“That slowdown in goods will work its way into drayage (short-distance trucking off the port), rail, and long-distance trucking over the month following and eventually show up as missing goods on shelves in the US over the summer. We can’t estimate how big the shortages of goods for consumers will be. But once those shortages start, they will take a significant amount of time to address because of the lag between production in China, transpacific shipping, and distribution throughout the US. That’s a good example of the different speeds at which negative feedbacks discussed in our framework operate.”
This is a serious headwind for Trump’s approval rating:
“As for public opinion, the Trump Administration is already dealing with a significant decline in approval ratings. Over the past few days, a number of high-quality public polls have found the President’s approval rating below 40%. And again, that’s before the flow of goods from China potentially leads to shortages which are at this point baked in to hit retailers in some form (we want to re-emphasize specific magnitude is impossible to estimate). It remains to be seen how that polling will feed back into the administration’s thinking, but it’s already getting pretty negative and any change in course on tariff policy will only feed back to the economy slowly thanks to the time lags.”Hence, per the following, there’s a sense of urgency in getting their tax cut package passed:
“(Bloomberg) -- Treasury Secretary Scott Bessent and congressional Republicans will meet to sketch out the plan for passing a multi-trillion tax cut in the coming weeks as polling shows that voters largely disapprove of the White House’s handling of the economy.This is a tough spot for the administration, as stacking additional cuts onto an extension of expiring Trump-1 cuts doesn’t jibe with their promise to cut the budget deficit… Although, they do say the tax cuts will be “partially” paid for by federal spending cuts.
Bessent and National Economic Council Director Kevin Hassett will meet with top congressional leaders Monday afternoon as lawmakers return from a two-week break. Senate Majority Leader John Thune, House Speaker Mike Johnson and the two tax committee chairmen Senator Mike Crapo and Representative Jason Smith are slated to attend, according to people familiar with the schedule.
President Donald Trump and Johnson will also meet earlier in the afternoon.
Trump has put increasing pressure on Republicans to pass the measure, going so far as to tell Michigan’s Republican lawmakers to stay in Washington rather than join him for a speech Tuesday in the state marking his first 100 days in office.”
Ironically, it might actually be better if it takes a while -- although we may already be nearing the point of no return -- allowing the economy to continue to cool, if not slide into a mild recession first… In that scenario tax cuts would be viewed as timely, as opposed to inflationary, should the economy continue to expand, alongside the presumed tariff regime, going forward.
Computer and electronic product manufacturing
This has been a crazy few weeks in the news. We export about 20 percent of our production. Our largest customers are in the United Kingdom and France, but we also export to China and many other countries. We import a few raw materials, but this isn't directly significant. The current tariff negotiations are having an effect in several ways. We accelerated one order to China to beat the reciprocal tariffs, and we expect our China sales to go to zero until the tariff situation changes. We are seeing some European customers stock up on inventory in anticipation of future tariffs. Most of our U.S. customers continue to buy, but we have seen a 25 percent drop in incoming RFQs [requests for quotations] in April compared with the average of previous months. Assuming this continues, we expect to see roughly a 10–15 percent decline in sales in May. We believe that this is largely due to uncertainty in our customer base driven by the tariff situation and potential knock-on effects to the general economy.
There is really no way to predict anything accurately six months out or even six weeks out now for our industry due to the tariff and trade uncertainty. Carve-outs for large electronics businesses (cellphones and laptops) leaves small business burdened to deal with tariffs on our own, which are likely to cause delays, cancellations and early product obsolescence on existing products and orders. We have already had to turn around and refuse shipments because customers cannot afford the tariffs, delaying our ability to build, which will eventually lead to job losses. If this continues for any length of time, many small companies are likely to be significantly hurt or even gone. If we want to bring manufacturing back to the U.S., can we try not to kill the companies that can actually help do that before we get the chance? Maybe we can think about using a scalpel rather than a sledgehammer? The risk we face now is far greater and less understood than what we saw during the COVID shutdown. Consumers and businesses will limit investment and orders until there is some sense of stability, and we have already experienced this with smaller orders and delayed orders. It's chaos right now.
Please lower interest rates. We need it in order to boost the economy due to the uncertainty and tariffs.
President Trump, tariffs and maximum business uncertainty [are issues affecting our business]. [We see a] probable recession soon.
And commenting on the latest Conference Board consumer survey (which saw its expectations component plummet):
"--those making over $125k saw confidence fall to the weakest since 2013 not including the initial Covid response. I’ll add this, the US economy can’t lose this upper income customer base if it’s going to avoid a recession. Age wise, confidence fell most notably for those between 35 and 55."
That's the point I've been stressing for months; those with higher income, and assets, have been doing virtually all of the heavy lifting with regard to spending... Lose them and we're in recession.
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