And so...the "recession" begins

^^^I would think most ingredients of Kellog's RB would be of American origin and made in America so no tariff worries there. But some producers and resellers may spread the pain around to products not subject to tariffs or not subject to much of a tariff.
 

againstthegrain said:
^^^I would think most ingredients of Kellog's RB would be of American origin and made in America so no tariff worries there. But some producers and resellers may spread the pain around to products not subject to tariffs or not subject to much of a tariff.
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That is precisely what the CEO of Walmart mentioned. He indicated they might raise the price of some non-tariffed items to keep the costs down on items with tariffs. Sort of equalizing the increases across the board.
 
anyway as a thin ice skater - don't ya just love it when we still see all these big important people meeting in different important places to try to solve a lot of important problems - and we all sit watching on our tv screens and wonder how our lives are gonna improve or not? just sayin like?
 
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I love the feeling of beach walking close to the sea and just paddling ; no swimming ; no getting in too deep and needing lifeguards? just wandering along with a song in mind - and we all like different tunes heh?
 
while we look at the price increases as inflationary, they really aren’t inflationary.

Adding tariffs cannot cause inflation anymore than removing tariffs can cause deflation.

There are two schools of thought regarding inflation:
  • “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” -- Milton Friedman, 1976 Nobel Prize in Economics winner. That is, expanding the money supply too quickly causes inflation.
  • “Persistent high inflation is always and everywhere a fiscal phenomenon, in which the central bank is a monetary accomplice." -- Thomas Sargent, 2011 Nobel Prize in Economics winner. That is, too much persistent federal government spending causes persistent inflation.
According to the Fiscal Theory of the Price Level (FTPL), inflation is primarily caused by fiscal policy rather than monetary policy. According to this theory:
  • Inflation occurs when government debt is larger than what people think the government will repay through future budget surpluses.
  • The real (that is, inflation-adjusted) value of government debt, which declines with inflation, is equal to the present value of expected future fiscal surpluses.
Notice that neither tariffs nor relatively high US labor costs cause inflation. They cannot.

But what tariffs can do is change the relative price of imported goods compared to domestic goods. For example, we can expect tariffs to cause the price of Vizio TVs made in China but sold in the USA to go up relative to the price of Broadway tickets or a season's lift pass to Deer Valley. That isn't inflation; that is a change in relative prices. We consumers react to changes in relative prices of goods - in aggregate, we will buy fewer Chinese made TVs and instead spend the money on, for example, Broadway tickets and a pass to Disney World.

but an increase in the competition can allow american manufacturers to raise prices to just under the competition.
plus the tariffs can add extra costs to things like insurance.

if the value of cars go up and parts are more costly insurance will go up .

so every dollar we have to spend more for something is a dollar less we will have for spending else where. so by definition that isn’t inflation since inflation is a rise in all general prices and that isn’t likely to happen since we can only buy this or that and not this and that
 
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Ah, but @mathjak107, as import prices rise, so do other prices. No portion of our economy is an island unto itself. Disney raises prices at the drop of a hat. (Speaking of hats, souvenirs sold at their theme parks are almost exclusively imported.)

As a trucking company's costs rise (fuel, equipment, computer systems, uniforms, coffee makers in the C-Suite, you name it), so will the their prices. That will cause escalating prices of even non-tariffed foods, because they need to be shuttled from hither to yon. When food costs rise, so will salaries of those stocking the shelves.

As tariff-related increases filter through to retail shelves, they'll have a cascading effect on other prices, including non-tariffed foods, service economy rates, school and other taxes (gotta pay for computers, desks, salaries and more).

Back to school shopping in rougly 6 weeks will be many families' first serious encounter with tariff impacts. The loss leaders will still exist, but where do you think most of this is made? Where do you think the lion's share of backpacks are manufactured? (Spoiler... that would be China, other Southeast Asia countries and elsewhere. Not the US.)

I'm hoping to be proven wrong about increased prices, but don't expect to be.
 
but every dollar that goes towards a price increase is another dollar that will, not go to someone else’s business. .

so one business gets a dollar more and one a dollar less .

that is why tariffs are not inflationary… we would all need to have more money to spend so we can buy this and that and not this or that.
so unless the fed floods us all with money again , the money supply in circulation is the same
 
Are We Seeing an End to the Age of Offshore Production?

A new report from Capgemini suggests that, for U.S. manufacturers, the dominance of offshore production is coming to an end.​
​
The survey of 600 U.S. manufacturers found a whopping 82% of respondents saying they plan to move a substantial amount of production for American markets either onshore or to a nearshore location within the next three years.​
​
U.S. companies expect to invest $1.4 trillion to make it happen. It’s all part of a trend that Capgemini calls “reindustrialization” — defined by the consultancy as “the reconfiguration of supply chains and global manufacturing capacity, including reshoring and nearshoring production, as well as diversifying and investment in domestic manufacturing production.” The effort could involve construction of new factories as well as the upgrading and modernizing of new ones, aided by cutting-edge technologies such as artificial intelligence and machine learning.​
​
The top driver behind reindustrialization strategies, according to the report, is growing pressure on supply chains to boost reliability. That’s followed by the need for sustainability, worries about geopolitical tensions, the desire to boost competitiveness, changing government trade policies, rising labor costs, and a need to reduce overall supply chain and logistics expense.​
...
Shifts in sourcing don’t happen overnight, and the scale of the effort described by the Capgemini report suggests that manufacturers are likely to encounter numerous challenges as they strive to nearshore and reshore production in a time of disruption and uncertainty. Still, the Capgemini report says, “Our research reveals a prevailing optimism among executives, with 68% of executives confident that reindustrialization can drive innovation and technical advancement.”​

Who Moved My Cheese? - Wikipedia
 
dilettante said:
Are We Seeing an End to the Age of Offshore Production?

A new report from Capgemini suggests that, for U.S. manufacturers, the dominance of offshore production is coming to an end.​
​
The survey of 600 U.S. manufacturers found a whopping 82% of respondents saying they plan to move a substantial amount of production for American markets either onshore or to a nearshore location within the next three years.​
​
U.S. companies expect to invest $1.4 trillion to make it happen. It’s all part of a trend that Capgemini calls “reindustrialization” — defined by the consultancy as “the reconfiguration of supply chains and global manufacturing capacity, including reshoring and nearshoring production, as well as diversifying and investment in domestic manufacturing production.” The effort could involve construction of new factories as well as the upgrading and modernizing of new ones, aided by cutting-edge technologies such as artificial intelligence and machine learning.​
​
The top driver behind reindustrialization strategies, according to the report, is growing pressure on supply chains to boost reliability. That’s followed by the need for sustainability, worries about geopolitical tensions, the desire to boost competitiveness, changing government trade policies, rising labor costs, and a need to reduce overall supply chain and logistics expense.​
...
Shifts in sourcing don’t happen overnight, and the scale of the effort described by the Capgemini report suggests that manufacturers are likely to encounter numerous challenges as they strive to nearshore and reshore production in a time of disruption and uncertainty. Still, the Capgemini report says, “Our research reveals a prevailing optimism among executives, with 68% of executives confident that reindustrialization can drive innovation and technical advancement.”​

Who Moved My Cheese? - Wikipedia
Click to expand...

This is not to dispute the content or source, but to reconcile its potential impact on inflation or recession.

"U.S. companies expect to invest $1.4 trillion to make it happen."*

*Investments of 1.4 trillion "to make it happen," plus higher manufacturing wages in the USA than wages in countries we import from will increase cost of goods.

"Signs of a move by U.S. manufacturers away from offshoring have been evident for years**, motivated in part by rising factory wages in China; growing trade tensions between China and the U.S., leading to the imposition of duties on a wide range of products and components, and a desire to boost supply chain resilience and dependability by shortening supply lines."

** Indicating the transitions were imminent prior to 2025, thereby negating the necessity to increase the amount of tariffs which were already in place.
 
mathjak107 said:
but every dollar that goes towards a price increase is another dollar that will, not go to someone else’s business. .

so one business gets a dollar more and one a dollar less .

that is why tariffs are not inflationary… we would all need to have more money to spend so we can buy this and that and not this or that.
so unless the fed floods us all with money again , the money supply in circulation is the same
Click to expand...
So not inflationary but likely recessionary?
 
dilettante said:
whopping 82% of respondents saying they plan to move a substantial amount of production for American markets either onshore or to a nearshore location within the next three years.
Click to expand...
In the past few years, I've seen a fair amount of labor-intensive manufacturing move from China to Southeast Asia and Central America. Not to the US. Central America may be the "nearshore" location these companies are hinting at.
 

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