Investing General Discussion

Lambourne said:

Shoes if you want just one example, they are almost 100% imported and the capability to manufacture them in numbers required to meet demand does not exist within the country. So a tariff is effectively a tax hike on shoes. Coffee and pepper are other examples.
A lot of it is indirect effects too. If you hire a guy to cut down a tree that job is not subject to a tariff but if the chainsaw and shoes he uses are imported, that's still going to drive up his cost of business.

The hope is that businesses will move factories to the US but (as rightly expressed by others in this thread) who wants to risk building a factory that costs tens of millions when it's dependent on tariffs to compete with Asian factories and those tariffs can be wiped away instantly by either this administration or the next?

The usual way to deal with that is for the government to sign a contract with the manufacturer that guarantees compensation if the tariffs are rescinded, or they guarantee to buy a certain number of products at price X for Y years. This moves the financial risk from the business to the taxpayer which has its own issues.

Even if it all pans out and 10 years from now all shoes are made in America, they will be made by American workers that command a higher wage so the shoes will be more expensive. Even if you like that from a political point of view, it's still costing you money that you can't spend on something else.

I suggest you ignore anyone that paints any of this as a straight win or loss. It's complicated and there are tons of second and third order effects that no one can fully predict.

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Gurgeh said:

Well, China said "game on", so it's going to hurt. A lot.

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Lambourne said:

Shoes if you want just one example, they are almost 100% imported and the capability to manufacture them in numbers required to meet demand does not exist within the country. So a tariff is effectively a tax hike on shoes. Coffee and pepper are other examples.
A lot of it is indirect effects too. If you hire a guy to cut down a tree that job is not subject to a tariff but if the chainsaw and shoes he uses are imported, that's still going to drive up his cost of business.

The hope is that businesses will move factories to the US but (as rightly expressed by others in this thread) who wants to risk building a factory that costs tens of millions when it's dependent on tariffs to compete with Asian factories and those tariffs can be wiped away instantly by either this administration or the next?

The usual way to deal with that is for the government to sign a contract with the manufacturer that guarantees compensation if the tariffs are rescinded, or they guarantee to buy a certain number of products at price X for Y years. This moves the financial risk from the business to the taxpayer which has its own issues.

Even if it all pans out and 10 years from now all shoes are made in America, they will be made by American workers that command a higher wage so the shoes will be more expensive. Even if you like that from a political point of view, it's still costing you money that you can't spend on something else.

I suggest you ignore anyone that paints any of this as a straight win or loss. It's complicated and there are tons of second and third order effects that no one can fully predict.

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Flobee said:

In order to get domestic asset prices (houses specifically but stonks too) into a range that the younger generation and working class more generally can participate foreign capital needs to leave our system. Thats exactly what Trump is doing, we're getting what we ordered with him. Foreign capital is no longer welcome in US assets and this is part of getting from where we are to where we're trying to go.

IMO whole investment perspective for everyone in US at least needs to dramatically change. We're entering an entirely new system and hard assets are going to be the backbone of that system. Valuations will revert to something approaching a historical norm. Bubble poppin' and it seems like nobody* in the investment world is actually listening to what Bessent, Lutnik, Trump etc are trying to tell them.

EDIT: Personally expecting inflation to rip pretty hard next few years (asset prices too) but wages should rip harder domestically if they do this right. Will have to see how it plays our

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Gravel said:

This is why it's all so complicated, and no one really knows the answer.

In absolute terms, yes, the shoes will be more expensive. But if you expand all of this out to the entire US economy and we're keeping extra billions (or trillions) within the country instead of outside of it, does everyone's income increase so much that now the relative price of those shoes is actually significantly cheaper, while the quality of them also goes up?

It's the tough question that globalism makes incredibly hard to answer. Right now every US worker is competing in a global economy. Yeah, you obviously can't win against some brown kid who's making pennies a day. But if we insulated ourselves, does that factory worker getting $30/hr to make socks now have a standard of living significantly above where they would be otherwise and everyone is better off (a rising tide lifts all boats)?

Edit: Post above in conjunction with this one. The Trump administration is attempting to make us truly independent. Yeah, we'll still participate in the global economy, but it's time we invested in ourselves.

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Burnem Wizfyre said:

Everyone in my household have multiple pairs of shoes around 10, I won’t be hiring a guy to cut down any trees and I have my own pole saw and yard equipment, I mowed and trimmed my trees as well as power washed my driveway sidewalk house and the windows, cleaned my gutters, had to get all my shit done, new league this weekend.

My coffee prices are going to go up, how much? More than what they already went up during the Biden administration? I already feel relief at the grocery store, my wife used to joke her weekly trip to the grocery store was like making a car payment(450) now it’s an insurance payment (300) one thing the Biden administration taught me was to be frugal and not spend on stupid stuff, nothing you said even remotely makes me blink.

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Falstaff said:

Congrats, you are the one person who isn’t going to be effected by global tariffs on consumer goods and services.

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