Big Blue Huddle

Excellent thread and discussion guys. It's encouraging to me to see that there can be a discussion about current events on the Front Porch that is civil and respectful, even if people have differing views. It's great to hear everyone's opinion on an important, topical subject that affects the lives of all Americans.

I will say that as a firm baseline rule, I am no fan of tariffs. I never have been. I am a free market guy, and I don't like anything that stifles competition and, potentially, innovation. So as a base case on this overall topic, I am more with Rich on this subject of tariffs. I think they do more harm than good.

However, I don't have zero sympathy for Bob's points. While I would not say I blanketly agree that longstanding alliances of ours should not be important to us if we don't "get value" out of them, I do think it is a bit tricky to come up with a convincing argument against the concept of reciprocal tariffs with countries who have tariffs on us. If country X is tariffing us 10% on Y widgets, and we currently have zero tariffs on them for the same Y widgets, why is it wrong or a bad idea for us to say "either you bring your 10% down to zero, or we go from zero to 10%"? Why is that not fair?

The reality is there are a lot of complexities to this discussion, and I do get that, but the idea that the US is in the wrong by imposing any tariffs on any countries is not one I automatically agree with (despite generally being no fan of tariffs). We have major trade deficits with a lot of countries, and if that's the case and they have tariffs on our products, why is it wrong to simply say we want it to be an equal playing field? I have a hard time disputing that stance myself.

So while I don't like a lot of what is going on, I am not so binary that I will automatically say anything this administration does is definitively bad. If that were the case, then people should be aggressively criticizing Biden for not removing the tariffs on China for $350b of goods that Trump imposed. He could have gotten rid of those but didn't.

It's not just the tariffs; it's siding with the criminal state of Russia, it's the toxicity, it's the proclaimed expansionist plans, it's the instability.   We, the US citizens, are paying a huge price for the last election.  Here is a prime example of US business suffering (and there is not quick fixes for this sort of damage)


Portugal Drops Plans for F-35 Citing U.S. Political Uncertainty


In an interview with Portuguese media outlet Público published on Mar. 13, 2025, Portuguese Defense Minister Nuno Melo dismissed the possibility of ordering the fifth-generation fighter, aligning with other European nations reconsidering their defense procurement strategies.

Q. Europe is preparing a significant financial package for defence. If the AD government is re-elected, will it approve the purchase of F-35 aircraft?

"The F-16s are at the end of their cycle and we will have to think about their replacement. However, we cannot ignore the geopolitical environment in our choices. The recent position of the United States, in the context of NATO and in the international geostrategic plan, must make us think about the best options, because the predictability of our allies is a greater asset to take into account. We must believe that, in all circumstances, these allies will be on our side. There are several options that must be considered, particularly in the context of European production and also taking into account the return that these options may have on the Portuguese economy."

Q. The Air Force wants this replacement to be made with F-35s, which are American-made aircraft. What you are saying is that, due to the change in American foreign policy, it is less likely that Portugal will replace the F-16s with an American aircraft?

"The world has already changed. There were elections in the US, there was a position in relation to NATO and the world, stated by the Secretary of Defense and by the US President himself, which must also be taken into account in Europe and in what concerns Portugal. And this ally of ours, which has always been predictable over the decades, could bring limitations to use, maintenance, components, and everything that has to do with ensuring that aircraft will be operational and used in all types of scenarios."


https://theaviationist.com/2025/03/13/portugal-f-35-plans/


Each fighter costs between $80 and a $100+ million plus there is all the repeat part sales.   

Fed staff median forecasts call for real gross domestic product growth to be 1.7% by the end of 2025, down from the December forecast's 2.1%, for unemployment to end the year at 4.4%, up from the prior 4.3% and core inflation to conclude 2025 at 2.8%, up from the previous 2.5%.

https://www.forbes.com/sites/dereksaul/2025/03/19/fed-ups-inflation-forecast-and-expects-less-economic-growth-citing-uncertainty/

Americans continue to sour on the US economic outlook as uncertainty around President Donald Trump's policies and higher prices weigh on consumer sentiment.

The latest consumer confidence index reading from the Conference Board was 92.9 in March, below the 100.1 seen in February and the lowest level in more than four years. The expectations index, which is based on consumers' short-term outlook for income, business, and labor market conditions, ticked down to 65.2 from 72.9 and remained below the threshold of 80 — which typically signals recession ahead — for the second straight month.

This marked a 12-year low for the expectations index, which was driven in part by consumer's expectations of their financial situation hitting its lowest level in more than two years.

"One of the most significant developments that we have seen was a decline in financial situation expectations from consumers," Yelena Shulyatyeva, The Conference Board Senior US Economist told Yahoo Finance. "So that seems to suggest that all this uncertainty around economic outlook is really starting to weigh on consumers assessment of how they will fare going forward."

MORE

https://finance.yahoo.com/news/americans-expectations-for-the-economy-hit-their-lowest-level-in-12-years-143308857.html

I believe these tariffs will do wonders for the economy. Already we see numerous big ticket companies committing to building plants in our country which will revitalize areas and create jobs.

If someone charges me 200% tariff then I want to charge them the same 200%.

Time will tell if the policy works or not.

Quote from: Trench on March 25, 2025, 09:28:41 PMAlready we see numerous big ticket companies committing to building plants in our country

How many and which companies?
 

Quote from: MightyGiants on March 26, 2025, 01:14:25 PMHow many and which companies?
 

There is a long list on the official White House website not limited to but including the following

OpenAI/Orackle/Softbank- 500 billion
Apple - 500 billion
TSMC - 100 billion
Nvidia - Hundreds of billions
Stellantis - 5 billion
Ely Lilly - 27 billion
CMA - 20 billion
DAMAC - 20 billion
MERK - 8 billion
Hyundai - 20 billion

Quote from: Trench on March 26, 2025, 06:45:06 PMThere is a long list on the official White House website not limited to but including the following

OpenAI/Orackle/Softbank- 500 billion
Apple - 500 billion
TSMC - 100 billion
Nvidia - Hundreds of billions
Stellantis - 5 billion
Ely Lilly - 27 billion
CMA - 20 billion
DAMAC - 20 billion
MERK - 8 billion
Hyundai - 20 billion

And yet

WASHINGTON, April 1(Reuters) - U.S. manufacturing contracted in March after growing for two straight months, while a measure of inflation at the factory gate jumped to the highest level in nearly three years amid rising anxiety over tariffs on imported goods.
The Institute for Supply Management (ISM) said on Tuesday that its manufacturing PMI dropped to 49.0 last month from 50.3 in February. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.2% of the economy.

Economists polled by Reuters had forecast the PMI slipping to 49.5. Manufacturing started turning around at the beginning of the year after a lengthy recession triggered by the Federal Reserve's aggressive interest rate hikes in 2022 and 2023 to tame inflation. But the nascent recovery appears to have been snuffed out by President Donald Trump's barrage of tariffs.

https://www.reuters.com/markets/us/us-manufacturing-slips-back-into-contraction-tariffs-angst-mounts-2025-04-01/

Quote from: MightyGiants on April 01, 2025, 11:15:16 AMAnd yet

WASHINGTON, April 1(Reuters) - U.S. manufacturing contracted in March after growing for two straight months, while a measure of inflation at the factory gate jumped to the highest level in nearly three years amid rising anxiety over tariffs on imported goods.
The Institute for Supply Management (ISM) said on Tuesday that its manufacturing PMI dropped to 49.0 last month from 50.3 in February. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.2% of the economy.

Economists polled by Reuters had forecast the PMI slipping to 49.5. Manufacturing started turning around at the beginning of the year after a lengthy recession triggered by the Federal Reserve's aggressive interest rate hikes in 2022 and 2023 to tame inflation. But the nascent recovery appears to have been snuffed out by President Donald Trump's barrage of tariffs.

https://www.reuters.com/markets/us/us-manufacturing-slips-back-into-contraction-tariffs-angst-mounts-2025-04-01/

Rich: I also noticed the article today. My first thought was likely NOT whatever you're thinking, but rather how the article is solid evidence we need to do all we can do to invest in restore and rebuild what we used to be - the world's leader in manufacturing. Note: we are STILL the world's leader in manufacturing WITHOUT USING SLAVE LABOR. Bob

Quote from: Bob In PA on April 01, 2025, 01:40:22 PMRich: I also noticed the article today. My first thought was likely NOT whatever you're thinking, but rather how the article is solid evidence we need to do all we can do to invest in restore and rebuild what we used to be - the world's leader in manufacturing. Note: we are STILL the world's leader in manufacturing WITHOUT USING SLAVE LABOR. Bob

Yesterday, Japan and South Korea formed an alliance with China to combat US tariffs and other trade sanctions. I wonder how that alliance will help the US economy or grow manufacturing.

We have seen tariffs raise prices and kill business.   What exactly is it about the manufacturing sector that you think is worth blowing up the US economy and potentially triggering another worldwide great depression just to artificially grow it (and pay higher prices for the goods produced)?

Quote from: MightyGiants on April 01, 2025, 01:47:05 PMYesterday, Japan and South Korea formed an alliance with China to combat US tariffs and other trade sanctions. I wonder how that alliance will help the US economy or grow manufacturing.

We have seen tariffs raise prices and kill business.   What exactly is it about the manufacturing sector that you think is worth blowing up the US economy and potentially triggering another worldwide great depression just to artificially grow it (and pay higher prices for the goods produced)?

First, we don't give a rat's ass what alliances form. The hard (and immutable) fact is that we have a trade deficit with almost every country of note. They can try to make alliances, but the reciprocal nature of the tariffs will then just be adjusted to (generally speaking) treat all of the member parties of the alliance as a single country in determining what tariff percentage will be charged to ALL of them. Do you see how this counteracts any alliance?

Second, bringing back manufacturing is essentially to undoing all the damage to the rust belt (and other) states that were once "manufacturing-heavy" (and world leaders). THOSE are the people who've been crushed as jobs "migrated" to (for example) Mexico, Canada and China, starting about twenty years ago (generally speaking).

Just look at the groups who used to vote for one party and now vote more so for the other to see who is desperate for help (at least in the financial sense). Let me know if I failed to address your concern fully and completely.

Bob

Quote from: Bob In PA on April 01, 2025, 02:40:15 PMFirst, we don't give a rat's ass what alliances form. The hard (and immutable) fact is that we have a trade deficit with almost every country of note. They can try to make alliances, but the reciprocal nature of the tariffs will then just be adjusted to (generally speaking) treat all of the member parties of the alliance as a single country in determining what tariff percentage will be charged to ALL of them. Do you see how this counteracts any alliance?

Second, bringing back manufacturing is essentially to undoing all the damage to the rust belt (and other) states that were once "manufacturing-heavy" (and world leaders). THOSE are the people who've been crushed as jobs "migrated" to (for example) Mexico, Canada and China, starting about twenty years ago (generally speaking).

Just look at the groups who used to vote for one party and now vote more so for the other to see who is desperate for help (at least in the financial sense). Let me know if I failed to address your concern fully and completely.

Bob

1)  When you look at GDP per country, the US can't afford to take on the world.  The alliance I spoke of and the EU easily exceeded the US GDP

2) The rust belt is not the site for any of the supposed new manufacturing locations that Trench listed

3) Runaway inflation and unemployment actually hurt people more than it helps.  There is no doubt many mistakenly believed the political claims that despite the overwhelming majority of economists saying tariffs are bad and economically damaging, they would be good things.

Sadly (as I said before), our economy can't be fooled by political tactics.  The reality is between the economic instability inflicted on our economy, the tariffs, the retaliation, and ill will being created (like how many billions will be lost when Canadians don't vacation in the US this summer), we are going to have a real-world bad impact on our nation and no amount of spin will change that.

Quote from: MightyGiants on April 01, 2025, 02:56:50 PM1)  When you look at GDP per country, the US can't afford to take on the world.  The alliance I spoke of and the EU easily exceeded the US GDP

2) The rust belt is not the site for any of the supposed new manufacturing locations that Trench listed

3) Runaway inflation and unemployment actually hurt people more than it helps.  There is no doubt many mistakenly believed the political claims that despite the overwhelming majority of economists saying tariffs are bad and economically damaging, they would be good things.

Sadly (as I said before), our economy can't be fooled by political tactics.  The reality is between the economic instability inflicted on our economy, the tariffs, the retaliation, and ill will being created (like how many billions will be lost when Canadians don't vacation in the US this summer), we are going to have a real-world bad impact on our nation and no amount of spin will change that.

(1) Gross GDP has significance, but trade balance has more. We have deficits with all the major players.

(2) Just because I didn't mention Michigan and Ohio doesn't mean I don't consider them part of the rust belt. It's true, a lot of the "sunny" states are gobbling up the new large manufacturing chunks, but the people who live in Arizona, Texas, Florida, etc., are Americans, too.

(3) Inflation takes time to reverse (must seem like years, but the new policies are only weeks old. I've already addressed unemployment, but I'll add the obvious...building factories takes time. The "overwhelming majority of economists" (as you say, correctly) predicted the doom and gloom in 2017, 2018 and 2019. They were proven to be DEAD WRONG then (talking about the tax cut bill) and the same group of losers is again wrong.

To quote you... "...our economy can't be fooled by political tactics..." I don't know what you're calling political tactics (I truly don't care so don't bother explaining), but we are talking here about economic policy. However, I do promise you I will remember your final paragraph above and remind you that you said it ... when the time is right.

He who laughs last, laughs best.

Bob

Quote from: Bob In PA on April 01, 2025, 03:15:24 PM(1) Gross GDP has significance, but trade balance has more. We have deficits with all the major players.

(2) Just because I didn't mention Michigan and Ohio doesn't mean I don't consider them part of the rust belt. It's true, a lot of the "sunny" states are gobbling up the new large manufacturing chunks, but the people who live in Arizona, Texas, Florida, etc., are Americans, too.

(3) Inflation takes time to reverse (must seem like years, but the new policies are only weeks old. I've already addressed unemployment, but I'll add the obvious...building factories takes time. The "overwhelming majority of economists" (as you say, correctly) predicted the doom and gloom in 2017, 2018 and 2019. They were proven to be DEAD WRONG then (talking about the tax cut bill) and the same group of losers is again wrong.

To quote you... "...our economy can't be fooled by political tactics..." I don't know what you're calling political tactics (I truly don't care so don't bother explaining), but we are talking here about economic policy. However, I do promise you I will remember your final paragraph above and remind you that you said it ... when the time is right.

He who laughs last, laughs best.

Bob

Bob,

We have had a trade deficit for the last 50 years.  So why suddenly take drastic and dangerous actions over an issue that hasn't really hurt our number one (by a good margin) economy?

Bob, to your point number two, you specifically said the actions being taken would help the Rust Belt.  How does people living in Texas, Florida, and Arizona, being Americans, help the Rust Belt?

Inflation takes time to reverse- it had been reversing most of the past year and is now going in the other direction.

Bob, I know you didn't want an answer, but ignoring economists and economic theory is in the political playbook.

Look, when it comes to investing and the economy, I am a political atheist. In fact, I think it's the pragmatic, fact-based, and critical-thinking nature of finance and investing that attracted me to learn more and enjoy listening to podcasts on the subject (and becoming an investor).  It appeals to the logical side of my brain.

Quote from: MightyGiants on April 01, 2025, 03:48:47 PMWe have had a trade deficit for the last 50 years.  So why suddenly take drastic and dangerous actions over an issue that hasn't really hurt our number one (by a good margin) economy?

I think you meant to say "after 50 years of AMASSING A MULTI-TRILLION DOLLAR national debt, why take action now? This answers your question. As for "danger," what danger? Danger that we might sell some wine in France? Their tariff on our wine is 800%, and that's just one of thousands of examples. By comparison, 25 percent doesn't appear "drastic" (another word you used).

Quote from: MightyGiants on April 01, 2025, 03:48:47 PMBob, to your point number two, you specifically said the actions being taken would help the Rust Belt.  How does people living in Texas, Florida, and Arizona, being Americans, help the Rust Belt?

There is ALSO a goal to reduce the national debt. Just because ONE goal is to help people in the rust belt doesn't rule out helping elsewhere too. It all goes to reduce the national trade imbalance and thereby reduce how much we owe.

Quote from: MightyGiants on April 01, 2025, 03:48:47 PMInflation takes time to reverse- it had been reversing most of the past year and is now going in the other direction.

"Reversing" for most of 2024, yes, but only after increasing wildly for THREE preceding years, all the while, the same group of "expert" economists upon whom you so heavily relied in your prior post, told us inflation was transitory. After a while, when WRONG enough times, experts lose their credibility.

Quote from: MightyGiants on April 01, 2025, 03:48:47 PMBob, I know you didn't want an answer, but ignoring economists and economic theory is in the political playbook.

Sincerely, Rich, that is not a political maneuver.  There are (simplifying things dramatically) two schools of economic thought. One is Keynesian economics. The other is monetarism.  To save space and hopefully not bore anyone here who deigns to read my dribble, just google "what theory opposes Keynesian economics?" It's not a political thing, and monetarism was proven to work during 2017, 2018, 2019 and would have continued to work in 2020 if not for COVID.

Quote from: MightyGiants on April 01, 2025, 03:48:47 PMLook, when it comes to investing and the economy, I am a political atheist. In fact, I think it's the pragmatic, fact-based, and critical-thinking nature of finance and investing that attracted me to learn more and enjoy listening to podcasts on the subject (and becoming an investor).  It appeals to the logical side of my brain.

Excellent. 99 out of 100 for that paragraph. One point deducted because use of the word "political" was unnecessary (and IMO meaningless, in that context). Remove it and you nailed it.

Bob