROW purchasing USA financial assets especially US Treasuries.

 

Trying to rebalance this even with much more modest 10% universal tariffs as well as trying to force US goods and FDI on countries (e.g. UK and Saudi Arabia trade deals) probably is going to backfire. Similarly trying to force USA companies to build factories in the USA. 

 

Central planning doesn't work. And this is what Trump sometimes looks on the verge of trying to do. 

[TwoCitiesCapital]

https://finance.yahoo.com/news/trump-says-us-set-tariff-091900283.html

 

Tarriffs were never about getting others to lower their tarriffs as Trump is now admitting by announcing that they're here to stay 

[DooDiligence]

9 minutes ago, TwoCitiesCapital said:

https://finance.yahoo.com/news/trump-says-us-set-tariff-091900283.html

 

Tarriffs were never about getting others to lower their tarriffs as Trump is now admitting by announcing that they're here to stay 

 

It was never about bringing back manufacturing.

It's nothing more than an extortion scheme.

He learned it from Soviet gangsters.

 

https://nymag.com/intelligencer/article/gd-culture-group-trump-meme-coin.html

[TwoCitiesCapital]

14 minutes ago, DooDiligence said:

 

It was never about bringing back manufacturing.

It's nothing more than an extortion scheme.

He learned it from Soviet gangsters.

 

https://nymag.com/intelligencer/article/gd-culture-group-trump-meme-coin.html

 

Don't I know it. It was pretty clear as they were flopping around from reason to reason like the flavor of the month. Manufacturing in the U.S. "Fair Trade". Imaginary fentanyl at the Canadian border. etc etc etc. 

 

They simply wanted tariffs and sold whatever lies they felt needed to justify them. 

 

But some people have yet to see through the smokescreen....

[DooDiligence]

8 minutes ago, TwoCitiesCapital said:

 

Don't I know it. It was pretty clear as they were flopping around from reason to reason like the flavor of the month. Manufacturing in the U.S. "Fair Trade". Imaginary fentanyl at the Canadian border. etc etc etc. 

 

They simply wanted tariffs and sold whatever lies they felt needed to justify them. 

 

But some people have yet to see through the smokescreen....

 

Yep. Suitcases full of money.

 

https://www.cbsnews.com/news/sinaloa-cartel-leader-family-enters-us-deal-trump-administration-mexico/

[cwericb]

5 minutes ago, TwoCitiesCapital said:

But some people have yet to see through the smokescreen....

 

Some "smart people" can be really, really stupid. 

 

"Brainwashed" was a term that you don't see as often as it used to be, but it certainly applies to a lot of the supporters of a certain present day politian.  

[cwericb]

1 minute ago, DooDiligence said:

 

Yep. Suitcases full of money.

 

https://www.cbsnews.com/news/sinaloa-cartel-leader-family-enters-us-deal-trump-administration-mexico/

 

Friend of mine went back for a visit to his middle eastern country a couple of years ago. Said while he was there one of his close friends asked him if he would take some U$ back with him and deposit them in an account for him. Took him down into his basement where he had bags and bags and bags of U$ that near filled his basement.

 

 

[TwoCitiesCapital]

3 minutes ago, james22 said:

 

As opposed to the especially perceptive supporters of the previous President?

 

"He's never been sharper!" LOL

 

See, here's the thing. While the political elite supported Biden WAY longer then they should have, your average Democratic had left him. That is why they had to change the ticket to Kamala because it was clear Biden didn't have a chance and that average Democratic supporters could see the cognitive decline. 

 

So, while both supporters ended up being "wrong", only one group has dug their heels in, refused to see what is right in front of them, and  doubled down after seeing the disaster of a presidency the first time....

Edited May 16, 2025 by TwoCitiesCapital

[Gregmal]

Just this…nothing more 

[DooDiligence]

5 hours ago, TwoCitiesCapital said:

 

See, here's the thing. While the political elite supported Biden WAY longer then they should have, your average Democratic had left him. That is why they had to change the ticket to Kamala because it was clear Biden didn't have a chance and that average Democratic supporters could see the cognitive decline. 

 

So, while both supporters ended up being "wrong", only one group has dug their heels in, refused to see what is right in front of them, and  doubled down after seeing the disaster of a presidency the first time....

 

This is the difference between party affiliation and a cult.

[TwoCitiesCapital]

1 minute ago, DooDiligence said:

 

This is the difference between party affiliation and a cult.

 

100%

[cubsfan]

43 minutes ago, Gregmal said:

Just this…nothing more 

 

Oh shit. LOL!

 

It's been a huge week for POTUS and not so much for the haters.

 

Pretty much the only haters left are Hamas & the LEFT.

[Hektor]

 

Layoffs on the horizon at Home Depot??

 

https://www.wsj.com/business/earnings/home-depot-hd-q1-earnings-report-stock-2025-7df6355f

 

Home Depot Plans to Keep Prices Steady Despite Tariffs

The retailer has been pushing suppliers to shift production out of China and keep prices low.

 

[cwericb]

On 5/16/2025 at 4:47 PM, DooDiligence said:

 

This is the difference between party affiliation and a cult.

 

 

And to prove the point ...................................................

 

On 5/16/2025 at 5:24 PM, cubsfan said:

 

Oh shit. LOL!

 

It's been a huge week for POTUS and not so much for the haters.

 

Pretty much the only haters left are Hamas & the LEFT.

 

[Spekulatius]

Hmm:

 

[cubsfan]

2 hours ago, cwericb said:

 

 

And to prove the point ...................................................

 

 

 

You guys still whining about the Greatest Political Comeback in American History??

 

While there is no cure for your severe TDS, the Trump momentum continues:

 

 

Donald Trump's Approval Rating Surges In Polls

Published May 20, 2025 at 6:41 AM EDT

 

https://www.newsweek.com/donald-trump-approval-rating-update-polls-2074502

 

 

[DooDiligence]

2 hours ago, cwericb said:

 

 

And to prove the point ...................................................

 

 

 

Yeah, there's a few unhinged cult members on here. Unfortunately if you choose to ignore them and select "mentions" they still show up when someone quotes them. I wish there was a way to fix that glitch.