Any guesses on how long the tRUMP Depression will last?

[Bernardo de La Paz]

18. Depends on how long he keeps tariffs on, how deep his govt cuts go, and how deep deportations & fear go.

All indications Friday and Saturday are that tRump is committed to long term imposition of tariff taxes. His cabinet is filled with men and a few women who are committed to tRump, chosen for loyalty, and committed to his agenda.

Economic uncertainty will prevail for a while because despite his commitment to tariffs, he also has a propensity to want to be seen as a master negotiator who saves the nation. Both Navarro and Lutnick have said there will be no negotiations over tariffs; that the "enemies" have to capitulate. But other murmurs about negotiation are still occasionally heard.

Even if uncertainty evaporated at 7:00 am Monday morning and everyone all around became fully convinced tariffs are permanent for more than 4 years, the earliest any real benefits would show up would be in about 18 months and not much then. Moving big plants and supply chains to be internal to the US would take at least 4 years. Even if you move a plant to the US, if you are importing 30% of the cost of each unit in foreign parts, then you have to weigh that cost against the current context costs.

A thought exercise with made up numbers, though reasonable, but it illustrates one dynamic: Company A and B both sell similar widgets that have about 40% market share each and cost about the same. Lets say that imported parts that might go into widgets are tariff taxed at 25% and that it would cost because of labour and peripheral costs (like infrastructure, taxes) such that parts made in the US are at about the same 25% premium . Let's take capital costs to be equal and amortized over years, though a factory might be cheaper in Vietnam.

Both make them in Vietnam because tRump 1.0 put tariffs on China. Now there are 49% tariffs on Vietnam when there used to be an average of 3%. Co A builds a factory in USA. Co B stays in Vietnam.

Both companies cost of parts are the same. But the fabrication costs in USA are higher than in Vietnam, by say, 25% as above. The 70/30 parts component of cost is tariff taxed differently.

Lets take the base cost in Vietnam of a container of Co B widgets is $100K. Tariff taxed, that is $150K. Co A has two options: A1: import parts, A2: buy American parts (assume they can be found). Both cost the same because A1 is tariff taxed at 25% and A2 costs 25% more per above premises. Both options mean parts cost $37.5K.

But Co A's cost on the 70% assembly, testing, and packaging component goes up 25%. What was $70K is now 87.5K. Add that to the 37.5K and unsurprisingly it is $125K, 25% higher.

maga would say that it's a no-brainer, $100K beats the tariff taxed $150K. But it is really more like $125K versus $150K, which is much less clear-cut, especially when we consider carrying the capital costs of building one plant while running and maintaining another. The plant being constructed is unproductive from the point of money being paid to architects and engineers until it starts making widgets at the same rate as the old plant.

This is in an environment of declining demand because of tariffed inflation. Which brings in uncertainty without even considering the uncertainty about the stickiness of tRump's tariffs.

In a business environment of uncertainty of costs and uncertainty of sales, a basic strategy is to stand pat. tRump may bray with great exaggeration about this company and that, but even companies committing will drag their feet on every phase and may even back out. I think there will be limited expansionary economic benefit from onshoring in four years and it will be outweighed by larger contractionary forces.

So my guess is that the recession / depression may not be as deep as the 1930s but may easily be four years or more. Even if Democrats win the House and the Senate handily in 2026, tRump, as an imperial president, wields a lot of power including the veto.

One way that the scenario might be ameliorated is if mass protests and mass economic action (include stock market action) overwhelm Republiconners and they withdraw their support for tRump unless he substantially reverses course. That might or might not take a long time.