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Comment by llm_nerd | Hacker News Reader

It isn't just China, and it isn't just goods.

Tourist travel to the US has contracted, for instance. US service exports are suddenly extremely suspect and a lot of countries are finding alternatives. US goods exports are facing massive headwinds, and counter-tariffs in some other countries (China, where imports from the US have basically stopped, and Canada where $400B+ of US goods were sold last year, many of which now see a counter-tariff and boycotts/replacement).

The situation is going to get much, much worse, and there is a serious sense of denial among both the market and many participants who seem to think Trump can retreat from his economic folly and everything will be good again. It won't. There is a massive structural shift that is going to linger for decades.

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To steelman it, the US has a far lower dependence on trade as a percentage of GDP than just about any other country, so if any country will be likely to (raw-economic-numbers) survive a shock like this, it's the US. Of course this is a generalization, there could be critical single/multi item goods that make this not a thing (note: it's not lithium or "the rare earth"). It's worth asking and doing a deeper analysis on the question: Are the goods not being traded to the US "things that Americans can do without"? I think for a large portion of that, the answer is "yes". No, you do not need dropshipped junk or an electronic device with a 50% chance of working from amazon. Even for bulk conumer goods american alternatives are not substantially more expensive. I was shopping for cookie cutters recently and a US cookie cutter is $2 more than the chinese cookie cutter. Without even amortizing over the number of uses I'll get out of this, the marginal increase in cost is ~0, but I am certain that the way that online retailers sort sales by price, the number of buyers of the american good is way lower.

I think more likely problems are small electronic PCBs used for semi-bespoke controls in whatever manufacturing that actually {happens in/moves to} the us, hvac controls etc.

It’s going to be similar to Brexit.

It won’t cause the economy to collapse with alarms going off everywhere.

It will instead be a quiet, slow and sustained shrinking of the economy.

> It’s going to be similar to Brexit.

Agreed, this is the most likely outcome in the short term.

In the long term there are going to be unexpeted knock-on effects. Even a modest definancialization of the American economy makes it more robust to demographic changes and the end of the population-driven growth era. Lowered imports from abroad (especially china) and decreased consumption writ large means lower carbon footprint. Maintenance of airplanes getting more expensive means people fly less (already happening), again, lower carbon footprint.

You sure like whats happening now to keep making up excuses for why its actually good, all over this thread.

theres a lot to hate about this administration right now.

Where is the shrinking? https://www.statista.com/statistics/1370599/g7-country-gdp-g...

The UK was the hardest hit by COVID, but it has recovered well.

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...

Per-capita GDP has been rough in the UK post-brexit.

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2023...

But compared to neighbours it's pretty close?

I was against Brexit, but I don't think the apocalyptic predictions have been borne out at all.

Trade is bi-lateral. The UK’s trading partners were also harmed by their decision to leave. Short term, it’s just simply a net negative for everybody. Long term (decades), the UK will have a long run growth rate lower than the rest of the EU. Granted, our lack of a crystal ball means that we can just debate outcomes ad nauseum.

If I recall correctly, the UK changed the way in which they compute the government contribution to GDP (going from G being just cost to some estimate of the output). This caused both the COVID drop and recovery to look steeper.

Surviving is hardly a desirable outcome. Surviving is akin to a Pyrrhic victory (which is net negative). The loss that follows is greater than the profit from the win even after the most desirable of outcomes.

In the case of the US the result is isolation. That means loss of economic strength as well as loss of political influence. Those are more expensive than they sound because the second and third order consequences are security concerns and more powerful coalitions in opposition.

> [isolation] means loss of economic strength as well as loss of political influence.

Could be. In the long term, the world needs to reckon with the fact that our implementation economic systems (capitalist, socialist, fascist) depend on population growth, and isolation could also mean removal from the chaos that ensues when the existing political systems can't cope. Assuming the US improves its situation, which believe it or not is oh so slightly better as a result of what's going on now.

We're making nobody want to immigrate to the US. We're also not at all addressing the reason people aren't having kids anymore and taking rights away from women that's further scaring them away from it. We're not reforming to a post-scarcity, low replenishment economy here.

How does losing a compensatory supply of labor across both low and high skill markets, cutting off ourselves from backup, discouraging fertility rates, and kneecapping any incentive to invest in manufacturing domestically AT ALL help the situation?

> We're also not at all addressing the reason people aren't having kids anymore and taking rights away from women that's further scaring them away from it

I'm on your side on the political issue, but the data do not agree with you: The states with the most restrictive reproductive laws have higher fertility rates. I'm not claiming there is a correlation -- but rather fertility is not at all governed by reproductive laws (or even motherhood support, because those states also have shit motherhood support systems).

To answer your question: Surviving into an non-population-driven-growth regime requires primarily two factors:

- reducing reliance on financialization

- reducing reliance on pure consumption

I'm not saying the US is good at either of those two (it's not) but it's better than it was, say, in 2019. I would even look at your retort -- it used the word invest. That suggests a heavily financialization-dependent mindset. If you are looking through those lenses, it is difficult to imagine what the future needs to look like.

We're not moving away from that. We're just making the capitalism more crony. I understand you're trying to steelman, but the argument fundamentally does not make sense.

Trump's economic and immigration and foreign labor policies do not encourage anything that mitigates the disaster of demographic collapse. We're making ourselves even more sensitive by taking away all the safety nets our economy could fall back on.

you misunderstand: i am implying trump is increasing cronyism but stumbling into "correct" policies along the way as an accidental side effect of his dumb shit.

> Assuming the US improves its situation, which believe it or not is oh so slightly better as a result of what's going on now.

You're right, I don't believe it. :)

> To steelman it, the US has a far lower dependence on trade as a percentage of GDP than just about any other country, so if any country will be likely to (raw-economic-numbers) survive a shock like this, it's the US.

The reason this line of thinking doesn't work is that these measures affect all the trade that the US does with anyone, but for any other country they affect only the trade with the US. The US relative dependence on the entire world is larger than any individual country's relative dependency on just the US.

To illustrate:

US imports seem to typically be about 15% of the US GDP. EU exports to the US are only 3% of the EU GDP. So we'd kind of expect the shock to the US to be 5x larger than the shock to the EU.

The US’s Brexit moment.

>To steelman it, the US has a far lower dependence on trade as a percentage of GDP

The US being the centre of trade is basically the entire foundation of its GDP. It is the reason the US $ is the global reserve. It is the reason the world holds t-bills. It's the reason silicon valley is in San Francisco and the centre of the music and movie industry is in LA. It's the reason the financial capital of the world is in NY. It's why science revolves...revolved...around the US.

If you're living in the richest large country in the world, it's worth contemplating why that is. Is it US exceptionalism? No, it's that the US came out relative untouched from two world wars that seriously harmed most of the world, so it become basically the central hub. The geographically-safe, still wealthy friendly power.

That is all dissolving at an astonishing pace, and the reality will be a harsh one. Like the other post said, the US isn't going to suddenly be poor, but instead it's just going to be an endless drain as the world reorients.

And I mean you can say "oh well we'll do without!", and...okay? I guess it's just the new minimalist world!

As to the "the US will be harmed less than others", while I actually believe the US will be one of the hardest hit countries of all, because most of the US economy relies upon an illusion, it's a silly self-comfort anyways because the US is the cause of all of this. It's like salting the land and then gloating because your crops weren't grow well anyways.

> It is the reason the US $ is the global reserve

That may have been the design case, but the reason it is now is just TINA. No other currency can absorb the volumes necessary. Let's go over the alternatives:

- Euro - has less than half the volume of the US. A possible contender, but remember each member state does get to dictate its own printing rules, so the

- Yen - one tenth the reserve volume, but pegged to a country that has been in several "lost" decades.

- Yuan - country has massive capital controls and you could get completely fucked if the government fears revolt and lets people move their money out of china. And yet, international reserves are LESS than the CAD.

> it's worth contemplating why that is. Is it US exceptionalism? No, it's that the US came out relative untouched from two world wars that seriously harmed most of the world, so it become basically the central hub.

I think you've got the causal arrow wrong on this. The US is geographically well situated. It touches both oceans, and has a huge gap between it and most of the rest of the world. It's ~energy independent, and has robust agricultural center. That's why it was untouched from both world wars and that's why it became the central hub of commerce in the postwar era. The US can afford to fuck up a lot of domestic and international policy and still generally speaking not worry about existential threats.

>I think you've got the causal arrow wrong on this.

My point was precisely that the US benefitted by geographical happenstance. Not sure how I got this wrong.

Regarding existential threats, nuclear proliferation is going to go through its worst period in human history. We are going to end this decade with a number of new nuclear bomb participants, and it's a profoundly obvious, inevitable outcome of the current US administration's myopic policies. And with that the probability that some American cities become glassed keeps spiralling ever upwards.

> It's ~energy independent

Not really. At least in terms of oil, the majority of what’s extracted cannot be refined in the US because all of the refineries were built for non-shale oil. Basically all of the oil gets sent abroad to be refined and then sent back.

Why this isn’t talked about more, especially under the context of “drill baby drill”, I don’t understand. If anything the slogan should be “refine, baby, refine”

yep thats why i put "~". youre absolutely correct but also in a pinch the us could fast track getting dirty athabasca sands oil in and mixing it with shale to get something more ingestable by our plant.

i would not be surprised if being ready for such a scenario + knowlege of shale reserve limitations is why those plants aren't kicked over so long as the trannsshipment for refining doesnt remain cost prohibitive.

Yup

Heard an interesting analysis by a Bloomberg Radio guest, running down the advantages/disadvantages between US and China. They came out mostly balanced, but the big imbalance is the population. The US population is a LOT less tolerant of disruption, and the Chinese population is more tolerant, and less informed, e.g., no one there even knows the rates are ~145%.

I'm inclined to agree. I see the US population as fully and multi-generationally accustomed to the luxury of comfortable living with a decent safety net. When things start to get really hard, the US population will get rapidly un-governable, while the Chinese will be both more ignorant, more controlled, and more willing to take some suffering for the country's good, while the US has been all about "ME" for quite a while.

Nah, the US has gone through plenty of crazy social shifts without totally collapsing. Since the civil war, historically, difficulty tends to galvanize the US public (for better or worse). You'll have to do a better job explaining why this time is different, that isn't just "vibes". American culture is full of inherent contradictions in individual/social balance. The biggest one recently is identity politics, and the swing to and from this movement is indicative of how malleable the US relationship with individualism is.

What’s different is the US is wayyyyy richer and more comfortable than any time previously in history, or at least was until recently (in terms of PPP of the avg person). When you grow up in those conditions, it’s like you’re the kid of a rich person who made all the money, and you now feel entitled to it without any of the work it took to get here, and without experiencing the pain without it or the lessons learned along the way. Instead you start to complain that you can’t do XYZ (buy a home, have a family, pay for healthcare), but because you didn’t create these conditions or experience life before, you just blame others without any of the tools to correct it for yourself.

>>When you grow up in those conditions, it’s like you’re the kid of a rich person who made all the money, and you now feel entitled to it without any of the work it took to get here, and without experiencing the pain without it or the lessons learned along the way. Instead you start to complain that you can’t do XYZ (buy a home, have a family, pay for healthcare), but because you didn’t create these conditions or experience life before, you just blame others without any of the tools to correct it for yourself.

THIS!

A nation of (predominantly) spoiled brats is not Sparta.

You think the US population, on average, knows what the tariff rate with China is?

On average? Maybe not. But that is not the point; it's the massive info imbalance between US vs China population

I would bet, of the US 48% who read above a 6th-grade level, at least 2/3 of them know the rate is well over 100%.

The analyst's point is that even the literate in China do NOT know the rates because they have been systematically suppressed by the govt., so the info is simply not available (except to those few who have a reliable hole in the Great Firewall), so the Chinese population is already more controlled.

>I see the US population as fully and multi-generationally accustomed to the luxury of comfortable living with a decent safety net.

What gives you this idea, at all?

Our safety net is non existent in this country. The fact is most people in the US feel squeezed, thats why Trump was able to win with his America First attitude to begin with.

Sure, maybe she's wrong and the US population is actually hardened, tough, and patriotic enough to get over their divisions and unite to support tariffs.

I'm looking at it from a general historic perspective. Just look back 100 years.

Of course the safety net could be a lot better and the GINI coefficient is awful, but there still has never been more wealth floating about the general population. When the people complaining loudest about their situation are having boat parades, driving $75K pickup trucks with aftermarket mods, and getting their news on 75" TVs, and their biggest complaint driving their vote is the price of eggs due to an avian flu pandemic, they are definitely comfortable.

When that changes in a matter of weeks, we'll see what happens.

I just found the analyst's observations valuable and worth sharing.

>Of course the safety net could be a lot better and the GINI coefficient is awful, but there still has never been more wealth floating about the general population. When the people complaining loudest about their situation are having boat parades, driving $75K pickup trucks with aftermarket mods, and getting their news on 75" TVs, and their biggest complaint driving their vote is the price of eggs due to an avian flu pandemic, they are definitely comfortable.

This isn't reflective of the median reality for most people. Simply put, the strata divide is growing even though there is a lot of wealth in US society, it is spread incredibly unevenly.

The US isn't well prepared to handle a trade war, never mind that this trade war is really cover for a class war because big businesses felt labor made too many gains from late 2020 through early 2023

Agree the US is ill-prepared (and less-prepared vs Chins) for any kind of war, trade or otherwise, which was the point of the analyst I cited.

I won't dispute that the median reality for most people is far less than ideal. Yet from a historical perspective the overall life in the US is of historically unparalleled safety with overall peace and low crime rates, health with more ppl covered by insurance (but yes, less than 32 other developed nations, but higher top-quality care), and plenty of historically cheap goods imported from low-wage nations.

Yes, it can all be far better, the top 0.001% are stealing vast wealth that could literally transform lives, and there is a homeless problem from inadequate psych care. But we do not have massive poverty, unemployment is at record lows for decades, and so forth.

It appears we are about to find out what it is like to see breadlines and brutality.

And yes, I 100% agree the "trade war" is about cementing more gains for the top class because labor had it too good. They can only see a business model where they prosper only if everyone else suffers. They don't see the greater prosperity possible if everyone participates in building the prosperity.

>Yet from a historical perspective the overall life in the US is of historically unparalleled safety with overall peace and low crime rates, health with more ppl covered by insurance (but yes, less than 32 other developed nations, but higher top-quality care), and plenty of historically cheap goods imported from low-wage nations.

Which in context of the conversation, means nothing. I'm not disputing the fact that relative to historical circumstances, entire swaths of the world have it better than ever, but that doesn't end poverty or meaningfully increase stability under the current regime, and whatever comes of this - and its not going to be good - will last far longer than the regime is likely to be in power[0]. Addressing current and future concerns is what counts here, regardless of how good anyone has it.

[0]: I hope the US can maintain free and fair elections. Remains to be seen if this administration, its cronies, and its followers running congress and SCOTUS won't dismantle elections

>>Which in context of the conversation, means nothing.

Umm, it's the central point —» Which population is more prepared and willing to endure deprivation to win a trade war? Those multi-generational experience of safety, stability, and MTV prosperity mean everything in terms of being unprepared to endure deprivation for a greater good. A nation of spoiled brats is not Sparta.

We certainly agree the outcome of this is inevitably bad, is already decades-long in terms of trust broken across the globe, and the regime is definitely trying to kill free&fair elections to remain in power.

>Are the goods not being traded to the US "things that Americans can do without"? I think for a large portion of that, the answer is "yes".

How does one reconcile this with the fact that 2/3rds of the US economy is based on consumer goods? I agree with the general premise that we probably don’t need so much frivolous junk, but like it or lump it, that’s what our economy has been based on for decades. It would potentially take just as long to remake the economy into something else.

Yes, everyone is whistling past the graveyard about this.

You will see panic in two weeks. I was talking to two truck drivers here in Lincoln, Nebraska I met at a Flying J. They are already talking about layoffs and job insecurity and they are wondering why no one cares. One of them asked where his bail out was.

The market, I think, is driven by AI and will be reactive, not predictive. All you need to do is be the quickest person out. All the under millionaire suckers will be wondering what happened to their 401k's.

If the millionaire has most money in the market, won’t they be wondering what happened to their money as well?

They do not make up the majority, and most of them have other assets:

"only about 12% of U.S. households have a net worth over $1 million."

https://finance.yahoo.com/news/guess-percent-people-1-millio...

I’m in that 12% (fortunately). But I’m far from the 0.5%. The 0.5% have complex diversified assets. “Normal” millionaires like me are mostly real estate and market. We are vulnerable both to market losses and, if the economy crashes, much lower property values.

Plus the defense industry of course. You could drop the tariffs overnight but much of the world which trusted America for their defence needs no longer do.

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