Launching a strategy-less trade war has consequences: f*** around & find out what happens when you make trade policy as a side-effect of performance art: China loses $4 billion a week that it has...
“…negotiations over the final tariffs that China and other countries must pay are still being negotiated by President Trump.” What? Is this the L.A. Times economics reporter? China’s not paying tariffs. Countries don’t pay tariffs. Firms importing goods pay tariffs. Consumers pay tariffs.
Well, he probably is just not THAT firmly committed to commercial transparency, so it was not a big ask. Probably something the consumers should demand like labeling things “organic” or “non GMO.”
"Empty shelves so soon after Covid may have a far more deleterious effect than they would have had sans the virus."
That's a really interesting observation.
Of course there will be cultists denying how bad it is, and there will be other cultists saying that it's the necessary price to pay to restore American greatness after decades of demoncrats selling us out.
But given Trump's already sinking popularity, and the prominence of tariffs, and the relative suddenness of the blow (very reminiscent of the retail effects of Covid), I suspect a comfortable majority will be quite clear as to who did this.
How does Trump survive that, other than by steamrolling democracy?
I agree with the other commentators so far: namely, that this is a textbook-worthy demonstration of the importance of not overlooking complexity and jigsaw-puzzle-like linkages in the economy. That for want of a nail the kingdom might be lost is often evident in the realm of frontier technologies (Mariana Mazzucato territory), but is more easily overlooked when it comes to things seemingly mundane, like shoes.
"... the physical commodity has to be at the core. No physical commodity, and all of the other service-sector components of value—the use-exchange wedge, retail, wholesale, transportation, design, organizational services, and all the rest—vanish into nothingness."
"All that is not solid melts into air" was *right there*, Brad.
“Laurence Darmiento: Traffic at the Port of Los Angeles set to plunge amid tariffs <https://www.latimes.com/business/story/2025-04-24/traffic-at-the-port-of-los-angeles-set-to-plunge-amid-tariffs-disruption>: ‘Imports at the Port of Los Angeles are expected to plunge in the next two weeks, even as negotiations over the final tariffs that China and other countries must pay are still being negotiated by President Trump. That was the sobering message that port Executive Director Gene Seroka had Thursday for the Los Angeles Board of Harbor Commissioners during an update on port activity. “It’s my prediction that in two weeks’ time, arrivals will drop by 35% as essentially all shipments out of China for major retailers and manufacturers have ceased, and cargo coming out of Southeast Asia locations is much softer than normal,” Seroka told the board…”
"Deregulation would help. There is a bestselling new book about it. :)"
Some regulations are well intentioned but poorly designed.
Some regulations made sense when they were implemented but are obsolete.
Some regulations address real problems but have been distorted by regulatory capture into something that, at best, does nothing, and at worst protects incumbents.
But if we look at worker safety, or environmental standards, or product safety (just to list a few categories), I assume from my time in goverment 24 years ago that there are plenty of regulations where the social value from reduced harm is greater than the cost of the regulation. There are probably even some where the cost to GDP is negative (that is, the regulation is making the GDP itself bigger) because it's preventing that harm other GDP-creating activities.
There's always room to improve things by modernizing some regulations and scrapping others.
How confident are you that this particular crew is going to do _that_, rather than just eliminate the ones that annoy them, with no effort to analyze the economic impact of those decisions?
Your write up on the value chain of Nike running shoes is fun and insightful to read. Thank you. Americans will become ever more informed on tariffs and their effect with the help of insightful writers like yourself. Again, thanks.
Thanks you again Brad for your insight. I never quite made the connection between how imports could have a multiplier effect on the much larger domestic economy. Nice, easy to understand example.
This post was truly " Value Above Replacement". Thank you.
“…negotiations over the final tariffs that China and other countries must pay are still being negotiated by President Trump.” What? Is this the L.A. Times economics reporter? China’s not paying tariffs. Countries don’t pay tariffs. Firms importing goods pay tariffs. Consumers pay tariffs.
And when Amazon was going to show the tariff, Trump complained and Amazon backed down.
Yeah, that was incredibly craven (but not surprisingly craven).
There used to be the concept of "f*** you money" - having enough dough that nobody could make you do anything you didn't want to do.
Possibilities here:
1. Bezos wants more dough than he has, and he needs Trump's blessing to keep operating and having his wealth go up.
2. Bezos is aware of some way that Trump can make him less rich - enough less rich so that it would matter to him.
3. Bezos wants want Trump is trying to create.
4. ...?
Well, he probably is just not THAT firmly committed to commercial transparency, so it was not a big ask. Probably something the consumers should demand like labeling things “organic” or “non GMO.”
A wonderful description of the labor/services chain standing aside each product. Thank you.
PTSD is a funny little beast (I know as my family almost died in a house fire 8 years ago and it still sometimes rears its head).
Empty shelves so soon after Covid may have a far more deleterious effect than they would have had sans the virus.
"Empty shelves so soon after Covid may have a far more deleterious effect than they would have had sans the virus."
That's a really interesting observation.
Of course there will be cultists denying how bad it is, and there will be other cultists saying that it's the necessary price to pay to restore American greatness after decades of demoncrats selling us out.
But given Trump's already sinking popularity, and the prominence of tariffs, and the relative suddenness of the blow (very reminiscent of the retail effects of Covid), I suspect a comfortable majority will be quite clear as to who did this.
How does Trump survive that, other than by steamrolling democracy?
I agree with the other commentators so far: namely, that this is a textbook-worthy demonstration of the importance of not overlooking complexity and jigsaw-puzzle-like linkages in the economy. That for want of a nail the kingdom might be lost is often evident in the realm of frontier technologies (Mariana Mazzucato territory), but is more easily overlooked when it comes to things seemingly mundane, like shoes.
What's the supposed basis for deregulation boosting GDP by that much?
"... the physical commodity has to be at the core. No physical commodity, and all of the other service-sector components of value—the use-exchange wedge, retail, wholesale, transportation, design, organizational services, and all the rest—vanish into nothingness."
"All that is not solid melts into air" was *right there*, Brad.
Posts like this remind me why I am a paid subscriber.
Precisely.....
April 29,2025
“Laurence Darmiento: Traffic at the Port of Los Angeles set to plunge amid tariffs <https://www.latimes.com/business/story/2025-04-24/traffic-at-the-port-of-los-angeles-set-to-plunge-amid-tariffs-disruption>: ‘Imports at the Port of Los Angeles are expected to plunge in the next two weeks, even as negotiations over the final tariffs that China and other countries must pay are still being negotiated by President Trump. That was the sobering message that port Executive Director Gene Seroka had Thursday for the Los Angeles Board of Harbor Commissioners during an update on port activity. “It’s my prediction that in two weeks’ time, arrivals will drop by 35% as essentially all shipments out of China for major retailers and manufacturers have ceased, and cargo coming out of Southeast Asia locations is much softer than normal,” Seroka told the board…”
It has been 2 weeks now.
Is there an update?
Has tourism by the ports also been affected?
There are 12 ports in California.
But the Fed ought to thinking about drooping rates in its March (oops May) meeting, explaining that the resulting inflation is necessary to deal with the Voluntary Trade Reset Recession. https://thomaslhutcheson.substack.com/p/voluntary-trade-reset-recession
"The Trump administration claims deregulation and tax policy will boost the 86% of the economy that are not imports"
Deregulation would help. There is a bestselling new book about it. :)
Tax policy however, adding another trillion dollars per year to the deficit is of course hugely destructive of growth as is immigration policy.
Trump took the three big failures of Biden -- trade, deficits, immigration, and made them exponentially worse.
"Deregulation would help. There is a bestselling new book about it. :)"
Some regulations are well intentioned but poorly designed.
Some regulations made sense when they were implemented but are obsolete.
Some regulations address real problems but have been distorted by regulatory capture into something that, at best, does nothing, and at worst protects incumbents.
But if we look at worker safety, or environmental standards, or product safety (just to list a few categories), I assume from my time in goverment 24 years ago that there are plenty of regulations where the social value from reduced harm is greater than the cost of the regulation. There are probably even some where the cost to GDP is negative (that is, the regulation is making the GDP itself bigger) because it's preventing that harm other GDP-creating activities.
There's always room to improve things by modernizing some regulations and scrapping others.
How confident are you that this particular crew is going to do _that_, rather than just eliminate the ones that annoy them, with no effort to analyze the economic impact of those decisions?
Your write up on the value chain of Nike running shoes is fun and insightful to read. Thank you. Americans will become ever more informed on tariffs and their effect with the help of insightful writers like yourself. Again, thanks.
Thanks you again Brad for your insight. I never quite made the connection between how imports could have a multiplier effect on the much larger domestic economy. Nice, easy to understand example.