I'm a bit confused about the bit about the "Imports expanded 37.9%, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points" bit.
Presumably when they calculated GDP previously, they hadn't seen quite as much imports, but had seen higher spending, thus they misattributed some of it to domestic products rather than imports, though I'm a bit confused as to how they underestimated imports given everything is declared. Perhaps some changes in the price index?
Though other articles talk about the expected GDP next quarter being higher because they don't expect a surge of imports to continue, which makes no sense to me unless one assumes spending remains the same with or without imports.
stolen from investopedia: The GDP formula is commonly expressed as GDP = C + I + G + (X - M), where C is consumer spending, I is business investment, G is government spending, and (X - M) represents net exports (exports minus imports). This formula helps measure the total economic output of a country during a specific period.
Our tariffs are tampering with the intelligent monitoring of GDP growth. When the USA expanded tariffs to 155% with China it was effectively an embargo, so imports went away (but exports didn't) and our GDP looked amazing. When the tariffs were brought back to previous rates of 55%, companies bought every import they could (or had them released from bonded warehouses) which has pumped the GDP in the other direction. And it'll likely be the same situation next month because Chinese ports are seeing record numbers as US companies try to buy every piece of inventory they can before these tariffs go back up.
One of the most upsetting things about our current state of governance is gamed metrics and lack of a national metrics "dashboard."
Metrics are gamed as marketing tools rather than assessment tools. There's a clear conflict of interest in the government presenting the metrics that it says to judge them by.
Unemployment is another gamed metric. If you want to get a sense of unemployment, a graph of % employed tells you more than some gamed number like "unemployment" since "unemployment" is a direct measure of political success.
Consumer spending/GDP are also directly used to measure political success, and a metric like "aggregate Visa/Mastercard purchases" is going to give a much better sense of how much people are spending.
During COVID, all cause mortality is a superior metric than COVID attributed deaths because any death attributed to COVID represented a failure of public health policy. We even saw direct attacks on public health monitoring in Florida.
It seems like the only ways to combat this are either states presenting their own metrics to imply national trends based on their own. I definitely wonder what kind of information we could get that is accurate and not gamed to create our own dashboards. Geohot's use of national energy consumption to estimate national productivity was sharp and the type of thing I wish journalists would do.
I don't think you know the space very well. Go to FRED, it is the largest of many that is a fantastic unbiased dashboard of governmental and societal data for the US. They even have almost the exact data that you would say is useful about CC spending. Here is all of the data that they publish about credit cards[1]. It has a lot more data than just the aggregate data from two of the credit card providers.
The people that gather and publish the data are historically pretty unbiased and open about methods. You can go get the raw data and methods. Some of the places that publish them like FRED, are not even under direct political jurisdiction. They are not at all the part of the government that is affected by the data they publish, and being run by a reserve bank puts them at pretty far reach from meddling by DC.
You can't stop politicians from using the data they like most, but don't pretend that ALL of the data isn't available in useful format.
It's not the data, it's the media narrative. No one cares if there are detailed breakouts of key economic indicators available somewhere obscure [1] if most people get their opinions from the media, and the media are in the propaganda and marketing business, not the truth-to-power business.
[1] Not media-quoted or foregrounded for the public.
That's a goal-post shift. GP were complaining that accurate, fulsome statistics aren't there, when they are.
The media narrative is out of the control of the various statistics bodies, and it is up to the informed reader to seek out better sources if the article they are reading has scanty info. For the record though, FRED is frequently cited as a source in reputable mainstream media (I see it in the NYT all the time). Read The Economist some time, that's an international news source that will deeply report on these stats. Can't be helped if people prefer Fox or other garbage as their news diet.
You are complaining about media literacy and bad journalism, which is an entirely separate issue from the fact that the data both exists, and is extremely easy to access.
It feels like both things can be true at once: the raw data is often accessible and methodologically sound (shoutout to FRED, BEA, BLS, etc), and the interpretation or prioritization of metrics by politicians and media can completely skew public understanding.
The frustration isn’t about access it is about trust.
People want metrics that reflect lived reality and can’t be spun or redefined every election cycle.
>being run by a reserve bank puts them at pretty far reach from meddling by DC.
Study the path other autocrats blazed for Trump, who is following and mimicing their tactics pretty closely now. Aggressive Fed interference is on his agenda, as can be seen by the way he likes to keep his fights with Powell constantly in the news cycle.
Politicians brag about the U-3 unemployment (that they've gamed), but actual economists look at U-6 (unless they need to do a comparison going back a century, when U-6 didn't yet exist).
During covid politicians bragged about covid attributed deaths, while public health experts were discussing all cause mortality.
This is the case everywhere. Quality metrics are absolutely out there - you just have to give enough of a shit to look at them.
GDP, consumer spending, unemployment are some of the most inspected numbers in the world. Not only are they rigorously defined and tested by the government and academia there are whole swaths of finance attuned to them.
And no one who uses them seriously doesn’t understand their weaknesses. At a macro level all signals have flaws, knowing what they are and how to deal with them is the whole job of many people.
You can find huge swaths of research comparing and contrasting the ADP number vs the official bls stat but no one serious thinks ADP is _better_ than the the headline unemployment number because it can’t be gamed.
>Metrics are gamed as marketing tools rather than assessment tools.
Macro metrics are marketing tools largely.
In Australia we had a long period of "Lower Taxes" Vs "Lower Taxes (As a proportion of GDP)" The issue being that the latter didnt actually lower taxes, they just spent more money, increasing GDP.
These metrics are helpful sometimes in review. But in terms of targets they suck.
The calculations are 100% transparent. Reminds me of the red hat crowd bleeting about how the numbers are "adjusted." Like it's some kind of conspiracy. It's all well known. If you understand it and choose not to like it, well ignore it and cook up your own stat. You can find the formulas and get the data. No secrets.
From what I understand from Econ 101, this is not true. The only reason you subtract imports is to avoid double counting because presumably the import was done by C, G or I.
The point of subtracting imports is so that it doesn't count as domestic production, and effectively zeros out the portion of C + G + I that was not produced domestically, but thats independent of how much is in exports.
That’s true (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight).
But you can’t change the process mid way through your measurement. We don’t have a way of measuring “consumption of domestic products” so we just measure consumption and subtract the imports afterwards.
X-M is an accounting trick, but when you’re using this model you have to stick with it.
The idea that imports were deferred causes this accounting trick to show its weakness. (Presumably, looking at the data for all of 2025 when it’s available will “low pass” the deferred imports)
I'm not sure I understand. What process is changing? The "accounting trick" doesn't stop working.
Let's try a very simple example of buying all our inventory in one quarter and selling it in another - what is supposedly behind our GDP woes.
Let's say in Q1, the only spending was on $1 trillion of imports into private inventories, thus: I=$1 trillion, C=$0, G=$0, X=$0, M=$1 trillion. That gives us a GDP of $0.
Next quarter, flush with product there's no need to import anymore and the entire inventory is somehow sold domestically, thus: I=-$1 trillion, C=$1 trillion, G=$0, X=$0, M=$0. That gives us again, a GDP of $0.
Yet articles claim that the GDP in Q2 would be higher due to the drop in imports and was reduced in Q1 due to an increase in imports.
Don't you always measure GDP using spending (for convince / accuracy of price) so if you import $1 trillion and don't sell it then the GDP is $-1 trillion?
So Q1 is $-1 trillion and Q2 is $1 trillion?
IIRC, Investment is more of I bought machinery to make socks not I have 100 nintendo switches.
> (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight)
damn, my clothes are heavy, because I know how much I weigh.
> The GDP formula is commonly expressed as GDP = C + I + G + (X - M), where C is consumer spending, I is business investment, G is government spending, and (X - M) represents net exports (exports minus imports).
Imports don't actually subtract from GDP. They are subtracted inside the GDP formula to make sure they aren't counted toward the country's production, basically.
Logically it makes sense: If you import something, it was not produced within the country. Therefore you need to make sure it's not counted in GDP. However, the starting values for GDP calculation are sum total type numbers, so you have to manually subtract out imports.
This proves endlessly confusing for journalists and even politicians who see the subtraction sign and conclude that "imports subtract from GDP"
That seems very strange to me that GDP is the same, when import:export is 4:3 or 3:2, but explains why someone would care more about the difference than the absolute values.
They're accounting identities, not casual relationships. Exports are stuff that's part of domestic product (but not consumed domestically) so get added. Imports are stuff domestic consumers get the benefit of but aren't actually produced domestically, hence the direction of the signs in the accounting identity. The 4:3 ratio is consistent with an economy which might be more open than a 3:2 one, but it doesn't actually have a higher GDP unless there's higher consumption or investment or government spending as a result of the extra trade.
The key part is that nobody should care about any values or ratios in isolation or impute causality that isn't there. Otherwise people start believing that doing crazy stuff to shrink a trade deficit results in higher GDP, as opposed to lower C+I+G. And when those people are sufficiently stubborn and sufficiently powerful, you get $economy shrank 0.5% in the first quarter headlines...
Quarterly GDP, since it's measured via global approximation, isn't meaningful in quarters when the economy is rapidly changing. The numbers only make sense over time periods where behavior is relatively steady.
Spending did not keep up; if it had, the net effect on GDP would be zero.
This is companies stocking up, and the items are in inventory. They will sell it over the next quarter or so, at which point the tariffs will really weigh.
I've heard this from a number of buyers for companies, that their companies have hugely held stockpiles, to avoid the tariff uncertainty in hope they get worked out before stockpiles run out... most of the ones i've talked to say its only gonna last a few months before shit really hits the fan
My company did that. Along with rushed some deliveries that weren't 100% ready to avoid the sudden spike in tariffs.
I also personally did that for expensive gear I was otherwise planning on waiting on. And now I'm not going to be buying that over the next 2-5 years like I was originally planning.
It's a big bolus of spending that will not be replicated in the future.
In the quoted statement, they're reasoning from an accounting identity because they don't understand the underlying measure. There's a kernel of truth, but it's much more complicated than that.
Imports are subtracted from the GDP calculation, BUT, that's only because they're added in the equation as well as part of consumption/investment/government spending. So to capture only the domestic production, since it's hard to measure consumption/investment/government spending only on domestic inputs, you just measure them overall, add exports, and subtract imports.
So people see that in the equation imports are literally subtracted as a variable, and reason that if imports go up $X, that means GDP literally goes down by that amount. In reality — ignoring for a moment that we sometimes mismeasure consumption/investment/government spending, the net effect in the equation is 0.
ON THE OTHER HAND, in one way part of the GDP drop here is because of imports. It's not something you can cleanly calculate the way journalists often try to, because there's a lot we don't know, but picture this simplified example:
I'm a factory owner, and my factory uses a lot of inputs that we import from China. We normally spend $50k/quarter on investment (maintenance, new machines, etc.). But next quarter my short-term cost of Chinese inputs may double. It may make sense for me to front-load imports ahead of tariffs and defer as much investment as possible. I can't do that forever, so eventually the money will show up in the equation more-or-less where it would have otherwise.
And on top of that, there are a bunch of confounding factors. Over time, imports also make domestic production more efficient, so shifting to less-efficient US inputs (or simply paying the tariff) will slow the rate of overall growth. And some costs are passed on as higher prices, which reduces demand, and therefore reduces growth. And importing goods also means exporting dollars, which affects exchange rates, and therefore affects exports as well. It's all interconnected.
Calling it out when they reason from an accounting identity is really important, because it's a lot of what drives the misconceptions of Trump's protectionist advisors — they use the same reasoning in reverse to say that anything that reduces the trade deficit therefore increases GDP. But that's only true in an accounting sense! Reality takes more complex modeling, and has to account for all the interconnected pieces.
However Economists tend to struggle with flow effects, and Noah is no exception.
Trade deficits are exports of money as static savings, and that reduces money in flow within the USD currency area. Deliberately, as that is how neo-mercantalism operates. The impact is on the income/expenditure sequence, not the aggregate figures - which are massaged by the reporting currency effect.
As you point out, there's no purchase level data about what's imported vs. not.
The way this is handled is that this quarter's imports are set against this quarter's consumption - basically the method assumes the import/domestic mix of business inventories stays the same (true enough in the long run, very incorrect in short term shocks).
That's why extremely disingenuously the AP says:
>Trade deficits reduce GDP. But that’s just a matter of mathematics. GDP is supposed to count only what’s produced domestically, not stuff that comes in from abroad. So imports — which show up in the GDP report as consumer spending or business investment — have to be subtracted out to keep them from artificially inflating domestic production.
Answer:
What happened here[1] is that the BLS makes a bunch of assumptions to get data out in time (preliminary figures based on historical seasonal trends, etc.) but this quarter, their assumptions about consumer spend were far too aggressive.
It happens all the time, especially in strange times like 1Q was, but there's also career/political incentive to be aggressive on the advanced data, since that's what drives the big headlines.
Given how many layoffs there have been and how much bad economic news has been coming out, I am quit surprised that we are not in a full blown technical recession. Even the DJI is touching historic highs and bond yields are down.
I know I sound like an armchair economist, which is probably why I am on here ranting instead of on a tropical beach with super models name Brooke and Tiffany, eating lobster and beluga caviar, washing it all down with fine champagne.
I can only assume that the last 5 years have been so solid for the economy that we have a long way down to go before we even begin to feel pain.
Structural demographics. ~13k-14k workers leave the labor force every day, through a combination of retirement and death. Beat on the economy hard with these terminal interest rates and tariffs, demand for labor will still exceed supply.
Sorry, but the widely accepted definition of a technical recession is typically identified by two consecutive quarters of negative growth in real gross domestic product (GDP). Tuesday is the cut off date for the quarter and that will determine if the US is in technical recession.
Nothing to worry about - life in the year 1990 was good, and that was with an inflation-adjusted GDP per capita just 59% of current (2023) value [1]. So we would need 82 of such 0.5% drops until things got as "bad" as in the year 1990.
Because GDP is a meaningful quality of life indicator.
It’s not just tariffs that are the issue… quite a few people from other countries have stopped coming to the US and are avoiding buying US products where possible
I don't blame them. My wife got her US citizenship very recently (like two months ago), and historically I have thought that was going to allow me to finally have a sigh of relief after years of fighting with and thousands of dollars spent for the immigration system in the US.
Now Republicans are actively trying to denaturalize people so they can be deported. I have no idea how successful that will actually be but the fact that there's an active attempt for it is enough to trigger anxiety for me.
If this is how they're treating naturalized citizens, I certainly cannot blame people for not visiting the US on a tourist visa; who the fuck knows what would happen to them? They're detaining tourists for bald JD Vance memes [1], I would stay the hell away from America and spend my vacation money elsewhere.
It really depresses me. I love the US. I was born here. I live here. Much as I love visiting Europe, I haven't really wanted to live anywhere else than the US, but I fear that this active hostility towards our foreign trading partners might cause permanent and irreparable damage. For the first time in my life, I have seriously started to consider moving me and my wife to a different country, which I hope I don't have to do but I am genuinely scared that they're going to detain my Mexican-immigrant wife.
[1] I know that CBP is denying that it was because of a meme, but instead because of drug use, but in this particular case, legitimacy doesn't matter. If it's believable that I could be detained in a country because I texted a meme to my friends, there's absolutely no way in hell I am visiting that country.
No one is safe. It took quite a while to bring the one guy they sent to El Salvador on the obviously photoshopped faked evidence he was a gang member in MS13, and they claim they have the right to send US citizens there as well where it will be easy to deny a lot of legal rights like habeas corpus or sixth amendment.
Yep. I didn’t think I would ever need it, but I have an immigration attorney saved, for myself, in case they actively try and denaturalize anyone who has ever said anything bad about Trump, which I have in many places.
Not sure how much it would help if shit hits the fan but it’s sort of surreal regardless.
I’ve never seen this level of anti-American sentiment in Canada in my whole life.
One thing I have my eye on is how hard consumer habits are to change. For example, American alcohol is simply gone from store shelves in Ontario. I can only imagine how much marketing work went up in the wind now that consumers have adapted. Returning the product to the market is probably not even the hard part.
On avoiding travel: One doesn't have to make a principled decision, it's entirely rational to avoid travel to the USA.
There's a growing body of holiday makers with neither a criminal record nor evidence of carrying a banned substance, who have been turned away from the USA for nothing more than the vibes of the CBP. In some cases these people were strip searched and thrown into federal prison without any kind of evidence and no wrongdoing whatsoever.
An informed person would be right in holidaying elsewhere, otherwise it's a gamble if they will lose the money paid for their holiday and flights.
On avoiding business with the USA: The tariffs and their mercurial changes create a type of instability where a USA-based vendor, at random, may no longer be able to fulfil their contract. It's incredibly damaging for our American partners.
The border situation is quite harmful to tourism, to the point where advice is being issued to be careful traveling to the USA. Its not a new thing except in scale either. The same shit was happening as far back as 2015, it just keeps getting worse. And from what I can tell, news reports about how hostile the US is to tourists, doesnt get airtime in the US. People seem shocked or think I am joking when I share story after story of people wrongfully apprehended at the border.
Trust that I and lots of others in Europe — and especially Scandinavia — are boycotting US products — the most basic one I can think of is coca-cola, instead I buy "freeway", ie Lidl's inhouse brand, and I don't think I am going back.
Freeway is honestly pretty competitive with Coke in taste. I haven't tried the sugary stuff but I have had a fair amount of their sugar-free drinks and I think they're actually quite good. Slightly differently than Diet Coke/Coke Zero, but not really "worse".
Foundation of US economy is domestic consumption. The current administration has significantly increased taxes - in the form of tariffs - on that consumption. So, the results are and are going to be as expected by any economy textbook.
Additional obvious effect of tariffs is introducing friction, to say the least, into supply chains, similar to how pandemics did at the beginning with about the same result - inflation and loss of productivity.
I personally have no panic here though - during my quarter of century here i noticed that US economy is extremely resilient and can take a lot of hits and damage, can even get knocked down, yet nothing can get it knocked out, and it would always come back even more roaring. It is though very hard on those who gets the sharp end of stick here, i'd wish that the society would get a bit more empathetic to them.
The hope, at least, is that the tariffs will encourage the creation of more, better, jobs in the US through re-shoring. This would, in theory, also increase domestic consumption though the time frame is longer.
The entire field of economics demonstrates the opposite. The result of tariffs will be fewer and worse jobs in the US, with everyone's standard of living going down.
>the tariffs will encourage the creation of more, better, jobs in the US through re-shoring
that isn't possible for any production other than a primitive one. The modern production is very complicated, and in particular contains long lists of components, materials, tools, technological stages of production and engineering services. I.e. it is a pyramid with very wide base. Even large country like US is too small to maintain all what is required for any even moderately complicated product. Tariffs are kind of shrinking the pyramid's base - the result is lower pyramid so to speak.
Of course, you and anybody welcome to bring counter-examples.
>This would, in theory, also increase domestic consumption
It would increase prices, and decrease productivity thus resulting in lower consumption.
Dell used to make computers in the US. Then they moved manufacturing to China. You're saying Dell can't make computers in the US ever again? If the economic incentives are there then the supply chains can be (re-)built, right?
How quickly did they move to China? Decades, right? Coming back takes that kind of timescale because everything needs to align – making PCs means that they need suppliers for every component, and those factories inputs, and logistics keeping factories’ production synchronized, and a lot of different skilled labor categories which aren’t trivially available. If you’re setting up a factory in the Midwest assembling parts from China, all you’re doing is ensuring that the results cost more and none of the key businesses are likely to come back because tariffs won’t make a factory competitive outside of the country.
You can encourage the whole thing to move but it needs to be a carefully considered long-term plan with strategic investments and ongoing investment. That’s the opposite of what we’re seeing now with tariffs changing every time an octogenarian gets cranky, and his party is trying to slash investments rather than grow them. No business is going to assume that any promise made will last for a business quarter, much less the years needed, and without some major funding commitments nobody is going to jump to line up tens of billions in financing.
how much of the value chain was actually in the US back then, and, how much could feasibly move to the US?
Even in the 90s, major components were made in Taiwan and Japan. And since that time, the US ability to make what we did previously has atrophied
What do we really get out of Dell moving PC manufacturing to the US if every single part they consume was manufactured in China or Taiwan? Final assembly is the lowest value part of the equation. Apple already did this shell game with the Mac Pro a few years ago and it didn't last long nor did it have a meaningful impact on anything other than the price of the product
similar like with networks the value of supply chain grows with its size, ie. more competing suppliers decrease the prices and increase the productivity and efficiency. It also lowers the risks of failing suppliers, and the supply risk is also an additional cost.
So, you suggest to rebuild supply chain hosted by the "technologically civilized" half+ of the world, i.e. by 4B+ of people, in a country of 340M. I.e. a supply chain at least 10x smaller, with at least 10x less competition (or the alternative - same number of suppliers 10x smaller in size). We all know what happens when there is 10x less competition. (and the alternative is even worse - the suppliers being 10x smaller in size is a loss of manufacturing efficiency which comes and goes with the scale of mass production and probably isn't possible at all as small suppliers usually quickly fail and/or scooped by larger ones, especially given that their addressable market is also 10x smaller)
> You're saying Dell can't make computers in the US ever again?
The person you are replying to said no such thing.
Yes, of course, in isolation, some manufacturers can build new factories. Not overnight. Not in a year, if the supply chain is remotely complicated.
Okay, lets say Dell, who moved their manufacturing out of the US nearly two decades ago, succeeds with their factory building and starts building here. Great! What are they building? Are they fabbing 100% of the components that are going into these computers they are building? Absolutely not.
Realistically, it's not a new user, since they're making a throwaway. It's someone on the site that just didn't want this post associated with their main account.
nickff: I agree it was borderline. My sentiment was closer to suggesting we look past tone to how shocking the content is. The human brain tries to normalize things, but a statement like this would have been unprecedented before 2016. People would have resigned or been fired, it would have been a scandal.
I think the comment you replied to was criticizing the "/rofl". These shallow reaction/dismissal comments really are turning this site into the hell-hole that Reddit already is.
The top-level comment added nothing to the conversation that this site is supposed to be about. We are supposed to assume that commenters read thee article, and if they did, a LOL, ROFL, or WTF doesn't move the conversation forward.
The problem with shallow dismissals in general is that it is a low bar for a comment. The problem with shallow dismissals in the context of someone else's work is that it's invalidating something which should be celebrated. They're both problems for different reasons. A comment explaining why one thinks the quote is ridiculous is more substantive than simply laughing at it.
> A comment explaining why one thinks the quote is ridiculous is more substantive than simply laughing at it.
The problem is if you do the work of analyzing the overt liars' statements, people will then pick on that for being too inflammatory. Never mind the downvotes from the true believers that are still gulping down the Kool-aid.
The current White House press statements are often bullshit, but most of the above statement is at least directionally true. Unemployment is still at historically low levels and has been flat for a year. US Real Average Hourly Earnings are up, and the latest CPI data shows a 12-month inflation rate of 2.4% (not seasonally adjusted).
This is needlessly combative. They were asking a different person this question...
But a better question might be. "Why is apnews an unreliable source for this information."
General distrust of a news outlet doesn't mean that the given article is false. I've seen some questionable shit from the BBC, though I generally trust them.
I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
I get a lots of moving parts from China, assemble those together and sell in a one single product on US soil and outside (imagine a watch made out of 2,000 parts). As it turned out with 25% tariffs, it turned out that there is another charge that is related to "processing fee". On most $10 items that fee was $17. Obviously make no economical sense. So doing a quick economics of sale, and knowing each separate package is a separate "processing fee" we would have to bump up my price some 30,000%. So instead of doing so, which wouldn't make any sense, we have moved the whole production to Europe. Tariffs are non-existent and even with 24% VAT (local tax) it is way cheaper to produce your merch and then send it to USA, in one complete piece, if anyone wants to buy on a US soil. The only inconvenience is the package takes about 10 days of delivery, no other differences. My company located in Texas is letting go the final employees at the end of this month, some 45 emps. We had offer current emps to move to Europe but noone wanted or had proper credentials to work on EU soil. Our choice was this OR closing down the whole company. I imagine many other corps and in similar position.
Can you explain to me why you continue to believe a serial liar? I really want to understand why people keep hanging on his every word when everything out of his mouth is a lie or some form of manipulative language. He told over 30,000 lies in his first term alone [1].
I'm truly sorry it's hit the workers where you are, that really sucks.
I think a key thing is he often states multiple sides of an issue depending upon the audience and even people who I’ve seen interviewed who heard both say they just disregard the parts they disagree with - it’s a level of cognitive dissonance approaching double think in 1984, IMHO.
> Noone in their right mind will start building factories in USA because of temporary tariffs that all might go away with an executive order and a stroke of a pen comes January 2029.
(I checked because the story just smells weird...)
> I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
Even if you assumed that, you started at step 1 and didn't think past that.
Let's assume China pays the tariff. Is China going to eat that? They will probably pass it onto the seller.
OK now what? Let's say before the tariffs, their total unit cost is $5, and they sell it to you for $10 (I'm just making stuff up here).
Tariffs were 145% at some point. So China pays $14.50. China passes it onto the seller, now the total unit cost is $19.50. They lost $9.50.
Are they in the business to lose money with every sale? No.
However, that presents a problem. The tariff they paid? It's higher than the price they sold it to you. That will remain the same regardless of the price you have to pay. Even if they charged you $1mil, they could not make a profit, because the tariff would be $1.45mil.
So, yeah, you were very much wrong. The idea is not only unrealistic, it is mathematically impossible if the goal is to actually make money when tariffs are 100% or more.
Yes, because we're supposed to believe that China having a surplus of manufactured goods constitutes a liability, and our need for manufactured goods constitutes a strength. So with our good strong healthy mentally competent leader, China will soon be paying us to take their products. Noted experts like Ron Vara have explained this in depth. </s>
I assumed, like President said, that it will be China, not me, who pays the tariffs.
“Man on the street” doesn’t know how tariffs work (or at least believes the bullshit), and I’m not surprised. But I’m truly surprised that someone running a business fell for this, especially given the person saying it.
So you employed 45 employees to do assembly work but bought each of 2000 parts one at a time so the processing fees were meaningful? Surely if the revenue supports that staffing, you should import by the pallet or container?
Like all the other sibling comments, just... sigh.
I did not assume any such thing.
My current home remodeling project with new siding and windows and so on, I've had to pay ~$2K extra in tariffs on just the materials for my soffits (planks of Canadian cedar). Boils my blood in anger.
Since there was a lot of confusion in some people/president heads about VAT: this is more or less the equivalent of Sales Tax that you can have in the US. The rate is different depending on which country you are in (in France the main rate for most products is 20%).
If you are traveling or sell in Europe: in Europe, it is generally expected (or even mandatory) that customers are displayed the price all taxes included.
You should really assume by default that whatever that guy says, the opposite is true. Don't give any money to anyone claiming to be a Nigerian Prince.
> The only inconvenience is the package takes about 10 days of delivery, no other differences. My company located in Texas is letting go the final employees at the end of this month, some 45 emps.
That's sad for those employees in Texas, but relatedly, why were you manufacturing in Texas before? Was it just quick delivery or were labor rates lower in Texas?
Based on your description, your product sounds like it requires highly skilled assembly labor.
How much would labor rates have to fall in Texas for you to move manufacturing back despite the tariffs?
> I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
Folks were screaming it from the rooftops for months prior to the election. So many folks, yourself included, refused to accept reality and now we all suffer the pain.
I would say "Maybe folks will learn!" But I know they won't. US voters as a bloc seem to have an incredibly short memory. They'll forget about all of this pain and stupidity within moments of Trump leaving office.
> The fact that the stupid person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with a person, but with slogans, catchwords and the like, that have taken possession of him. He is under a spell, blinded, misused, and abused in his very being.
I spend a lot of time (too much, apparently) chatting with MAGA folks and this is a stunningly accurate description. It really is just pre-programmed slogans. You see it now even in Congressional hearings of cabinet members, which is fucking horrifying.
Thanks for sharing your real world experience, it helps in seeing how regular folk are affected by policy decisions.
I understand from your post that you are a business person, buying product, performing value added services and selling for profit. Although I know little about business, I would guess that if one of your suppliers raised the prices on one of the inputs to your finished goods, you would likely increase the price of your product to preserve your profits and continue your business as a venture. I would guess that you would not pay the additional cost out of your own pocket.
My question is; why did you not expect the same logic to play out in the tariffs situation? That any country would pay the additional cost of doing business out of their own pocket and not pass it on to the consumer?
What this administration's model of tariffs completely misses is how fungible labor and manufacturing are in the world now. Business is as much about strength of information as strength of arm or strength of steel. It's hard to believe they had any professionals in the room when they came up with this "protectionist" scheme.
A good analogy a friend once gave me was that there are two ways to build a car in the US. You can tool up an industry ecosystem where you can gather (or produce) base materials and then shape and combine them into small parts, make the small parts into larger parts, do final assembly, and roll them off an assembly line. Or, you can take about as much land as you'd use for that, maybe a bit less, and grow corn. Lots of corn. Lots and lots of corn. Then you put that corn on a boat. Ten months later, that boat comes back with cars on it.
When the world is that varied a place, one country trying to jam its finger in the dkye via tariffs is a fool's errand. The economy will interpret artificial cost as damage and route around it.
It is deeply uncharitable to assume that someone is willfully ignorant. And frankly it is toxic to polite discussion to make accusations like that. Please consider extending charity to people if your goal is to have a constructive discussion rather than a quarrel.
I'm a bit confused about the bit about the "Imports expanded 37.9%, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points" bit.
Presumably when they calculated GDP previously, they hadn't seen quite as much imports, but had seen higher spending, thus they misattributed some of it to domestic products rather than imports, though I'm a bit confused as to how they underestimated imports given everything is declared. Perhaps some changes in the price index?
Though other articles talk about the expected GDP next quarter being higher because they don't expect a surge of imports to continue, which makes no sense to me unless one assumes spending remains the same with or without imports.
stolen from investopedia: The GDP formula is commonly expressed as GDP = C + I + G + (X - M), where C is consumer spending, I is business investment, G is government spending, and (X - M) represents net exports (exports minus imports). This formula helps measure the total economic output of a country during a specific period.
Our tariffs are tampering with the intelligent monitoring of GDP growth. When the USA expanded tariffs to 155% with China it was effectively an embargo, so imports went away (but exports didn't) and our GDP looked amazing. When the tariffs were brought back to previous rates of 55%, companies bought every import they could (or had them released from bonded warehouses) which has pumped the GDP in the other direction. And it'll likely be the same situation next month because Chinese ports are seeing record numbers as US companies try to buy every piece of inventory they can before these tariffs go back up.
One of the most upsetting things about our current state of governance is gamed metrics and lack of a national metrics "dashboard."
Metrics are gamed as marketing tools rather than assessment tools. There's a clear conflict of interest in the government presenting the metrics that it says to judge them by.
Unemployment is another gamed metric. If you want to get a sense of unemployment, a graph of % employed tells you more than some gamed number like "unemployment" since "unemployment" is a direct measure of political success.
Consumer spending/GDP are also directly used to measure political success, and a metric like "aggregate Visa/Mastercard purchases" is going to give a much better sense of how much people are spending.
During COVID, all cause mortality is a superior metric than COVID attributed deaths because any death attributed to COVID represented a failure of public health policy. We even saw direct attacks on public health monitoring in Florida.
It seems like the only ways to combat this are either states presenting their own metrics to imply national trends based on their own. I definitely wonder what kind of information we could get that is accurate and not gamed to create our own dashboards. Geohot's use of national energy consumption to estimate national productivity was sharp and the type of thing I wish journalists would do.
I don't think you know the space very well. Go to FRED, it is the largest of many that is a fantastic unbiased dashboard of governmental and societal data for the US. They even have almost the exact data that you would say is useful about CC spending. Here is all of the data that they publish about credit cards[1]. It has a lot more data than just the aggregate data from two of the credit card providers.
The people that gather and publish the data are historically pretty unbiased and open about methods. You can go get the raw data and methods. Some of the places that publish them like FRED, are not even under direct political jurisdiction. They are not at all the part of the government that is affected by the data they publish, and being run by a reserve bank puts them at pretty far reach from meddling by DC.
You can't stop politicians from using the data they like most, but don't pretend that ALL of the data isn't available in useful format.
1. https://fred.stlouisfed.org/tags/series?t=credit+cards
It's not the data, it's the media narrative. No one cares if there are detailed breakouts of key economic indicators available somewhere obscure [1] if most people get their opinions from the media, and the media are in the propaganda and marketing business, not the truth-to-power business.
[1] Not media-quoted or foregrounded for the public.
That's a goal-post shift. GP were complaining that accurate, fulsome statistics aren't there, when they are.
The media narrative is out of the control of the various statistics bodies, and it is up to the informed reader to seek out better sources if the article they are reading has scanty info. For the record though, FRED is frequently cited as a source in reputable mainstream media (I see it in the NYT all the time). Read The Economist some time, that's an international news source that will deeply report on these stats. Can't be helped if people prefer Fox or other garbage as their news diet.
You are complaining about media literacy and bad journalism, which is an entirely separate issue from the fact that the data both exists, and is extremely easy to access.
It feels like both things can be true at once: the raw data is often accessible and methodologically sound (shoutout to FRED, BEA, BLS, etc), and the interpretation or prioritization of metrics by politicians and media can completely skew public understanding.
The frustration isn’t about access it is about trust.
People want metrics that reflect lived reality and can’t be spun or redefined every election cycle.
Except that mainstream media do use FRED data ... so.
It is also possible to try to paint journalists as worst then they are ... that is good for actual quacks that to not like the good data.
You are supposed to be an adult and ignore all that biased rhetoric.
>being run by a reserve bank puts them at pretty far reach from meddling by DC.
Study the path other autocrats blazed for Trump, who is following and mimicing their tactics pretty closely now. Aggressive Fed interference is on his agenda, as can be seen by the way he likes to keep his fights with Powell constantly in the news cycle.
Well aware.
At least the few adults that are left, along with the market, start getting very upset when certain politicians target the fed.
Politicians brag about the U-3 unemployment (that they've gamed), but actual economists look at U-6 (unless they need to do a comparison going back a century, when U-6 didn't yet exist).
During covid politicians bragged about covid attributed deaths, while public health experts were discussing all cause mortality.
This is the case everywhere. Quality metrics are absolutely out there - you just have to give enough of a shit to look at them.
GDP, consumer spending, unemployment are some of the most inspected numbers in the world. Not only are they rigorously defined and tested by the government and academia there are whole swaths of finance attuned to them.
And no one who uses them seriously doesn’t understand their weaknesses. At a macro level all signals have flaws, knowing what they are and how to deal with them is the whole job of many people.
You can find huge swaths of research comparing and contrasting the ADP number vs the official bls stat but no one serious thinks ADP is _better_ than the the headline unemployment number because it can’t be gamed.
>Metrics are gamed as marketing tools rather than assessment tools.
Macro metrics are marketing tools largely.
In Australia we had a long period of "Lower Taxes" Vs "Lower Taxes (As a proportion of GDP)" The issue being that the latter didnt actually lower taxes, they just spent more money, increasing GDP.
These metrics are helpful sometimes in review. But in terms of targets they suck.
The calculations are 100% transparent. Reminds me of the red hat crowd bleeting about how the numbers are "adjusted." Like it's some kind of conspiracy. It's all well known. If you understand it and choose not to like it, well ignore it and cook up your own stat. You can find the formulas and get the data. No secrets.
So you are in favor of temporally changing the GDP formula to fit your mindset better?
From what I understand from Econ 101, this is not true. The only reason you subtract imports is to avoid double counting because presumably the import was done by C, G or I.
The point of subtracting imports is so that it doesn't count as domestic production, and effectively zeros out the portion of C + G + I that was not produced domestically, but thats independent of how much is in exports.
That’s true (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight).
But you can’t change the process mid way through your measurement. We don’t have a way of measuring “consumption of domestic products” so we just measure consumption and subtract the imports afterwards.
X-M is an accounting trick, but when you’re using this model you have to stick with it.
The idea that imports were deferred causes this accounting trick to show its weakness. (Presumably, looking at the data for all of 2025 when it’s available will “low pass” the deferred imports)
I'm not sure I understand. What process is changing? The "accounting trick" doesn't stop working.
Let's try a very simple example of buying all our inventory in one quarter and selling it in another - what is supposedly behind our GDP woes.
Let's say in Q1, the only spending was on $1 trillion of imports into private inventories, thus: I=$1 trillion, C=$0, G=$0, X=$0, M=$1 trillion. That gives us a GDP of $0.
Next quarter, flush with product there's no need to import anymore and the entire inventory is somehow sold domestically, thus: I=-$1 trillion, C=$1 trillion, G=$0, X=$0, M=$0. That gives us again, a GDP of $0.
Yet articles claim that the GDP in Q2 would be higher due to the drop in imports and was reduced in Q1 due to an increase in imports.
Don't you always measure GDP using spending (for convince / accuracy of price) so if you import $1 trillion and don't sell it then the GDP is $-1 trillion?
So Q1 is $-1 trillion and Q2 is $1 trillion?
IIRC, Investment is more of I bought machinery to make socks not I have 100 nintendo switches.
I (investment) in the GDP includes changes in private inventory, not just spending on fixed assets, so the 100 nintendo switches should be in there.
That's why in my example Q2 investment goes negative since inventories get depleted when they are sold.
> (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight)
damn, my clothes are heavy, because I know how much I weigh.
> The GDP formula is commonly expressed as GDP = C + I + G + (X - M), where C is consumer spending, I is business investment, G is government spending, and (X - M) represents net exports (exports minus imports).
Imports don't actually subtract from GDP. They are subtracted inside the GDP formula to make sure they aren't counted toward the country's production, basically.
Logically it makes sense: If you import something, it was not produced within the country. Therefore you need to make sure it's not counted in GDP. However, the starting values for GDP calculation are sum total type numbers, so you have to manually subtract out imports.
This proves endlessly confusing for journalists and even politicians who see the subtraction sign and conclude that "imports subtract from GDP"
Chris Clarke has a great Short on this: https://www.youtube.com/shorts/UrsRoHmXCug
In a non-terrible format: https://www.youtube.com/watch?v=UrsRoHmXCug
how is that better? the selected background color is not better than black which is what most players will do when forced to a landscape player
You can pause and forward the video and scrolling doesn’t change to another video.
I generally can't take anyone seriously publishing 9:16 "Shorts" when they embed horizontal powerpoint 16:9 screenshotted graphs into it
That seems very strange to me that GDP is the same, when import:export is 4:3 or 3:2, but explains why someone would care more about the difference than the absolute values.
They're accounting identities, not casual relationships. Exports are stuff that's part of domestic product (but not consumed domestically) so get added. Imports are stuff domestic consumers get the benefit of but aren't actually produced domestically, hence the direction of the signs in the accounting identity. The 4:3 ratio is consistent with an economy which might be more open than a 3:2 one, but it doesn't actually have a higher GDP unless there's higher consumption or investment or government spending as a result of the extra trade.
The key part is that nobody should care about any values or ratios in isolation or impute causality that isn't there. Otherwise people start believing that doing crazy stuff to shrink a trade deficit results in higher GDP, as opposed to lower C+I+G. And when those people are sufficiently stubborn and sufficiently powerful, you get $economy shrank 0.5% in the first quarter headlines...
If you import something and immediately export it the ratio changes but the difference doesnt
Quarterly GDP, since it's measured via global approximation, isn't meaningful in quarters when the economy is rapidly changing. The numbers only make sense over time periods where behavior is relatively steady.
Spending did not keep up; if it had, the net effect on GDP would be zero.
This is companies stocking up, and the items are in inventory. They will sell it over the next quarter or so, at which point the tariffs will really weigh.
I've heard this from a number of buyers for companies, that their companies have hugely held stockpiles, to avoid the tariff uncertainty in hope they get worked out before stockpiles run out... most of the ones i've talked to say its only gonna last a few months before shit really hits the fan
My theory would be that a lot of companies imported a ton in the first quarter knowing that tariffs were coming.
My company did that. Along with rushed some deliveries that weren't 100% ready to avoid the sudden spike in tariffs.
I also personally did that for expensive gear I was otherwise planning on waiting on. And now I'm not going to be buying that over the next 2-5 years like I was originally planning.
It's a big bolus of spending that will not be replicated in the future.
Yup, did the same, ton of new hardware.
Last week I was looking at a proposal from a supplier that's got a ~8K "tariff" line on it and thinking... y'know, I can wait on that project.
Sure, but GP's point is that that level of spending likely won't continue now that the (forecasted) demand has been met.
In the quoted statement, they're reasoning from an accounting identity because they don't understand the underlying measure. There's a kernel of truth, but it's much more complicated than that.
Imports are subtracted from the GDP calculation, BUT, that's only because they're added in the equation as well as part of consumption/investment/government spending. So to capture only the domestic production, since it's hard to measure consumption/investment/government spending only on domestic inputs, you just measure them overall, add exports, and subtract imports.
So people see that in the equation imports are literally subtracted as a variable, and reason that if imports go up $X, that means GDP literally goes down by that amount. In reality — ignoring for a moment that we sometimes mismeasure consumption/investment/government spending, the net effect in the equation is 0.
ON THE OTHER HAND, in one way part of the GDP drop here is because of imports. It's not something you can cleanly calculate the way journalists often try to, because there's a lot we don't know, but picture this simplified example:
I'm a factory owner, and my factory uses a lot of inputs that we import from China. We normally spend $50k/quarter on investment (maintenance, new machines, etc.). But next quarter my short-term cost of Chinese inputs may double. It may make sense for me to front-load imports ahead of tariffs and defer as much investment as possible. I can't do that forever, so eventually the money will show up in the equation more-or-less where it would have otherwise.
And on top of that, there are a bunch of confounding factors. Over time, imports also make domestic production more efficient, so shifting to less-efficient US inputs (or simply paying the tariff) will slow the rate of overall growth. And some costs are passed on as higher prices, which reduces demand, and therefore reduces growth. And importing goods also means exporting dollars, which affects exchange rates, and therefore affects exports as well. It's all interconnected.
Calling it out when they reason from an accounting identity is really important, because it's a lot of what drives the misconceptions of Trump's protectionist advisors — they use the same reasoning in reverse to say that anything that reduces the trade deficit therefore increases GDP. But that's only true in an accounting sense! Reality takes more complex modeling, and has to account for all the interconnected pieces.
See this article: Why do econ journalists keep making this basic mistake.
https://www.noahpinion.blog/p/why-do-econ-journalists-keep-m...
Source: am economist, and the writer of the blog is 100% correct.
Reporting and commentary on GDP and economics stats is just generally bad.
However Economists tend to struggle with flow effects, and Noah is no exception.
Trade deficits are exports of money as static savings, and that reduces money in flow within the USD currency area. Deliberately, as that is how neo-mercantalism operates. The impact is on the income/expenditure sequence, not the aggregate figures - which are massaged by the reporting currency effect.
Thank you. This makes far more sense.
Preamble: GDP, is a bit of a synthetic metric.
As you point out, there's no purchase level data about what's imported vs. not.
The way this is handled is that this quarter's imports are set against this quarter's consumption - basically the method assumes the import/domestic mix of business inventories stays the same (true enough in the long run, very incorrect in short term shocks).
That's why extremely disingenuously the AP says:
>Trade deficits reduce GDP. But that’s just a matter of mathematics. GDP is supposed to count only what’s produced domestically, not stuff that comes in from abroad. So imports — which show up in the GDP report as consumer spending or business investment — have to be subtracted out to keep them from artificially inflating domestic production.
Answer: What happened here[1] is that the BLS makes a bunch of assumptions to get data out in time (preliminary figures based on historical seasonal trends, etc.) but this quarter, their assumptions about consumer spend were far too aggressive.
It happens all the time, especially in strange times like 1Q was, but there's also career/political incentive to be aggressive on the advanced data, since that's what drives the big headlines.
[1]https://www.bea.gov/system/files/gdp1q25-3rd-chart-02.png
Given how many layoffs there have been and how much bad economic news has been coming out, I am quit surprised that we are not in a full blown technical recession. Even the DJI is touching historic highs and bond yields are down.
I know I sound like an armchair economist, which is probably why I am on here ranting instead of on a tropical beach with super models name Brooke and Tiffany, eating lobster and beluga caviar, washing it all down with fine champagne.
I can only assume that the last 5 years have been so solid for the economy that we have a long way down to go before we even begin to feel pain.
Structural demographics. ~13k-14k workers leave the labor force every day, through a combination of retirement and death. Beat on the economy hard with these terminal interest rates and tariffs, demand for labor will still exceed supply.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
Recession is when the economy was in decline for three quarters and it were not three quarters yet.
Sorry, but the widely accepted definition of a technical recession is typically identified by two consecutive quarters of negative growth in real gross domestic product (GDP). Tuesday is the cut off date for the quarter and that will determine if the US is in technical recession.
The "bad news is actually good news" post are gonna be wild.
Or it’s Biden‘s economy until there’s a turnaround.
Nothing to worry about - life in the year 1990 was good, and that was with an inflation-adjusted GDP per capita just 59% of current (2023) value [1]. So we would need 82 of such 0.5% drops until things got as "bad" as in the year 1990.
Because GDP is a meaningful quality of life indicator.
[1] https://data.worldbank.org/indicator/NY.GDP.PCAP.KD?location...
It’s not just tariffs that are the issue… quite a few people from other countries have stopped coming to the US and are avoiding buying US products where possible
I don't blame them. My wife got her US citizenship very recently (like two months ago), and historically I have thought that was going to allow me to finally have a sigh of relief after years of fighting with and thousands of dollars spent for the immigration system in the US.
Now Republicans are actively trying to denaturalize people so they can be deported. I have no idea how successful that will actually be but the fact that there's an active attempt for it is enough to trigger anxiety for me.
If this is how they're treating naturalized citizens, I certainly cannot blame people for not visiting the US on a tourist visa; who the fuck knows what would happen to them? They're detaining tourists for bald JD Vance memes [1], I would stay the hell away from America and spend my vacation money elsewhere.
It really depresses me. I love the US. I was born here. I live here. Much as I love visiting Europe, I haven't really wanted to live anywhere else than the US, but I fear that this active hostility towards our foreign trading partners might cause permanent and irreparable damage. For the first time in my life, I have seriously started to consider moving me and my wife to a different country, which I hope I don't have to do but I am genuinely scared that they're going to detain my Mexican-immigrant wife.
[1] I know that CBP is denying that it was because of a meme, but instead because of drug use, but in this particular case, legitimacy doesn't matter. If it's believable that I could be detained in a country because I texted a meme to my friends, there's absolutely no way in hell I am visiting that country.
No one is safe. It took quite a while to bring the one guy they sent to El Salvador on the obviously photoshopped faked evidence he was a gang member in MS13, and they claim they have the right to send US citizens there as well where it will be easy to deny a lot of legal rights like habeas corpus or sixth amendment.
Yep. I didn’t think I would ever need it, but I have an immigration attorney saved, for myself, in case they actively try and denaturalize anyone who has ever said anything bad about Trump, which I have in many places.
Not sure how much it would help if shit hits the fan but it’s sort of surreal regardless.
Can you point me to a non-partisan source describing attempts to denaturalize citizens?
The rhetoric is there. See Randy Ogles (R-Tenn) call for Mamdani to be denaturalized.
Yeah that’s what I was referring to. I saw that tweet a few hours ago.
https://x.com/RepOgles/status/1938301392416084150
I’ve never seen this level of anti-American sentiment in Canada in my whole life.
One thing I have my eye on is how hard consumer habits are to change. For example, American alcohol is simply gone from store shelves in Ontario. I can only imagine how much marketing work went up in the wind now that consumers have adapted. Returning the product to the market is probably not even the hard part.
I'm glad to hear first hand that there was followthrough on the alcohol thing.
A Canadian just died in ICE custody. I don't see any reason why Canadians should visit the US.
No idea why you are getting downvoted. Embarrassment maybe, they cant stand to see the result of their inaction.
On avoiding travel: One doesn't have to make a principled decision, it's entirely rational to avoid travel to the USA.
There's a growing body of holiday makers with neither a criminal record nor evidence of carrying a banned substance, who have been turned away from the USA for nothing more than the vibes of the CBP. In some cases these people were strip searched and thrown into federal prison without any kind of evidence and no wrongdoing whatsoever.
An informed person would be right in holidaying elsewhere, otherwise it's a gamble if they will lose the money paid for their holiday and flights.
On avoiding business with the USA: The tariffs and their mercurial changes create a type of instability where a USA-based vendor, at random, may no longer be able to fulfil their contract. It's incredibly damaging for our American partners.
The border situation is quite harmful to tourism, to the point where advice is being issued to be careful traveling to the USA. Its not a new thing except in scale either. The same shit was happening as far back as 2015, it just keeps getting worse. And from what I can tell, news reports about how hostile the US is to tourists, doesnt get airtime in the US. People seem shocked or think I am joking when I share story after story of people wrongfully apprehended at the border.
On the bright side maybe the national parks will stop being so overcrowded. Better take my kids to Yellowstone soon while this is still the case.
Better take your kids there before large chunks of it are sold to developers.
Trust that I and lots of others in Europe — and especially Scandinavia — are boycotting US products — the most basic one I can think of is coca-cola, instead I buy "freeway", ie Lidl's inhouse brand, and I don't think I am going back.
Freeway is honestly pretty competitive with Coke in taste. I haven't tried the sugary stuff but I have had a fair amount of their sugar-free drinks and I think they're actually quite good. Slightly differently than Diet Coke/Coke Zero, but not really "worse".
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A shrinking economy is likely to reduce emissions of greenhouse gases, won't it? Might the effect be detectable?
Depends which areas shrink I guess. Not all product has the same carbon cost.
https://polymarket.com/event/us-recession-in-2025?tid=175098...
Polymarket puts 30% chance on a recession.
I have a heavy bias against that website, but it may be unfounded.
It's been around for a while now, are there any 3rd party reliable studies showing how good polymarket markets are at predicting events?
They work well! Almost as well as Tarot.
Foundation of US economy is domestic consumption. The current administration has significantly increased taxes - in the form of tariffs - on that consumption. So, the results are and are going to be as expected by any economy textbook.
Additional obvious effect of tariffs is introducing friction, to say the least, into supply chains, similar to how pandemics did at the beginning with about the same result - inflation and loss of productivity.
I personally have no panic here though - during my quarter of century here i noticed that US economy is extremely resilient and can take a lot of hits and damage, can even get knocked down, yet nothing can get it knocked out, and it would always come back even more roaring. It is though very hard on those who gets the sharp end of stick here, i'd wish that the society would get a bit more empathetic to them.
The hope, at least, is that the tariffs will encourage the creation of more, better, jobs in the US through re-shoring. This would, in theory, also increase domestic consumption though the time frame is longer.
The entire field of economics demonstrates the opposite. The result of tariffs will be fewer and worse jobs in the US, with everyone's standard of living going down.
>the tariffs will encourage the creation of more, better, jobs in the US through re-shoring
that isn't possible for any production other than a primitive one. The modern production is very complicated, and in particular contains long lists of components, materials, tools, technological stages of production and engineering services. I.e. it is a pyramid with very wide base. Even large country like US is too small to maintain all what is required for any even moderately complicated product. Tariffs are kind of shrinking the pyramid's base - the result is lower pyramid so to speak.
Of course, you and anybody welcome to bring counter-examples.
>This would, in theory, also increase domestic consumption
It would increase prices, and decrease productivity thus resulting in lower consumption.
Dell used to make computers in the US. Then they moved manufacturing to China. You're saying Dell can't make computers in the US ever again? If the economic incentives are there then the supply chains can be (re-)built, right?
How quickly did they move to China? Decades, right? Coming back takes that kind of timescale because everything needs to align – making PCs means that they need suppliers for every component, and those factories inputs, and logistics keeping factories’ production synchronized, and a lot of different skilled labor categories which aren’t trivially available. If you’re setting up a factory in the Midwest assembling parts from China, all you’re doing is ensuring that the results cost more and none of the key businesses are likely to come back because tariffs won’t make a factory competitive outside of the country.
You can encourage the whole thing to move but it needs to be a carefully considered long-term plan with strategic investments and ongoing investment. That’s the opposite of what we’re seeing now with tariffs changing every time an octogenarian gets cranky, and his party is trying to slash investments rather than grow them. No business is going to assume that any promise made will last for a business quarter, much less the years needed, and without some major funding commitments nobody is going to jump to line up tens of billions in financing.
how much of the value chain was actually in the US back then, and, how much could feasibly move to the US?
Even in the 90s, major components were made in Taiwan and Japan. And since that time, the US ability to make what we did previously has atrophied
What do we really get out of Dell moving PC manufacturing to the US if every single part they consume was manufactured in China or Taiwan? Final assembly is the lowest value part of the equation. Apple already did this shell game with the Mac Pro a few years ago and it didn't last long nor did it have a meaningful impact on anything other than the price of the product
>then the supply chains can be (re-)built
similar like with networks the value of supply chain grows with its size, ie. more competing suppliers decrease the prices and increase the productivity and efficiency. It also lowers the risks of failing suppliers, and the supply risk is also an additional cost.
So, you suggest to rebuild supply chain hosted by the "technologically civilized" half+ of the world, i.e. by 4B+ of people, in a country of 340M. I.e. a supply chain at least 10x smaller, with at least 10x less competition (or the alternative - same number of suppliers 10x smaller in size). We all know what happens when there is 10x less competition. (and the alternative is even worse - the suppliers being 10x smaller in size is a loss of manufacturing efficiency which comes and goes with the scale of mass production and probably isn't possible at all as small suppliers usually quickly fail and/or scooped by larger ones, especially given that their addressable market is also 10x smaller)
> You're saying Dell can't make computers in the US ever again?
The person you are replying to said no such thing.
Yes, of course, in isolation, some manufacturers can build new factories. Not overnight. Not in a year, if the supply chain is remotely complicated.
Okay, lets say Dell, who moved their manufacturing out of the US nearly two decades ago, succeeds with their factory building and starts building here. Great! What are they building? Are they fabbing 100% of the components that are going into these computers they are building? Absolutely not.
If it weren't tragic it would be hilarious that Trump is the worst thing the US economy has seen since COVID.
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“It’s the media’s fault for reporting the numbers accurately” /s
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As a new account, it'd probably be best to familiarize yourself with the site guidelines. For example,
>Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
>Omit internet tropes.
>Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something.
https://news.ycombinator.com/newsguidelines.html
Realistically, it's not a new user, since they're making a throwaway. It's someone on the site that just didn't want this post associated with their main account.
While I think this is borderline in terms of following guidelines, it is much more concerning that the comment accurately quoted the source: https://www.whitehouse.gov/articles/2025/06/trump-effect-hig...
nickff: I agree it was borderline. My sentiment was closer to suggesting we look past tone to how shocking the content is. The human brain tries to normalize things, but a statement like this would have been unprecedented before 2016. People would have resigned or been fired, it would have been a scandal.
I think the comment you replied to was criticizing the "/rofl". These shallow reaction/dismissal comments really are turning this site into the hell-hole that Reddit already is.
Leavitt's statement doesn't deserve further scrutiny beyond shallow dismissal.
>The most important principle on HN, though, is to make thoughtful comments. Thoughtful in both senses: civil and substantial.
https://news.ycombinator.com/newswelcome.html
The top-level comment added nothing to the conversation that this site is supposed to be about. We are supposed to assume that commenters read thee article, and if they did, a LOL, ROFL, or WTF doesn't move the conversation forward.
The quote in the top-level comment from the White House is not in the article [1], so I'm having trouble understanding your point.
[1] right now. It is possible it was in an earlier version of the article.
This whole thread adds nothing to the conversation.
Downvote as you choose and move on. Maybe I ought to take my own advice.
Are we considering propaganda work now?
> especially
The problem with shallow dismissals in general is that it is a low bar for a comment. The problem with shallow dismissals in the context of someone else's work is that it's invalidating something which should be celebrated. They're both problems for different reasons. A comment explaining why one thinks the quote is ridiculous is more substantive than simply laughing at it.
> A comment explaining why one thinks the quote is ridiculous is more substantive than simply laughing at it.
The problem is if you do the work of analyzing the overt liars' statements, people will then pick on that for being too inflammatory. Never mind the downvotes from the true believers that are still gulping down the Kool-aid.
This GDP print is mostly statistical fluke from excessive imports ahead of tariffs, way too early to be dancing on graves.
None of those are negated by a lower GDP number to be fair.
The current White House press statements are often bullshit, but most of the above statement is at least directionally true. Unemployment is still at historically low levels and has been flat for a year. US Real Average Hourly Earnings are up, and the latest CPI data shows a 12-month inflation rate of 2.4% (not seasonally adjusted).
And if proven otherwise, it is "Biden's fault".
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The article never claims tariffs going into effect caused the Q1 issues.
What news source you do think is not a propaganda outlet?
NPR. Al Jazeera. Reuters. BBC.
But I already know you’re going to shit on those. People like you who ask that question aren’t asking in good faith.
This is needlessly combative. They were asking a different person this question...
But a better question might be. "Why is apnews an unreliable source for this information."
General distrust of a news outlet doesn't mean that the given article is false. I've seen some questionable shit from the BBC, though I generally trust them.
Personal story related to tariffs ahead:
I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
I get a lots of moving parts from China, assemble those together and sell in a one single product on US soil and outside (imagine a watch made out of 2,000 parts). As it turned out with 25% tariffs, it turned out that there is another charge that is related to "processing fee". On most $10 items that fee was $17. Obviously make no economical sense. So doing a quick economics of sale, and knowing each separate package is a separate "processing fee" we would have to bump up my price some 30,000%. So instead of doing so, which wouldn't make any sense, we have moved the whole production to Europe. Tariffs are non-existent and even with 24% VAT (local tax) it is way cheaper to produce your merch and then send it to USA, in one complete piece, if anyone wants to buy on a US soil. The only inconvenience is the package takes about 10 days of delivery, no other differences. My company located in Texas is letting go the final employees at the end of this month, some 45 emps. We had offer current emps to move to Europe but noone wanted or had proper credentials to work on EU soil. Our choice was this OR closing down the whole company. I imagine many other corps and in similar position.
> I assumed, like President said, ...
Can you explain to me why you continue to believe a serial liar? I really want to understand why people keep hanging on his every word when everything out of his mouth is a lie or some form of manipulative language. He told over 30,000 lies in his first term alone [1].
I'm truly sorry it's hit the workers where you are, that really sucks.
[1] https://docs.house.gov/meetings/FD/FD00/20240515/117301/HHRG...
I think a key thing is he often states multiple sides of an issue depending upon the audience and even people who I’ve seen interviewed who heard both say they just disregard the parts they disagree with - it’s a level of cognitive dissonance approaching double think in 1984, IMHO.
How does this story match up with https://news.ycombinator.com/item?id=43590072 where you post after the tariff announcement (April 4th):
> Noone in their right mind will start building factories in USA because of temporary tariffs that all might go away with an executive order and a stroke of a pen comes January 2029.
(I checked because the story just smells weird...)
> I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
Even if you assumed that, you started at step 1 and didn't think past that.
Let's assume China pays the tariff. Is China going to eat that? They will probably pass it onto the seller.
OK now what? Let's say before the tariffs, their total unit cost is $5, and they sell it to you for $10 (I'm just making stuff up here).
Tariffs were 145% at some point. So China pays $14.50. China passes it onto the seller, now the total unit cost is $19.50. They lost $9.50.
Are they in the business to lose money with every sale? No.
However, that presents a problem. The tariff they paid? It's higher than the price they sold it to you. That will remain the same regardless of the price you have to pay. Even if they charged you $1mil, they could not make a profit, because the tariff would be $1.45mil.
So, yeah, you were very much wrong. The idea is not only unrealistic, it is mathematically impossible if the goal is to actually make money when tariffs are 100% or more.
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Even if China paid the tariffs, how did you expect it to work? The manufacturers would just eat the entire fee and give you stuff for under cost?
Chinese manufacturers will split the fee with buyers when the tariff rate is modest and doesn't eat too much into their profit.
The rate isn’t modest so the straw already broke the camel’s back.
Yes, because we're supposed to believe that China having a surplus of manufactured goods constitutes a liability, and our need for manufactured goods constitutes a strength. So with our good strong healthy mentally competent leader, China will soon be paying us to take their products. Noted experts like Ron Vara have explained this in depth. </s>
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I assumed, like President said, that it will be China, not me, who pays the tariffs.
“Man on the street” doesn’t know how tariffs work (or at least believes the bullshit), and I’m not surprised. But I’m truly surprised that someone running a business fell for this, especially given the person saying it.
> I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
How do you run a business that relies on imports and not know how tariffs work?
> I assumed, like President said, that it will be China, not me, who pays the tariffs
You have been importing parts from China, yet you didn't know how tariffs work? I have a hard time believing this.
So you employed 45 employees to do assembly work but bought each of 2000 parts one at a time so the processing fees were meaningful? Surely if the revenue supports that staffing, you should import by the pallet or container?
>I assumed, like President said
Like all the other sibling comments, just... sigh.
I did not assume any such thing.
My current home remodeling project with new siding and windows and so on, I've had to pay ~$2K extra in tariffs on just the materials for my soffits (planks of Canadian cedar). Boils my blood in anger.
Since there was a lot of confusion in some people/president heads about VAT: this is more or less the equivalent of Sales Tax that you can have in the US. The rate is different depending on which country you are in (in France the main rate for most products is 20%).
If you are traveling or sell in Europe: in Europe, it is generally expected (or even mandatory) that customers are displayed the price all taxes included.
In the UK retailers that sell to consumers must include VAT in the listed price
Companies selling to other companies normally use an ex VAT price and then VAT is added on top
You should really assume by default that whatever that guy says, the opposite is true. Don't give any money to anyone claiming to be a Nigerian Prince.
> I assumed, like President said, that it will be China, not me, who pays the tariffs.
Why would they pay a tax that's levied by the US government? In both the most literal sense, and in the sense of keeping their prices the same.
Trump can say that 2 plus 2 equals 3 and millions of US citizens will blame their teachers and call for a restructuring of the education system.
>even with 24% VAT
If you are buying your finished goods from Europe you shouldn't be paying VAT.
> The only inconvenience is the package takes about 10 days of delivery, no other differences. My company located in Texas is letting go the final employees at the end of this month, some 45 emps.
That's sad for those employees in Texas, but relatedly, why were you manufacturing in Texas before? Was it just quick delivery or were labor rates lower in Texas?
Based on your description, your product sounds like it requires highly skilled assembly labor.
How much would labor rates have to fall in Texas for you to move manufacturing back despite the tariffs?
Are you saying that a $1000 box of 100 widgets imported from China has a $1700 processing fee on top of the tariff?
Why Europe? Did you consider moving production to Mexico or Canada instead to keep your delivery time lower?
> I assumed, like President said, that it will be China, not me, who pays the tariffs. I was very much wrong.
Folks were screaming it from the rooftops for months prior to the election. So many folks, yourself included, refused to accept reality and now we all suffer the pain.
I would say "Maybe folks will learn!" But I know they won't. US voters as a bloc seem to have an incredibly short memory. They'll forget about all of this pain and stupidity within moments of Trump leaving office.
Bonhoeffer's theory of stupidty is relevant here: https://www.onthewing.org/user/Bonhoeffer%20-%20Theory%20of%...
This is amazing, thank you for sharing!
> The fact that the stupid person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with a person, but with slogans, catchwords and the like, that have taken possession of him. He is under a spell, blinded, misused, and abused in his very being.
I spend a lot of time (too much, apparently) chatting with MAGA folks and this is a stunningly accurate description. It really is just pre-programmed slogans. You see it now even in Congressional hearings of cabinet members, which is fucking horrifying.
Thanks for sharing your real world experience, it helps in seeing how regular folk are affected by policy decisions.
I understand from your post that you are a business person, buying product, performing value added services and selling for profit. Although I know little about business, I would guess that if one of your suppliers raised the prices on one of the inputs to your finished goods, you would likely increase the price of your product to preserve your profits and continue your business as a venture. I would guess that you would not pay the additional cost out of your own pocket.
My question is; why did you not expect the same logic to play out in the tariffs situation? That any country would pay the additional cost of doing business out of their own pocket and not pass it on to the consumer?
Why don't you move jobs to China if you assemble Chinese parts
Sorry about the bad experience.
What this administration's model of tariffs completely misses is how fungible labor and manufacturing are in the world now. Business is as much about strength of information as strength of arm or strength of steel. It's hard to believe they had any professionals in the room when they came up with this "protectionist" scheme.
A good analogy a friend once gave me was that there are two ways to build a car in the US. You can tool up an industry ecosystem where you can gather (or produce) base materials and then shape and combine them into small parts, make the small parts into larger parts, do final assembly, and roll them off an assembly line. Or, you can take about as much land as you'd use for that, maybe a bit less, and grow corn. Lots of corn. Lots and lots of corn. Then you put that corn on a boat. Ten months later, that boat comes back with cars on it.
When the world is that varied a place, one country trying to jam its finger in the dkye via tariffs is a fool's errand. The economy will interpret artificial cost as damage and route around it.
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It is deeply uncharitable to assume that someone is willfully ignorant. And frankly it is toxic to polite discussion to make accusations like that. Please consider extending charity to people if your goal is to have a constructive discussion rather than a quarrel.
You wanna know what is deeply toxic? This: https://en.wikipedia.org/wiki/Racial_views_of_Donald_Trump
Now imagine voting for that. Calling it willful ignorance is actually extremely charitable and well into inaccurate.
Strange that you don’t seem to care.
Conservatives were given excessively charitable ingeroretations for years and it only made them more destructive.
Maybe we should stop doing that amd start grappling with reality: they are not just wilfully ignorant but also actively seeking harm.