The trade and economy mega-thread (4 Viewers)

[superchuck500]

Is there a trade deal with China? Is it really a deal or just a pull-back to status quo ante? Is Trump advancing US interests in this well-executed trade battle plan or was this poorly conceived from the start . . . and harmful?

I think the jury's still out, but I haven't seen that the Chinese are offering much in compromise - and it's not even clear if there's going to be an agreement. But it's clear they are working on something and I'm sure Trump will sell it as the greatest trade deal ever. The proof will be in the details.

 

[efil4]

Thanks

I thought that the importer does pay the tariff they just add it to the price so the consumer does end up paying it

If the product doesn’t sell because if the higher price it is the importer who eats the extra cost

Is that right?

Yes.
And guess what happens if the importer eats 20% on 5000 widget order?

Won't have that happen again. Next order will be 500. And if he eats any of that, no more orders til demand spikes.

Now you have a supply demand issue

 

[efil4]

I literally build industrial facilities and have for twenty plus years.

I am the project executive, and sign all of the payment applications and I create the budget and approve the schedule.

Nobody is going to build shirt.

Unless the market is expanding a la Data Centers, they will just raise their prices.

The rule of thumb cost of constructing an industrial building is between $150 and $400 per square foot depending on the dock door style and count, the overall site power needs etc.

You are investing in something that is at least 75k square feet, or you are a retailer and don't count. So let's go low and put your base build project cost at $11.25MM. That is just for the (relatively) very small building and doesn't actually produce anything yet. Bank payments begin after the entitlements phase so add about $2-3 million to the cost to build.

Timeline for a facility to come on line, starting at Due Diligence on the dirt, is no shorter than 18 months. If you have a technical build (hospital, food processing) or a particularly difficult AHJ you can double - even triple - that timeline.

Equipment is going to cost at least half, if not more than the building itself (it depends on what you are doing of course. Brewery equipment is 2:1 more expensive than the building. Semi-conductor is 10:1).

So let's say we are making jeans and call it a cool $20MM all in. For a tiny site mind you. Companies at this scale are not publicly traded and cannot use equity as a lever unless they plan on taking on a very vocal partner - mostly likely a VC (vulture capitalist) or a bank if you are in good standing. Either way they are now telling you how to run your business. ROI is 36 - 48 months from signing so pray you don't have a schedule delay or you will find yourself having to claw back your business as an employee.

Or you can complete a TI on an existing facility. Pay triple net lease and deal with a LL. Your TI has to be doubly approved now (AHJ and LL) and you are at the mercy of the dreaded "existing conditions." But since a TI doesn't include the cost to build, you can likely move in on the same project for like $15MM. ROI is 30 months and under now as you only have equipment to buy so the terms of lending are very different. Depreciation is only 5 years so your equipment better be paid off before that.

This is all to say that the cost to add production is incredibly high and comes with massive risk to the existing operation.

In this instance it would be asinine to expand. Like you should be fired for trying to fill this vacuum. Nobody is building a GD thing that they weren't already going to build.

There is no new market. It's the same market with less suppliers. Which means raising prices, not Capex. This is simple Econ 101.

So anyone with a delusion that this is going to spur growth doesn't know the first thing about manufacturing capex.

Haribo opened a production facility 2 years ago in Wisconsin.

500,000 sq ft mfg facility.

Wanna guess how many employees?

 

[Poison]

Trump following through on his threat to implement a 104% tariff on China is unbridled economic vandalism. Does he not understand that China makes so much of what the world needs and consumes and has the political system to withstand an economic downturn in a way that he can't?

Given we are 12 to 18 hours ahead down here, the ASX has been a useful bellweather as to how the European and US markets will respond during this unfolding crisis. The answer based on three hours of trading activity this morning is: not good, very bad.

 

[efil4]

Trump following through on his threat to implement a 104% tariff on China is unbridled economic vandalism. Does he not understand that China makes so much of what the world needs and consumes and has the political system to withstand an economic downturn in a way that he can't?

Given we are 12 to 18 hours ahead down here, the ASX has been a useful bellweather as to how the European and US markets will respond during this unfolding crisis. The answer based on three hours of trading activity this morning is: not good, very bad.

He doesn't care at this point.

He is backed into a corner now. China has refused to budge and negotiate. Like I posted on EE thread, they are much more prepared to engage in a trade war, citizens as well. They have been circulating JD Vance video clip saying " We borrowed money from Chinese peasants to buy products made by Chinese peasants". That alone is galvanizing.

We are a consumption based citizenry. The top US companies that rely on China: (no particular order)

Apple
Walmart
Tesla ( 100% batteries come from China)
Boeing
GM
FORD
Nike

And Quallcomm and Micron tech for revenue.


Apple -90% of iPhone is China. This is going to unwind Apple like we have never seen.
Walmart-70-80% of goods come from China


This is nuts.

 

[superchuck500]

The US bond market tonight showing big weakness, possibly indicating sell interest from abroad.

 

[Optimus Prime]

Donald Trump has claimed world leaderspanicked by his gargantuan global tariffs are “kissing my a**” in desperate bids to reduce the levies.

The president made the bold remark during a 90-minute address as he attempted to court political donors at the National Republican Congressional Committe’s annual fundraising dinner in Washington, D.C. on Tuesday evening.

“These countries are calling us up, kissing my a**” to negotiate deals on tariffs, Trump said just hours before his reciprocal duties went into effect against dozens of nations just after midnight on Wednesday, including a 104 percent levy on Chinese imports.

“They are,” he emphasized. “They are dying to make a deal.”

The president went on to mock the tariff-deal supplicants, pretending to be them as he pitifully pleaded in a simpering voice: “Please, Sir, make a deal. I’ll do anything. I’ll do anything, Sir.”

Trump failed to explicitly mention which countries were allegedly attempting to cozy up to him. Despite Trump’s claims, a number of countries including China and Canada are launching counter-tariffs on U.S. goods…….

Trump, however, bragged that he had the “most successful 100 days in the history of this country.”

According to the president, the stage is now “set for a monumental victory for the Republicans in the midterms” on account of his policies. Most mainstream economists and business experts argue they will supercharge inflation and threaten America’s status as the world’s leading economy with a grievous self-inflicted wound.

Trump maintains that he is correct and everyone else is wrong about the dangers of tariffs.

“I know what the hell I'm doing,” he told the audience. “I know what I'm doing, and you know what I'm doing too.”………

Trump brags world leaders are ‘kissing my a**’ and celebrates ‘great Hannibal Lecter’ at NRCC dinner​

https://www.independent.co.uk/news/...riff-arse-kissing-nrcc-hannibal-b2729968.html

 

[Optimus Prime]

Now Fox News is suggesting Trump could win Nobel Peace Prize over tariffs

‘Is there a Nobel Prize in trade? I don’t know, but maybe he might be up for that one,’ Fox News anchor John Roberts declared on Tuesday

www.independent.co.uk

I think Trump is really really bothered by Obama's Nobel

 

[Dragon]

Donald Trump has claimed world leaderspanicked by his gargantuan global tariffs are “kissing my a**” in desperate bids to reduce the levies.

The president made the bold remark during a 90-minute address as he attempted to court political donors at the National Republican Congressional Committe’s annual fundraising dinner in Washington, D.C. on Tuesday evening.

“These countries are calling us up, kissing my a**” to negotiate deals on tariffs, Trump said just hours before his reciprocal duties went into effect against dozens of nations just after midnight on Wednesday, including a 104 percent levy on Chinese imports.

“They are,” he emphasized. “They are dying to make a deal.”

The president went on to mock the tariff-deal supplicants, pretending to be them as he pitifully pleaded in a simpering voice: “Please, Sir, make a deal. I’ll do anything. I’ll do anything, Sir.”

Trump failed to explicitly mention which countries were allegedly attempting to cozy up to him. Despite Trump’s claims, a number of countries including China and Canada are launching counter-tariffs on U.S. goods…….

Trump, however, bragged that he had the “most successful 100 days in the history of this country.”

According to the president, the stage is now “set for a monumental victory for the Republicans in the midterms” on account of his policies. Most mainstream economists and business experts argue they will supercharge inflation and threaten America’s status as the world’s leading economy with a grievous self-inflicted wound.

Trump maintains that he is correct and everyone else is wrong about the dangers of tariffs.

“I know what the hell I'm doing,” he told the audience. “I know what I'm doing, and you know what I'm doing too.”………

Trump brags world leaders are ‘kissing my a**’ and celebrates ‘great Hannibal Lecter’ at NRCC dinner​

https://www.independent.co.uk/news/...riff-arse-kissing-nrcc-hannibal-b2729968.html

Whenever Trump claim someone is begging him and calling him "sir" it is a clear sign that he is lying. It has been that way for years.

 

[RobF]

Whenever Trump claim someone is begging him and calling him "sir" it is a clear sign that he is lying. It has been that way for years.

True. I mean, I'm sure countries are talking about deals, because that's a constant, but you know, in a rational, trying to be polite while talking to someone being insane, way.

That said, I don't like some of the moves the EU is reportedly making though. E.g.:

EU drops plans to hit American bourbon with retaliatory tariffs

Drink removed from draft list after lobbying from whiskey-making Ireland and wine-producing Italy and France

www.theguardian.com

Bourbon and wine have been removed from a draft list of US goods that will be subject to EU retaliatory tariffs in response to Trump’s duties on steel and aluminium announced last month, according to a leaked list first reported by Reuters.​

...​

France, Italy and Ireland protested against their inclusion after Trump threatened a counter-punch on learning of the threat to bourbon last month. On social media on 13 March, he warned of “a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES”.​

Because the message that sends is, "threaten ludicrous 200% tariffs on something and we'll back down," which is not a great message to send someone like Trump.

They really just need to hold the line for a bit, because the higher prices are going to kick in and people will not be happy.

 

[Dragon]

Now Fox News is suggesting Trump could win Nobel Peace Prize over tariffs

‘Is there a Nobel Prize in trade? I don’t know, but maybe he might be up for that one,’ Fox News anchor John Roberts declared on Tuesday

www.independent.co.uk

This is absolute madness. What Trump is doing is isolating the United States from the rest of the world.

Who does he think will still want to trade with the U.S. when there are so many other options? Europe, Asia, and Oceania are already strengthening trade ties among themselves, actively pursuing agreements that reduce dependency on American markets.

In fact, recent data shows a significant sell-off of U.S. Treasury bonds by foreign holders, particularly in Europe and China—an indication of declining confidence in the stability and reliability of the U.S. economy.

• According to U.S. Treasury data, foreign holdings of U.S. debt fell sharply in 2023, with countries like China and Japan reducing their positions.
• The EU has been pushing forward with trade deals, including the EU-New Zealand agreement (entered into force in 2024) and deepening ties with ASEAN, Mercosur, and India.
• The Regional Comprehensive Economic Partnership (RCEP) in Asia, the world’s largest trade bloc, excludes the U.S. entirely.

If this trajectory continues, America risks becoming increasingly irrelevant on the global economic stage—by its own design.

 

[Dragon]

True. I mean, I'm sure countries are talking about deals, because that's a constant, but you know, in a rational, trying to be polite while talking to someone being insane, way.

That said, I don't like some of the moves the EU is reportedly making though. E.g.:

EU drops plans to hit American bourbon with retaliatory tariffs

Drink removed from draft list after lobbying from whiskey-making Ireland and wine-producing Italy and France

www.theguardian.com

Bourbon and wine have been removed from a draft list of US goods that will be subject to EU retaliatory tariffs in response to Trump’s duties on steel and aluminium announced last month, according to a leaked list first reported by Reuters.​

...​

France, Italy and Ireland protested against their inclusion after Trump threatened a counter-punch on learning of the threat to bourbon last month. On social media on 13 March, he warned of “a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES”.​

Because the message that sends is, "threaten ludicrous 200% tariffs on something and we'll back down," which is not a great message to send someone like Trump.

They really just need to hold the line for a bit, because the higher prices are going to kick in and people will not be happy.

Agree. Besides France and Italy should not worry because consumers will want to support European products over US made products so what they lose in the US they will gain in the EU

 

[superchuck500]

 

[Optimus Prime]

I literally build industrial facilities and have for twenty plus years.

I am the project executive, and sign all of the payment applications and I create the budget and approve the schedule.

Nobody is going to build shirt.

Unless the market is expanding a la Data Centers, they will just raise their prices.

The rule of thumb cost of constructing an industrial building is between $150 and $400 per square foot depending on the dock door style and count, the overall site power needs etc.

You are investing in something that is at least 75k square feet, or you are a retailer and don't count. So let's go low and put your base build project cost at $11.25MM. That is just for the (relatively) very small building and doesn't actually produce anything yet. Bank payments begin after the entitlements phase so add about $2-3 million to the cost to build.

Timeline for a facility to come on line, starting at Due Diligence on the dirt, is no shorter than 18 months. If you have a technical build (hospital, food processing) or a particularly difficult AHJ you can double - even triple - that timeline.

Equipment is going to cost at least half, if not more than the building itself (it depends on what you are doing of course. Brewery equipment is 2:1 more expensive than the building. Semi-conductor is 10:1).

So let's say we are making jeans and call it a cool $20MM all in. For a tiny site mind you. Companies at this scale are not publicly traded and cannot use equity as a lever unless they plan on taking on a very vocal partner - mostly likely a VC (vulture capitalist) or a bank if you are in good standing. Either way they are now telling you how to run your business. ROI is 36 - 48 months from signing so pray you don't have a schedule delay or you will find yourself having to claw back your business as an employee.

Or you can complete a TI on an existing facility. Pay triple net lease and deal with a LL. Your TI has to be doubly approved now (AHJ and LL) and you are at the mercy of the dreaded "existing conditions." But since a TI doesn't include the cost to build, you can likely move in on the same project for like $15MM. ROI is 30 months and under now as you only have equipment to buy so the terms of lending are very different. Depreciation is only 5 years so your equipment better be paid off before that.

This is all to say that the cost to add production is incredibly high and comes with massive risk to the existing operation.

In this instance it would be asinine to expand. Like you should be fired for trying to fill this vacuum. Nobody is building a GD thing that they weren't already going to build.

There is no new market. It's the same market with less suppliers. Which means raising prices, not Capex. This is simple Econ 101.

So anyone with a delusion that this is going to spur growth doesn't know the first thing about manufacturing capex.

Thanks for this

Do you have a rough idea of what that would do to the price of a product?

If a widget made overseas is sold in the USA to the consumer for $100 and with tariffs would go up to say $120

If this factory was built here what do you think the same widget but made here by American workers would cost?

$200? $300? more than that?

 

[efil4]

The US bond market tonight showing big weakness, possibly indicating sell interest from abroad.

China, Japan and Taiwan, combined, hold close to $2.6 T - trillion - in US Treasuries.

Just those 3 alone.


and i pulled this from your second post in the comments

China Restricts Companies From Investing in US as Tensions Rise

(Bloomberg) -- China has taken steps to restrict local companies from investing in the US, according to people familiar with the matter, in a move that could give Beijing more leverage for potential trade negotiations with the Trump administration.Most Read from BloombergMetro-North Is Faster...

finance.yahoo.com

Trump filed bankruptcy owning a CASINO. A !@!@#!# CASINO - and folks think he knows what he is doing.

 

[UriUT]

China, Japan and Taiwan, combined, hold close to $2.6 T - trillion - in US Treasuries.

Just those 3 alone.

Japan said they won't use them as negotiating leverage with current tariffs. They are saving it for later use.

https://www.reuters.com/markets/asia/japan-rules-out-using-us-treasury-holdings-counter-trump-tariffs-2025-04-09/

Who is unwinding?

https://www.bloomberg.com/news/articles/2025-04-09/treasuries-fire-sale-sends-long-term-yields-soaring-worldwide?embedded-checkout=true

Canada too denied claims they sold US Treasuries as well.

 

[efil4]

Japan said they won't use them as negotiating leverage with current tariffs. They are saving it for later use.

https://www.reuters.com/markets/asia/japan-rules-out-using-us-treasury-holdings-counter-trump-tariffs-2025-04-09/

Who is unwinding?

https://www.bloomberg.com/news/articles/2025-04-09/treasuries-fire-sale-sends-long-term-yields-soaring-worldwide?embedded-checkout=true

Canada too denied claims they sold US Treasuries as well.

i cant open Bloomberg- who are they saying is selling?

 

[UriUT]

i cant open Bloomberg- who are they saying is selling?

They don't know. Just theories atm. China is the guess

In other markets, European and Asian stocks tumbled again, with Europe’s Stoxx 600 sinking about 3%. However, S&P 500 futures were little changed. Some traders pointed to the fact that China hasn’t immediately responded to the new US tariffs as some hint of a respite in the trade war. The dollar weakened and Brent crude dropped toward $60 a barrel.

Another theory has been that hedge funds being forced to rapidly unwind positions, like in the case of the basis-trade blow-up of 2020, might also be fueling additional market turmoil. Some pointed to the abrupt collapse of a popular wager that Treasuries would perform better than interest-rate swaps.

 

[efil4]

They don't know. Just theories atm. China is the guess

its the proverbial "warning shot across bow" - stay on current heading, and the next one wont miss.