You’re arguing that business will order more supplies, inventory, services, goods this year than their business fundamentals would be able to use to “stockpile” items and avoid a tariff.
Like they won’t shift their orders forward in time, they will double their orders.
Make the case. How would that work?
If I understand the numbers correctly, autos and auto parts made outside north america will get a 25% tariff. Presumably this is 25% of the wholesale costs as listed on the invoice when they come over the border.
I am not sure what the markup is on cars, but let’s ignore this for now and just assume that we are paying a tariff on 25% of the MSRP that the consumer pays.
So 25% of 25% would be the final tariff extra charge, which is 6.25% of the total pricetag of the car.
For a rental agency, my guess is that a lot of the car fleet they run, they don’t buy for outright cash but they more than likely finance the vehicles, rent them for a while and then sell them on for their residual value and pay off the loans.
I’m not sure that most car rental agencies would consider the 6.25% enough of a price jump to go out and double their car fleet purchase UNLESS they think they have a good shot at renting those vehicles.
Because of the way that vehicles depreciate, having aging vehicles that are costing you insurance, storage, cleaning, capital depreciation etc is a huge liability.
Also, consider that they need to resell these cars in a year or two. The resale market has to be able to absorb the vehicles so that the car company is able to liquidate and reduce their liabilities.
Putting this in simple terms, a car company shopping ahead of the tariffs would be getting 20 cars today for the price of 19 tomorrow.
I suspect the fundamental rental business will be the largest factor. Sure companies may pull orders forward a few months, but in this example I doubt they will buy an entire double annual allotment of vehicles… There is not enough “savings” there to make borrowing that much money (and paying interest) make any sense. They are going to optimize around having the vehicles they do run being fully rented as much of the time as possible
And so at the end of the year, you’ll take your GDP calculator and figure out what the economy did.
Perhaps all the orders that would have happened in July were paid in March, but it could work out to be the same size economy.
One name for this phenomenon of higher standards is “the bigotry of high expectations” (as opposed to the ‘soft bigotry of low expectations’).
Yes, of course prices will go up. GDP (as a specific measure) takes the imported materials and removes them from GDP.
Example: let’s say you have a chocolate factory in Poland. When you’re calculating the Polish GDP, you can’t count sugar and cocoa that you import as ingredients. You can only count the things that Poles add domestically, so labor and other value you create inside your own country.
In this example, you would take the price of the chocolate bar and subtract the costs of the imports.
Now let’s say sugar and cocoa went up in cost. You have to charge more for the chocolate bar but you also subtract more for the imports in the GDP calculation. GDP could stay the exact same. Also, if the price goes up, maybe people will buy less chocolate, so GDP might even fall.
GDP = C + I + G + ((X − M))
M = Imports. Note the negative sign.
The GDP is specifically designed to not count any imports in any estimated domestic production.
There was supposed to be this Biden era analysis that showed that the tariffs were not broadly inflationary, and Biden kept a lot of the tariffs in place. One point that tariff proponents took from this was that tariffs COULDN’T be inflationary and wouldn’t drive up consumer prices.
Meanwhile, what happened was that many Chinese companies shifted parts of their production to non tariff countries and sidestepped the tariff costs. (Hence, prices were kept low, no taroffs due to that major loophole.)
Then, to keep that from happening again, Trump put the China tariff on every nation at once. No more loophole. But amazingly, they maintained a near religious belief that prices could be the same.
If you think in terms of complex systems, the first round of tariffs had all these self organizing details that defused the impact.
Round two is playing out like the administration can’t even see around the corner in simple causality cause-and-effect chains. They will never work out how to control the global trade using one country’s import tax program. Its insanity.
GDP, the D means Domestic. Imports are not counted and any stuff you’re importing that becomes a component of some domestic product is eventually backed out in the accounting.
So no, pumping imports shouldn’t increase GDP one iota. Imports count AGAINST the GDP.
And just wait until he starts keeping classified documents in the airplane lavatory next to the photocopier.
https://scholarworks.wm.edu/reports/1111/
" vertical land movement (VLM). VLM here varies over relatively short time scales amid changing patterns of subsurface water and hydrocarbons extraction.RSL rise rates of 5 mm/year or more aided by weak acceleration in Louisiana and Texas project a total RSL rise of between 0.4 and 0.5 meters above 1992 MSL by the year 2050; other Gulf and East Coast locations will experience equal or greater rise if upward trends in acceleration continue "
https://news.wm.edu/2025/05/06/2024-sea-level-report-cards-map-futures-of-u-s-coastal-communities/
And it’s just historically ignorant and obnoxious.
Yeah, they don’t even know about the battle of the gulf in the year 1218 when the confederated mayan forces trounced the Americans in an epic cannon battle and won the naming rights.
The way the climate is heading we all need to eat more flame retardants. Looking forward to my more retardanted future. /s
Interesting article, but it doesn’t say they are increasing the GDP / ordering more for the year.
It said they “stocked up” and pulled orders forward a few months AND STOPPED.
This is not a growth in the economy / massive extra investment. They are not doubling their orders for the year, they are just bringing in the same amount of products they were going to order, but they ordered slightly early.
They actually give the math in the article: last month was up 8%, this month down 50%.