Tariffs and Potential Inflation

[SAJ-99]

It is the American consumer's attention span that blissfully perpetuates the economic force factor of engineered obsolescence.

Pretty much, as should be clear anywhere on Black Friday.
Amazon paid to broadcast an NFL game on Friday night and will have QR codes on the screen for people to scan with their phone to make buying that "junk" easier.
We are all part of the problem. Tariffs aren't going to solve that.

 

[RemingtonRules]

What has been achieved in the last 8 years of tariffs?

Nothing except price inflation for American citizens.

Some jobs have been created and investments domestically to move back from China.

 

[BigHornRam]

 

[D_Walt]

Saw the chart below in WSJ and it reminded me your post. I wonder if they are almost two different industries. I have done two remodels and used local manufacturers both times. That local source allows for more custom build. I wonder if the chart below is mostly big-box stuff? Clearly the first set of tariffs helped reduce the China -made stuff, but it was quickly replaced by sources from other countries. The total output simply coincides with the housing market.

View attachment 350691

Multiple factors at play and it is definitely a dynamic boom and bust industry. Remodels and custom shops like you are talking about don’t really move the needle; new home and apartment construction drives the bulk of the market.

The post-Covid boom cycle brought on by extremely low interest rates pushed demand to record levels and cost became nearly a non -factor; the only thing that really mattered was availability. Add to that the fact that there is also a lot of US based manufacturers that use some foreign components (often pre-finished doors) and the plot thickens even more.

Imported product is definitely making waves in the industry (at least in my markets) right now, especially products made in Mexico.

 

[SAJ-99]

Probably should add to this discussion by saying that the current nominee for treasury secretary would agree with "most" economists, or at least the sober ones, regarding tariffs and inflation. His early 2024 letter to his investors is linked (ready like an Cover letter for the US treasury job, LOL) It does seem the market agrees with him in that it is mostly talk.

https://assets.realclear.com/files/2024/02/2353_keysquare.pdf

 

[WVmike]

This makes my head hurt!

 

[Sytes]

Probably should add to this discussion by saying that the current nominee for treasury secretary would agree with "most" economists, or at least the sober ones, regarding tariffs and inflation. His early 2024 letter to his investors is linked (ready like an Cover letter for the US treasury job, LOL) It does seem the market agrees with him in that it is mostly talk.

View attachment 351465

https://assets.realclear.com/files/2024/02/2353_keysquare.pdf

And then there's Janet Yellin... But who's to say, right? Not the critic who counts...

 

[VikingsGuy]

Probably should add to this discussion by saying that the current nominee for treasury secretary would agree with "most" economists, or at least the sober ones, regarding tariffs and inflation. His early 2024 letter to his investors is linked (ready like an Cover letter for the US treasury job, LOL) It does seem the market agrees with him in that it is mostly talk.

View attachment 351465

https://assets.realclear.com/files/2024/02/2353_keysquare.pdf

For all those who don’t like how the free market works, we will likely get a real dose of how government markets work when they jack around with tariffs and monetary policy. Remember the 1970s - we can run out the old playbook again, but I am not expecting a different outcome.

 

[Nick87]

Remember the 1970s

....no

 

[Bonasababy]

Probably should add to this discussion by saying that the current nominee for treasury secretary would agree with "most" economists, or at least the sober ones, regarding tariffs and inflation. His early 2024 letter to his investors is linked (ready like an Cover letter for the US treasury job, LOL) It does seem the market agrees with him in that it is mostly talk.

View attachment 351465

https://assets.realclear.com/files/2024/02/2353_keysquare.pdf

Yea, but the DAY AFTER Trump nominated him he went onto media to announce 25 percent tariffs on both Canada and Mexico. And we never produced more oil and natural gas than we have under Biden. I've seen industry doubts we could exceed where we are now or that producers would want to. They want to shorten supplies to raise prices and Trump assured them he'd please them. Of course they could accomplish that by shipping a lot of what our country produces right out of our country, which I believe is their intent. Increase production, but export all of the increase so they can still make their money off of us. Will be fun to watch folks wonder what the h#ll happened. Some of the talk--e.g. resurrecting the Keystone pipeline--which will mostly move canadian oil all the way through and out of our country and will actually raise our prices (at least in the middle of the country) according to experts...is bass ackwards from what people think will happen.

 

[hank4elk]

He claims a economics degree...prolly from his university.

Bet my taxes don't decrease this time either. Hang onto your hats kids.
From one pile into another is my take.

 

[Sytes]

From one pile into another is my take.

Considering this is a continuation of a continuation, absolutely.

Another day "representing" constituents.

 

[SAJ-99]

Lots of other opinions on other subjects in response to the post. My post was simply to say the finance guy chosen to run the show believes tariffs cause inflation and instead should just be used as a threat. The market reacted positively to his selection because at least he has some understanding of how this stuff actually works, which I'm sure the elected guy doesn't. As Treasury Secretary he will quickly learn what he can control and what he can't. All of the rest of that stuff's going to figure itself out too. I suspect that in the process some stuff will get "fixed" and some stuff will get "broken".

 

[Bonasababy]

I figure Trumps pick and then his tariff announcement are an example of what we will see in markets--again. WILD fluctuation, high volatility. The pick was loved by the markets which then headed down sharply after his tariff announcement. Just needs to keep his mouth shut but we all know that's an impossible task. Taxes will be interesting--his tax cuts expire and they led to a sharp increase in the national debt--continuing them and increasing any of them--which he is widely expected to do--greatly ramp up the debt. Best way to start easing the debt is to let them expire but that won't happen.

I often try to use historical comparisons with folks who just don't understand the reality of taxes and where we are. "How would you like to go back to the tax rates we had under Reagan?"

Reality-they were much HIGHER under Reagan, especially on the truly wealthy!

 

[VikingsGuy]

A reminder - savers like steady upward markets. Traders need a lot of volatility (and hope it ends upward over the long haul). Volatility they are likely to get for the next 4 yrs. Savers had best buckle up.

 

[RemingtonRules]

Yea, but the DAY AFTER Trump nominated him he went onto media to announce 25 percent tariffs on both Canada and Mexico. And we never produced more oil and natural gas than we have under Biden. I've seen industry doubts we could exceed where we are now or that producers would want to. They want to shorten supplies to raise prices and Trump assured them he'd please them. Of course they could accomplish that by shipping a lot of what our country produces right out of our country, which I believe is their intent. Increase production, but export all of the increase so they can still make their money off of us. Will be fun to watch folks wonder what the h#ll happened. Some of the talk--e.g. resurrecting the Keystone pipeline--which will mostly move canadian oil all the way through and out of our country and will actually raise our prices (at least in the middle of the country) according to experts...is bass ackwards from what people think will happen.

Do you have the source on this info? "And we never produced more oil and natural gas than we have under Biden."

 

[BigHornRam]

https://twitter.com/x/status/1863729977033740550

Imagine the hunting opportunities in our new 51st state!

 

[Sytes]

Public stakeholders are driven by profit.

Trump and Biden refer to national security implications, among other aspects.

Very rare both Democrats and Republicans agree...

“People like me grew up with the view: If people send you cheap goods, you should send a thank-you note. That’s what standard economics basically says,” she said. “I would never ever again say, ‘Send a thank-you note." - Janet Yellin

Another notable reverse of thought:

Nobel Prize Economic Science, Angus Deaton

“I am much more skeptical of the benefits of free trade to American workers and am even skeptical of the claim, which I and others have made in the past, that globalization was responsible for the vast reduction in global poverty over the past 30 years. I also no longer defend the idea that the harm done to working Americans by globalization was a reasonable price to pay for global poverty reduction because workers in America are so much better off than the global poor. I believe that the reduction in poverty in India had little to do with world trade. And poverty reduction in China could have happened with less damage to workers in rich countries if Chinese policies caused it to save less of its national income, allowing more of its manufacturing growth to be absorbed at home. I had also seriously underthought my ethical judgments about trade-offs between domestic and foreign workers. We certainly have a duty to aid those in distress, but we have additional obligations to our fellow citizens that we do not have to others.” - Angus Deaton

Rethinking Economics or Rethinking My Economics by Angus Deaton

Questioning one’s views as circumstances evolve can be a good thing

www.imf.org

 

[jryoung]

Do you have the source on this info? "And we never produced more oil and natural gas than we have under Biden."

Is this a rhetorical question, or do you need a link to EIA.gov or any O&G analyst websites highlighting our dramatic production increases since the Bush Administration/Fracking boom?

 

[WildWill]

https://twitter.com/x/status/1863729977033740550

Imagine the hunting opportunities in our new 51st state!