I'm not an economist. In fact, I hate money. I hate that it exists. Almost every terrible man-made thing in the world can be traced to someone wanting more money and or power.
I feel like I'm going crazy. I feel like I'm Peter Beale from Network.
Donald Trump is a bully. He always has been, always will be. He bullied his brother mercilessly, often dismissing the skills it takes to be a pilot, which drove his brother to alcoholism and an early death. He's had 3500 lawsuits against him for not paying contractors and essentially saying, "Sue me, my money will outlast yours in court." So you have a bully and a liar in charge of the country with the largest military in the world.
On top of that, Trump is not a smart guy. He's not a smart business man. He's filed for bankruptcy six times (Trump Taj Mahal, Trump Plaza Hotel, Trump Hotels and Casino Resorts, Trump Entertainment Resorts). He's had failed businesses like Trump's Steaks and Trump University, some of which were quick grifts to take money from less fortunate, some of which were bad ideas. There's an entire Wiki page dedicated to his businesses, failings, and crimes.
So when I started hearing Trump on the trail talking about how great tariffs were, I had to go back to my 9th grade social studies class to confirm, "Oh, anyone that isn't rich is going to get f-cked by these."
Again, I felt like I was going crazy hearing how many people were on board with tariffs. (Later finding out that most people don't understand tariffs)
Trump would lead you to believe in tariffs alone, we can get rid of income tax and the government can still function. Most economists say there's not a trading world where we can even pay for our military, let alone everything else using tariffs alone. (Luckily, thanks to Elon Musk, we won't have many government departments and services that need funding in the near future)
Wired has been doing some fantastic journalism and they spoke to an economist to break down an example of what is about to happen to us. This is from "Tariffs are going to make your electronics more expensive."
Here's an example from Jason Miller, a professor of supply chain management at Michigan State University: Let’s say a laptop costs $400 at import in the US. A retailer would then add an average gross margin rate of 30 percent—how much revenue the retailer retains after deducting the cost to produce or acquire the item—and that laptop will now cost $571. That's the price you'll pay at a big box store.
China exports a lot of laptops to the US, and now we have to factor in the tariff. The following math was based on the 104 percent tariff that went into effect on April 9, but the White House has now bumped that tariff up to 125 percent. Based on historical data that suggests 95 percent of the tariff is absorbed by the importer, the initial 104 percent tariff causes the import price to jump by $395 to $795, and if the retailer passes those costs to you, the new total you'll pay at the store is $966. That represents 69 percent inflation, and the retailer's gross margin rate is lowered to 18 percent. Basically, you pay more, and the retailer earns less.
Most of our electronics come from Vietnam, Taiwan, Japan, China, and India, all hit with high tariffs. So that $900 iPhone is no more, it'll be more like $1200/$1300.
The lusted after Nintendo Switch 2 pulled their preorders for North America because the tariffs are changing so often. Originally was going to be $339 (which is still is in Japan), it's now estimated to be $449 in the US... IF those tariffs don't go up further.
Most videogame cartridges and disks are pressed in Mexico. The big three already raised prices to $70 a game last year to offset production costs. Well, with the tariff, videogames are now $80 and because game companies don't want to piss off retailers like Target, the digital versions of the games are also going to be $80.
And the worst part is, when this inevitable tariff experiment fails and Trump somehow blames Biden for the tariffs and he rolls them back, those prices will never go down.
There's never been a company in the history of the world that sees that people get used to spending a certain amount, inflation catches up, costs get cheaper, and they say, "Golly gee, this is great, let's reduce the price for this product." Absolutely not. The CEOs pocket that profit. The shareholders make a ton of money. But the consumer continues paying $1200 for that iPhone.
And if it were just electronics, OK, update your phone less often, get better at repairing your laptops, it would be better for the world anyway not to have all that electronic waste.
Well, tariffs are coming for medication. The US already pays more for medicine than any other country in the first world, and now they're going to tack these on? My brother is already on specialized drugs that are $40 some months and $500 others depending on if his insurance wants to cover them. All of our cloths hit too. Our food.
The items that we import the most from China are all going to get hit by tariffs:
- Furniture
- Shoes and apparel
- Microwave ovens
- Silverware, plates
- Blinds, linens, and curtains
- Toys
- Solar panels
- Building materials, like vinyl flooring
- Cashews
- Candles
- Fans
- Air conditioner parts
- Golf clubs
- Exercise equipment
- Keyboards
- Auto parts
- Christmas ornaments and Home Decor
- Toilets
- Food blenders
- Seafood
The United States very rarely produces something 100%. That ship sailed. Companies found it much cheaper to exploit labor in other countries and ship everything here, than manufacture here. That's not coming back to the US.
If manufacturing plants get built here, they will be built with maximum amount of automation. There won't be jobs.
The stock market is going to crash. We are likely headed for another recession, the forth one I've lived through as an adult.
What happens then?
- Stock market crashes
- Rich share holders aren't happy because line always has to go up
- We lose jobs. Yes, the people provided the goods, not making the decisions lose jobs. Not the CEO or the share holders. The workers do.
- Those lucky ones that keep their jobs get less of a raise. Not matching the cost of living.
- Those people have to choose between food, shelter, clothing, so they sell their house
- House gets scooped up by private equity (Some estimates saying private equity will own 30% of all houses by 2030)
- Housing prices go up.
- No one can afford to buy houses, so they start renting, so the rich get richer. Now the poor don't have equity so they can't get a bank loan.
- Private equity is happy. Except there's a problem... there's not enough product to invest 100% in the housing market anymore. they created too much competition for each other.
- So the rich are now buying up small farms. Some using Vice President J.D. Vance's app, AcreTrader. (It's not his app, but he's a heavy investor)
- Stock market continued to go down, but then rich people buy up dirt cheap stock
- Stock market starts going up
- Rich are richer, middle-class and poor just lost years of financial progress
- And now the poor are so thankful for any scraps the rich give them that wages keep going down, working conditions get worse, and next thing you know there are Libertarians trying to bring back child labor in Florida
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