by Fabian Ommar, The Organic Prepper:
Even though it’s in no small measure another Manufactured Distraction Of The Moment, Trump’s ‘tarifazo’ will bring real consequences and impact everyone, everywhere, for months and years to come.
How do I know?
Because ‘history’, and because I’ve lived through something similar during part of my life, as explained in the preface of my last book and a host of posts here on The O.P.
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Granted, this is a different world from that of the 1970s and 80s (and even more so from that of the 1930s). However, the dynamics of crises remain unchanged.
Everything is attached to the economy, and today, it runs on globalized trading more than ever. The majority of products we consume daily are “global” in one way or another.
That arrangement is about to face profound changes and suffer large shocks, bringing instability to levels not seen during the last three or four decades.
Markets already provided a glimpse: shortly after the announcement, the DOW crashed more than 1,500 points, the S&P dropped 4%, and the NASDAQ dropped another 5%. Trillions vanished in a matter of hours. The Russell 2000 index dropped 20%, indicating a recession on the horizon.
At the moment, those are just numbers on a screen.
However, once they materialize in the real world, the industry and commerce, the market, the government, and the population will start feeling the impact. And it will be painful.
Stagflation, poverty, layoffs and rising unemployment, austerity, even larger wealth gaps, and everything that comes with that—social unrest (riots, violence, crime, strikes), shortages and disruptions, possibly market crashes and bank runs.
In short, this is a very 1980s-like scenario.
That’s what I’ve been warning about and preparing for. I’m not here to over-analyze Trump’s plans or judge their merits but to offer a perspective and some advice to those trying to navigate this crisis based on what millions in my country and others experienced, so here are my initial thoughts.
Liberation Day isn’t about improving fiscal status, restoring trading balance, and bringing back industries to the U.S.
Tariffs and deals are deliberately studied, negotiated between nations, and implemented in phases to avoid significant disruptions and panic.
That’s how these things run during normal times, but these are not normal times. And even though we cannot see the bigger picture yet (perhaps ever), from a distance, it feels as if the tariff deal was purposely crafted to cause the opposite effect, which it did.
Be that as it may, Trump and his administration have been hinting at this since before the election, so it shouldn’t be a surprise to anyone paying attention. The world won’t end, but it certainly won’t return to how it was before the 1990s.
Globalization is in reverse.
Let’s be honest: does anyone think Americans will work 10-hour shifts at a U.S. Nike or Apple factory for $5 an hour? Or Canadians, or even Mexicans? That’s what Chinese and Vietnamese workers do.
The truth is that the re-industrialization of the U.S. has other obstacles against which tariffs and protectionism are ineffective and could, in fact, turn the problem much worse as it did in my country for decades before it opened to the world in 1991 (more on that in a moment).
Globalization will be replaced by something different, something new. I have no idea what, and as interesting and exciting as this topic may be (it is), I’m more interested in staying prepared for whatever happens until we get there.
Tariffs are not the disease but a symptom.
The current economic, financial, and geopolitical systems are broken and in dire need of an overhaul. Some may call it a reset, but whatever: there’s no way to make an omelet without breaking the eggs.
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