FOH Cigar Index: Global Economy

[madandana]

History tells us the market will always go up. The world has been through B.S. worse than this and has bounced back. The only question in my mind is how much to buy now and how much to wait on.

My whole life the world has been going to hell in a hand basket for one reason or another, I was born in the late 60s so my first memories are from the 70s and there’s been issues ever since. We’ll all be fine.

[Webbo]

I took a 2 week business road trip from Alabama up Chicago, mainly visiting the steel towns so Nashville, Memphis all the way up via Ohio to Gary Indiana. As a Brit who has not passed this way for 20 years it was fascinating and in equal measures both shocking and inspiring.

I try to avoid politics wherever possible on my travels worldwide but as this was the time of the inauguration it would crop up often. I met with many people from wealthy business owners and senior management all the way to guys on the mill floor. Naturally views and opinions would vary wildly on many issues but the most common thread running through all conversations, regardless of position, wealth or political persuasion was the high cost of goods and inflation, particularly household items and food, and the terrible impact it was making. Reducing prices was absolutely upmost on all the wishlist's of everyone and I am 100% certain that not one person I talked to remotely thought that they where voting for increased financial pain for possible longer term gain, regardless of which way they cast their ballot.

Frankly I'm not interested in hearing any justifications for tariffs, all I'm stating is from the limited sample size I experienced the shock of their impacts must (or may well be soon) horrifying for a lot of good people. What strange days we live in....

[ltte]

Does someone can explain me in simple word why this word wide hysteria about those tariffs?

How the complete world economy will crash cause of those tariffs? Does it mean that 330 - 350 milions American consumers make the majority of worldwide consumers? I can not believe that the US market was until now fully open for importers and that there was not any import duty and customs.

Any explanation would be welcomed and appreciated because I have a big problem with understanding this situation.

Ltte

[Webbo]

5 hours ago, ltte said:

Does someone can explain me in simple word why this word wide hysteria about those tariffs?

How the complete world economy will crash cause of those tariffs? Does it mean that 330 - 350 milions American consumers make the majority of worldwide consumers? I can not believe that the US market was until now fully open for importers and that there was not any import duty and customs.

Any explanation would be welcomed and appreciated because I have a big problem with understanding this situation.

Ltte

The simple answer to your question is that the US has  ~5% of the worlds population but consumes ~30% of the worlds resources (including energy). Any part (component of product) of that 30% that is not 100% sourced and produced in the US just increased in cost between 10 - 50%.

[Fugu]

18 hours ago, El Presidente said:

The tragedy (in this part of the world) is that 80 years of Asia Pacific goodwill/aliances have been torched. There is no getting back to where the US Japan/Singapore/Phillipine/Australia etc relationship was. It is a new dawn and all have been made very aware of the new realities. 

Disruption can offer opportunities and chances. Sometimes it's an act of liberation, in some instances the only one, even. But making it a principle of your acting, be it now politics, economy or personal relationships,  you - now, how to put it - ... you are going to lose a lot of friends. This is all about reliance, faith and dependability.

Tariffs. What good are tariffs for? To protect your own market from "evil", to make good for trade/production disadvantages from local legislation, or to simply keep competitors out. If solely done for the latter it hinders competition and kills innovation. Eventually, it will make market actors self-contented and lazy. I don't see anything good being brought about it if applied that way.

[sudoslash]

4 minutes ago, Fugu said:

Tariffs. What good are tariffs for? To protect your own market from "evil", to make good for trade/production disadvantages from local legislation, or to simply keep competitors out. If solely done for the latter it hinders competition and kills innovation. Eventually, it will make market actors self-contented and lazy.

I agree 100%. Broad tariffs are indirect government subsidies and fundamentally anti-competitive. I would argue that the scope of these tariffs are akin to a "government bailout". If Peter Navarro's claim of $6T over the next decade is true, that's basically a 2008 GFC bailout every year for the next decade for American manufacturing. The difference is, instead of the Fed footing the bill through deficit spending, consumers will fund this bailout directly through prices.

[Fugu]

39 minutes ago, sudoslash said:

I agree 100%. Broad tariffs are indirect government subsidies and fundamentally anti-competitive. I would argue that the scope of these tariffs are akin to a "government bailout". If Peter Navarro's claim of $6T over the next decade is true, that's basically a 2008 GFC bailout every year for the next decade for American manufacturing. The difference is, instead of the Fed footing the bill through deficit spending, consumers will fund this bailout directly through prices.

Yep, that's certainly another motivation, which I didn't dare to mention in order not to risk touching forum red-lines. But indeed, and generally speaking in this context, basic broad tariffs per country are effectively contradicting the genuine idea of tariffs. Usually (and I have been dealing quite a bit with export of commodities, also into the US, with tariffs and customs documentation in my professional life), tariffs are a pretty sophisticated regulatory tool (one shouldn't think so ). A tool that is being applied carefully and restrictedly (!) to country of origin AND type of commodity. There isn't a one-fits-all tariff. Applying a general basic rate per nation makes not much sense from a trade economist's perspective. It will inevitably be perceived as a hostile act, nothing of any regulatory value.

[Cigar Surgeon]

Hoy boy, I'm going to have to wear some comfortable slippers here. 

Free trade is good for everyone and a proven strategy. The economics are well understood and proven for decades now. Even Ronald Reagan understood the benefits well. 

Culturally for Canada we're seeing a significant and lasting change. A big drop off in cross border vacation travel which has already driven air carriers to drop routes. Major focus on a permanent shift to trade markets. Short term avoidance of goods from a particular nation, hard to say whether that will sustain. 

Nationally I've not seen the country this unified in my lifetime. When you see Quebec leaning into Canadian solidarity that raises significant eyebrows. 

[Arabian]

Buy the dipping dip. The market will reset itself as usual but its a bloodbath. I'm seeing a new world order. Its a slap in the face for XYZ countries. People don't get that nations go after their interests. The word 'ally' is a rubbery term at best. 

[El Presidente]

I think the Heard Island penguins have shown how this will pan out.

 

Initially they were furious that they had been hit by 10%.  To be honest, they had no idea anyone, let alone the US administration,  knew they existed. 

 

 

Vance laid down the facts for their inclusion in global Tariffs. 

The Penguins initially overreacted. 

 

 

They entered negotiations 

 

 

and finally came to an agreement 

 

 

 

[Webbo]

Penguins! It’s always the bastard penguins (shakes fist at sky). 

[Chas.Alpha]

Now wait a minute, I got a warning for posting telescope ads? 🤔

[El Presidente]

7 minutes ago, Chas.Alpha said:

Now wait a minute, I got a warning for posting telescope ads? 🤔

........the Heard Island Penguins reached out and demanded their time in the sun. 

[riderpride]

1 hour ago, Chas.Alpha said:

Now wait a minute, I got a warning for posting telescope ads? 🤔

I can only infer they're instrumental to cigar logistics... 

Cheers!

[Kaptain Karl]

On 4/5/2025 at 3:13 PM, JohnS said:

Turn on the news today. Mass protests in major cities in first world countries and companies such as Range Rover ceasing exportation of their vehicles to the US. Bills being prepared on both sides to counter this.

Historically speaking, there is a strong link with enacting big changes and assassination attempts. To me, it reminds me of the final chapter of Julius Caesar's political career. We all know how that turned out.

P.S. This may be the most inflammatory I've been in a post on FoH in a long, long time. Yet, I'm comforted by the thought that even Jesus took a whip against corruption in the temple markets.

When I say stuff like this I’m basically talking to myself because it’s not my purpose in this life to lead and engage in the hypervigilance of politics. And there’s many people who it is their purpose. Just not mine. 
What’s going on REALLY bothers me. My grandfather was a mischling in the Sudetenland in 1938. France and Britain giving Hitler the Sudetenland led to every practicing Jewish member of my family being murdered in Auschwitz and my grandpa enduring Nazi slave labor until May 5, 1945. So I feel deeply what’s happening in Ukraine…as the parallels are uncanny. I’m very into history and geopolitics…and when I feel this stuff I feel it on a level that’s connected to the intergenerational trauma my family has endured. It’s not something I can turn on and off. So my journey isn’t to engage deeply into the chaos. There’s days where my ego is inflamed and I want to let loose on how stupid my intellect thinks this is. But then it overwhelms everything and I’m f**ked for the day.
So I apologize for how that came off. The Aussies have been our most faithful ally, and we should ALWAYS treat you as well as you have us. It’s shameful. 

[El Presidente]

10 hours ago, Kaptain Karl said:

. There’s days where my ego is inflamed and I want to let loose on how stupid my intellect thinks this is. But then it overwhelms everything and I’m f**ked for the day.
So I apologize for how that came off. The Aussies have been our most faithful ally, and we should ALWAYS treat you as well as you have us. It’s shameful. 

From our perspective, Aussies will get through this relatively well economically.

Every country is entitled to run its own trade policy in what it perceives to be the best interest of its populace. This 10% tariff may indeed be repealed—but it doesn’t matter, as the damage has already been done.

What has left Australia (and other close U.S. allies) aghast is the speed, lack of consultation, and lack of consideration. It isn’t the tariff itself that concerns us most—it’s the realignment and the regional (Asia-Pacific) instability it brings. Until now, the U.S. has been our closest and most reliable regional partner. Without overstating it, since WWII the U.S. has maintained a relatively consistent global vision in terms of trade and security. It may not always have been right, but it was predictable—serving as a bulwark for fair trade and the promotion of democracy against the influence of bad actors. That predictability now appears to be out the window, as the U.S. seemingly retreats into an increasingly insular modus operandi.

We in the West have all been complicit in the decline of domestic manufacturing. We traded manufacturing for cheap products and low inflation. This was policy—an offering at the high altar of WTO free trade.

Trade rules that are unfair do need to be rewritten. But they should be rewritten with nuance—taking into account geopolitical realities and the risk of unintended consequences. What was needed here was a scalpel, not a sledgehammer. Bad actors are now emboldened. Trust among allies has been unnecessarily eroded. Countries that once leaned toward the U.S. are now second-guessing and spreading their risks. The idea of being “all in” with allies is out the window—for at least a generation.

I understand the objective. I only despair at the mechanism.

[Chas.Alpha]

Everything I want to say right now would get me banned for a week. Thank God we have the Best and Brightest handling these problems for us…😳

[Chas.Alpha]

[Kaptain Karl]

On 4/7/2025 at 1:01 PM, El Presidente said:

I understand the objective. I only despair at the mechanism.

Couldn't agree more on that and your post. If from what I've pieced together (bipolar neo-Bretton Woods) is the objective, then alienating allies that are going to take part in this reorganization of the global trading system seems incredibly counter-intuitive. 

[helix]

On 4/6/2025 at 1:57 PM, Cigar Surgeon said:

Hoy boy, I'm going to have to wear some comfortable slippers here. 

Free trade is good for everyone and a proven strategy. The economics are well understood and proven for decades now. Even Ronald Reagan understood the benefits well. 

Culturally for Canada we're seeing a significant and lasting change. A big drop off in cross border vacation travel which has already driven air carriers to drop routes. Major focus on a permanent shift to trade markets. Short term avoidance of goods from a particular nation, hard to say whether that will sustain. 

Nationally I've not seen the country this unified in my lifetime. When you see Quebec leaning into Canadian solidarity that raises significant eyebrows. 

How does a democratic sovereign nation act when blind sided by a trusted long time ally with economic ruin and invasion?

[Chas.Alpha]

3 minutes ago, helix said:

How does a democratic sovereign nation act when blind sided by a trusted long time ally with economic ruin and invasion?

Hockey?🏒🥅

[dicko]

Economy - much more concerned by the ever growing uniparty/duopoly bloated State in Australia (tax, ban, censor, bloat public, crush small business) than anything coming from US.

Markets - buying the dip. Money printing (stealth QE) coming latter part of this year. Global m2 rising and US will cut rates later this year and have a ready made excuse (i.e. blame President Trump). I think they need to roll over 10 odd trillion in covid bonds this year? Huge asset price inflation over next couple of years after the dust settles on this tariff stuff.

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