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Six months into tariffs, businesses have no idea how to price anything

(www.wsj.com)
462 points JumpCrisscross | 9 comments | 30 Aug 25 20:56 UTC | HN request time: 0.875s | source | bottom
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haunter ◴[30 Aug 25 22:47 UTC] No.45078660[source]▶
In the end it's the biggest leopard ate my face moment ever:

China has very high growth momentum that surpasses American living standards soon, and not long before it will surpass American security standards too. China's purchasing power is probably more comfortable than most western countries, with extensive housing and high speed rail and electric cars etc. When a country becomes rich, inevitably other countries ask for their help. That's why China's growth must be curbed, fast > tariff them to their death or so. But I really don't think it will work at all. And personally I don't even think it's a good idea at all to begin with.

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decimalenough ◴[31 Aug 25 00:19 UTC] No.45079201[source]▶
The craziest thing about all this is that Chinese exports to the US aren't even that big a part of the Chinese economy (3% or so). Sure, it'll hurt and there's multiplier effects, but the entire rest of the world is more than happy to take up the slack. So the tariffs really are the US cutting its own nose off to spite its face.
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1. refurb ◴[31 Aug 25 00:37 UTC] No.45079300[source]▶
What do you mean “the rest of the world will take up the slack”?

Is the rest of the world suddenly going to start buying something they haven’t in the past? Why?

And the US consumer market is 2x the size of the next biggest (EU).

How exactly is the the rest of the world going to replace the demand of something several times its size?

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2. nemomarx ◴[31 Aug 25 01:31 UTC] No.45079536[source]▶
It seems plausible to me that growing markets like India could fill that hole over time, yeah.
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3. decimalenough ◴[31 Aug 25 02:06 UTC] No.45079688[source]▶
If the US buys less, there will be unsold inventory and a temporary glut in supply, which will lead to the Chinese dropping prices and exporting elsewhere. This is already happening in SE Asia:

https://www.chiangraitimes.com/china/china-export-dumping/

Obviously the profit margin will be less than selling to the US, but it does mean that the 3% of GDP mentioned above is not going away entirely, just shrinking to (say) 2 or 2.5%.

The article also mentions transshipment, where Chinese goods get routed to the US via a third country. Although Trump's strategy of "tariff everybody for all the things" is putting a damper on this too.

4. jandrewrogers ◴[31 Aug 25 02:35 UTC] No.45079845[source]▶
The “over time” is doing a lot of heavy lifting here. It won’t happen on anything remotely resembling a time horizon that matters for these purposes. Factories will be closed and gone by then.
5. seadan83 ◴[31 Aug 25 05:21 UTC] No.45080570[source]▶
When demand is reduced, you lower prices. Rest of the world suddenly are buyers. Governments can throw subsidies at impacted sectors too to cover the price difference while supply chains adjust. With growing trade relations, economies of scale and transition costs become factors. The cost of trade with the new trade relationships become cheaper and so does the reluctance to change (for example with a 3 year production pipeline baked, you don't walk away easily).
6. foxylad ◴[31 Aug 25 05:30 UTC] No.45080599[source]▶
As an example, I'm pretty sure I just took up some of the slack here in NZ. I've been looking at installing solar for a while, and a particularly good quote for a Chinese system (Sigen) recently made me go ahead. I strongly suspect the unusually good price and fast delivery were due to cancelled US demand.

OT: Solar is awesome! 18 panels are generating 2/3 of our load, despite it being late winter. And a 16kWh battery means the grid power we import is all off-peak. In summer we're going to be exporting enough that we may even cover our winter grid import. Plus it gives us the best UPS system we've ever had, including zero-second cut-over (c.f. Tesla's half-second glitch).

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7. csomar ◴[31 Aug 25 06:22 UTC] No.45080828[source]▶
China exported something like 525 billion worth of goods last year to the US. Not all good can be replaced but let’s say something like 350 billion worth of goods are unmarketable because of the tariffs. Do you really think the whole world can’t swallow 350 billion of imports?
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8. ◴[31 Aug 25 19:42 UTC] No.45086385{3}[source]▶
9. refurb ◴[01 Sep 25 01:37 UTC] No.45088649[source]▶
You’re ignoring the fact that the demand and supply were in equilibrium before.

So the world needs to absorb almost half a trillion of new supply.