On the Liberation Day, Donald Trump released the Pandora’s box of Stagflation, Inflation and Recession. Only one thing is bounded up which is hope and not yet released.
He used Trump Mathematics for Reciprocal Tariff, according to the table shown last Friday, people would not understand why their country was levied so much tariff for reciprocal, they never had any tariff against US. Trump used the trade deficit to minus the export and came to such a formula of tariff. It shocked everyone that knows economics and trade. He is not just King Donald, but Emperor Donald, he can do any calculation as he likes, neglecting Nobel Prize winners of Economics, Chicago School of Economics, classic and neo-Economics.
He just want everything go back to US for manufacturing, from high technology products to daily life sundry items. So they would like to buy basic daily items of life from a high cost of American factories. How could they bear? Even high end products like TSMC was not so successful in Arizona, because they would not run 3 shifts in a day for 24 hours as that in Taiwan, and that is why the second plant was built in Kumamoto of Japan, because only Asian workers would like to work as hard as a JACK. In US even new immigrants like to work, but the union would not allow them to work overtime so much. Even employed workers from Latin America or Asia, the production in US is surely smaller and more expensive.
Anyway, bring jobs back to US would take quite a long time. Let’s see in Covid-19, Apple said they would shift 20% of their production from China to India, the first two years passed and hardly had any progress, and then extent two more years still the plan had not completed. Besides building up a factory needs time to plan and construction, workers in China are more experienced and it takes some time to train the Indian workers to be as skillful as those that had worked for over a decade in mainland China. No matter in management or basic working positions. IT needs time and experience to upgrade. Rome was not built in a day! Apple and Tesla factories are also not built in a day no matter in Vietnam, India, Mexico or US.
So what we can expect are harder times ahead of us, including stagflation, that is inflation without any growth but just high unemployment, recession of a longer time. When will sunny days come? Still a hope, that is when recession is harder and more than the expectation of Emperor Donald Trump, may be some changes. But when? Just wait. Over the weekend, there were 1200 demonstrations spreading across 50 states against Donald Trump.
It was the age of wisdom, it was the age of foolishness. (Charles Dickens)