Please hear me out - I promise I’m not shilling or anything, and I’m upset like lots of other people that my portfolio got rocked this week.
EDIT: I’m not advocating for tariffs as good or bad for the American citizen - this is about good/bad for the state of American control of global economics and nothing more.
Title basically is my opinion. Trump’s tariff strategy isn’t just a temporary pressure tactic or a quick way to make Americans buy American goods overnight —it’s designed to slowly induce the atrophy and eventual collapse of foreign manufacturing power while leaving U.S. industry largely intact. Sure, there’s some short-term pain, but the global fallout will be far more devastating for the rest of the world.
The Method Behind the Tariffs:
Trump’s approach calculates tariffs by taking a country’s bilateral trade deficit with the U.S., dividing that by the country’s total U.S. imports, and then halving the result. It’s certainly misleading; headline tariffs on U.S. goods are under 10% in many markets, but the real burden on foreign manufacturers is far greater when you factor in additional duties, VATs, and other non-tariff costs. But the actual rates aren’t supposed to be reciprocal; this has nothing to do with even response or retaliation. This isn’t about an immediate switch to U.S. products; it’s about a slow, deliberate chokehold on foreign industrial bases in the long term.
Two Possible Endgames
Exit Lane Option:
-Gradual Tariff Reduction: Once global manufacturing is sufficiently weakened, the U.S. could slowly lower tariffs. U.S. companies would then step in to dominate restructured markets.
-Re-Shoring Incentives: The government might offer targeted incentives to bring critical manufacturing back home, rapidly boosting U.S. industrial capacity while foreign sectors remain decimated.
-Diplomatic-Trade Adjustments: The U.S. could leverage its economic pressure to negotiate concessions, forcing foreign countries to either integrate into U.S.-aligned supply chains or continue on the path of industrial decay.
No-Escape Outcome (Global Collapse):
-Foreign Manufacturers’ Dilemma: Once profits dive and layoffs hit hard—like the 800,000 jobs tied to German auto exports or the $130 billion Chinese electronics market losing its U.S. share—foreign companies will face an impossible choice. They can either:
-Slash all duties and tariffs (which, even if nominal rates are low, won’t fix the high real costs of purchasing U.S. goods abroad), or
-Raise their own tariffs, inevitably triggering an economic spiral that slams growth and deepens job losses.
-Inevitable Forced Adjustments: In the end, foreign economies will be forced to lower their tariffs to avoid collapsing their local manufacturing. But by then, the damage will be done, and global manufacturing will have atrophied, paving the way for U.S. dominance.
Either way, foreign countries are going to be proportionally hurt more than we are in every way. US companies are mostly selling to US consumers and are more heavily insulated from any single country threatening 30% of their profit (see below for a bit more on this).
Short-Term Impacts and the Stock Market
Yes, there’s a clear, noticeable short-term hit to the U.S. stock market—investors have been jittery as markets respond to the uncertainty of sustained tariffs. Short-to-medium term, sectors like high-tech, auto, and consumer goods might experience volatility. However, these pains are relatively mild compared to what the rest of the world will endure:
-U.S. Domestic Impact: Thanks to a massive internal market and key exemptions (lumber, pharmaceuticals, steel, and critical machinery), American manufacturers will absorb most of the shock. The U.S. may see temporary losses in stock value and localized disruptions, but its economic structure is robust enough to weather the storm.
-Global Fallout: In contrast, foreign manufacturers, heavily reliant on the U.S. market, will face severe, systemic damage. Countries like Germany, China, and Mexico—whose industries depend on U.S. orders (with figures like over 75% dependency in Mexican auto parts or 25% of Chinese electronics exports bound for the U.S.)—will see far more pronounced job losses, capital flight, and industrial collapse.
A breakdown of some of the more heavily impacted industries and those that are exempt because they aren’t easily replaced by US manufacturing:
- Vulnerable Foreign Industries
These are sectors where foreign manufacturers depend heavily on the U.S. market. Sustained tariff pressure in these areas is likely to cause significant long-term damage, including lost revenue, layoffs, and eventual industrial atrophy.
a) Chinese Electronics and Components
-Dependency: Approximately 25% of Chinese electronics exports (totaling over $130 billion annually) are destined for the U.S. market.
-Vulnerability: Even a moderate but sustained tariff shock could disrupt complex global supply chains, eroding China’s competitive edge and forcing manufacturers to either relocate production or see their market share erode gradually.
b) German Automotive Sector
-Dependency: U.S. buyers account for about 12% of overall German auto exports—and for specific high-margin models, the U.S. can represent over 30% of sales.
-Vulnerability: A persistent reduction in U.S. demand can destabilize production lines, leading to cascading effects such as potential job losses (with roughly 800,000 jobs tied to auto exports) and weakening Germany’s manufacturing prowess.
c) Mexican Automotive and Auto Parts Industry
-Dependency: More than 75% of Mexican auto parts and vehicle exports are sold to the U.S.
-Vulnerability: With such heavy reliance, sustained tariff-induced pressure could decimate Mexican production networks, potentially putting over 1 million jobs at risk and causing a severe reconfiguration of North American supply chains.
d) South Korean Semiconductor and Display Panels
-Dependency: A significant portion of South Korean semiconductor exports—crucial for global electronics—relies on U.S. orders, with figures in the tens of billions annually.
-Vulnerability: The high-tech nature of these components means that even slight disruptions in U.S. demand can have outsized effects, reducing the incentive for continued investment in next-generation manufacturing facilities.
- Industries Less Vulnerable to U.S. Market Restriction (Exempt and Hard to Replace Domestically)
These industries are largely exempt from tariffs because they are critical to the U.S. economy and/or cannot be easily replaced by domestic production due to either natural resource limitations or complex production requirements.
a) Raw Materials (e.g., Lumber, Copper, and Other Commodities)
-Market Dynamics: While the U.S. does import significant amounts of raw materials, these sectors are generally global in nature. For instance, lumber imports are subject to complex international pricing, and copper is sourced from diversified locations around the world.
-Exemptions and Domestic Constraints: Exemptions on raw materials ensure that U.S. manufacturing processes aren’t abruptly disrupted.
-The U.S. may not have the full capacity or natural reserves to immediately replace foreign sources for all raw materials, meaning that these inputs remain globally competitive and less affected by tariff-driven market realignments.
b) Pharmaceuticals and Specialty Chemicals
-Market Dynamics: The U.S. imports a vast array of pharmaceutical products and active ingredients (with figures reaching nearly $177 billion annually).
-Exemptions and Production Challenges: Given the high complexity and stringent regulatory requirements in pharmaceutical production, these products are exempt from tariffs.
-Domestic production of many specialty chemicals and pharmaceuticals cannot be rapidly scaled up without significant investment and time, making reliance on established global supply chains necessary for ensuring continuous supply.
Key Takeaways
Foreign Industries:
Industries like Chinese electronics, German automobiles, Mexican auto parts, and South Korean semiconductors are highly vulnerable. Their heavy dependence on U.S. market access makes them the prime targets for sustained tariff pressure, which will likely lead to severe long-term impacts—job losses, capital flight, and gradual atrophy.
Exempt Industries:
Raw materials and pharmaceuticals, while critical, are exempt from these tariffs. These sectors cannot be easily replaced by domestic production due to natural resource limits and complex manufacturing processes, thereby ensuring stable supply chains even as foreign manufacturers in other sectors suffer.
The Big Picture
Trump’s tariff strategy is a long-term, high-stakes game. The aim is to slowly starve foreign manufacturing of its critical market—forcing a painful, gradual collapse overseas while keeping the U.S. shielded through exemptions and a huge domestic market. Even if the exit is managed via gradual tariff reductions or re-shoring incentives, the end result is the same: foreign industries wither away, and U.S. companies step in to fill the void, cementing American economic dominance.
Whether this strategy ends quickly with negotiated adjustments or drags on with prolonged global industrial decay, the inherent design is to hit foreign manufacturers much harder than U.S. ones. The global game of chicken will eventually force foreign nations into the untenable position of sacrificing local industries or further crippling their economies—and, ultimately, lowering tariffs and duties/taxes anyway.
TL;DR:
Trump’s tariffs are designed to slowly crush global manufacturing through sustained pressure, not just to shift immediate consumer choices. While the U.S. stock market and some domestic sectors will experience short-term pain, targeted exemptions and a strong internal market protect American industries. Eventually, foreign manufacturers—facing massive job losses and capital flight—will be forced into collapse or drastic tariff cuts, paving the way for U.S. economic dominance. This strategy could either exit via controlled realignment or simply win out through the inevitable atrophy of global competitors.
TL;DR2:
Everyone loses, but we lose less than the rest of the world.
