Is Black Monday Incoming?

[u/Chrissylumpy21]

So much fear in the markets and this time really feels different. All the Mag7 stocks are so hit by the tariffs our iPhones will probably cost $5,000 soon and as the world slows, people will use Amazon less, advertise less on FB/IG. No one is buying Tesla anymore. Who needs anymore AI chips, yet AI is decreasing Google searches.

I fear the world is realizing it all this weekend. Or is it just me that sky appears to be falling?

[u/PatrickWhelan]

This will be the ultimate test of modern political and economic theory, it's hard to imagine the era of free trade ending, the economic interdependence of nations has been a major factor in the (relative) global peace over the last 40 years. Is this going to actually usher in a new model of isolationist economics? Is Trump positioning a US-MX-CA economic block as global manufacturing power? Hard to imagine really - seem more likely pressure from the oligarchs will make these tariffs be somehow defanged over the next few months and things return back to the global normal, of "business as usual".

It seems like the second is, overall, more likely. At the end of the day Trump can't maintain control in a crashed economy and he'll get backed off to try to sustain his power. So maybe we crash another 40% now but I think we might be back on the up tick in 8 months or something. Seems like just chill and ignore the market time

[u/nsfishman → u/PatrickWhelan]

Global Free Trade isn’t ending; it’s being forced to create a work around without the USA, by the USA.

Once the other economies of the world achieve some sort of semblance of a stable, workable world economy without the US then the USD is at risk of losing its global currency status. If that happens, then the last few days will be a minor correction compared to the implications of that systemic change.

[u/Glass_Eye5320 → u/nsfishman]

While I agree the longer this goes on, the more the chances of workarounds becoming the new norm (sans the US), I don't think it will be that simple. What's to stop other countries pulling the same stuff that Trump has pulled? At some point China could become the new superpower and suddenly demand that the rest of the world "bend the knee" as well. Who knows - this could actually be their long term strategy as part of subsidizing local production (e.g. EV cars).

But I digress. I believe that humans always prefer the "path of least resistance" i.e. a quick fix that is stable just enough. I think what would make more sense would be to route goods via third party countries in order to circumvent much of the tariffs at the cost of transportation. Prices will go up in the US by 10-15%, people will get used to it (like they got used to inflation) and the world will keep on turning. It's not like prices ever go down. This is exactly what has been going on in my country for the past 5 years.

[u/Aware-Impact-1981 → u/Glass_Eye5320]

China has stable consistent leadership and for decades has been making thought out long term plays. Moreover, for like 40+ years they've used capitalistic free trade with other nations as their primary way to gain wealth and influence.

If they replace the US as the top superpower, they will become even more economically linked to Europe, and Asian nations will have to cozy up to them.

China would probably leverage that into a "we're taking Tiawan, anyone dare sanction us?? Didn't think so" play, but they have no incentive to randomly do what Trump is doing and put a gun to the head of all their trade partners or betray every military alliance they signed.

I see zero evidence Chine will fumble the bag like that. It's not even that they're "too smart" to make that mistake, it's that they "aren't dumb enough" to do it

[u/Glass_Eye5320 → u/Aware-Impact-1981]

I agree - but I think that most people thought the same way about the tariffs. No one in their right mind thought that these tariff percentages would be decided on (even from someone like Trump). All I'm saying is that all we need is one power hungry irrational leader to do the same thing. Also, China could very well be playing the long game for as long as they want- they're not really democratic in the way the their leaders are subject to terms.

Regarding Taiwan, excellent point and once they start, it probably won't stop there.

[u/Aware-Impact-1981 → u/Glass_Eye5320]

It's precisely BECAUSE China isn't democratic that they'll never have a complete fucking moron running their country like a dictator. That requires either 1) a civil war where the winning general becomes the dictator (Mao), or 2) voters being idiots (Trump). China has an established political system where the leaders pick the leader and have a say. They would never pick a Trump. Understand I'm not saying Democracy isn't the best system, I'm saying Democracy allows a lower floor for IQ at the top

[u/Santos_125 → u/Glass_Eye5320]

What's to stop other countries pulling the same stuff that Trump has pulled?

They'll have an example of exactly how that goes and how it destabilizes their country and the rest of the world. It would take a psychopath surrounded by psychopaths to follow in Trump's footsteps. 

[u/Slapinsack → u/PatrickWhelan]

I'm curious if he's attempting to employ a door-in-the-face technique.