The White House knew that tariffs were going to rock the economy, so they scheduled their announcement for after markets close. Prices plummeted in real time, and markets were roiled worldwide. The S&P ended the day down 5%. The NASDAQ was down 6%. The smaller business Russell 2000 was down 6.6%.
We could see a global recession and a 200 basis point hit to GDP. Job losses from the tariffs are estimated in the hundreds of thousands.
More global trade means economic growth. It means food is cheaper. Winter coats are cheaper. Incomes go up. Poorer countries impose tariffs, and free trade made America prosper. This administration doesn’t understand that. But even within their own paradigm, the effort just makes so little sense.
- The U.S. put higher tariffs on Israel than on Iran – even though Israel dropped all tariffs on U.S. goods. (Trump had previously said that countries which dropped their tariffs wouldn’t have them imposed.)
- Trump’s tariffs were ostensibly pegged to each country’s tariffs on U.S. goods, but it turns out they’re not. Instead, they nonsensically divided the U.S. trade deficit with a country by the country’s exports here.
- The U.S. runs trade surpluses with Australia, the U.K., Hong Kong and the Netherlands. Why are we imposing new higher tariffs there if the tariffs are supposed to be reciprocal? Singapore has no tariffs on U.S. goods at all.
- And if we are worried about China, we should be leaning into our relationship with Vietnam not pushing them away! Vietnam had announced a reduction in tariffs but wound up with one of the highest rates in the world.
So I was surprised by United Airlines CEO Scott Kirby’s remarks on Thursday in San Francisco that Trump’s tariffs represent a “genuine desire to create more careers” and that while “some may disagree with the way and tactics, but the goal I think is a laudable one.”
Does Scott Kirby have any conviction? Lower economic growth and less trade is certainly bad for the economy and for air travel. Kirby has made the case that airline revenue tracks very closely with GDP. But a global slowdown hurts United most of all, because United is most exposed to far-flung routes. United’s stock fell over 15% on the tariff news today.
Kirby was woke when woke was in. United got out ahead of vaccine mandates and leaned into climate change (and supported affirmative action in California) when that was pleasing to the Biden administration. Now, United donated $1 million to Trump’s inauguration. Kirby gets his advice from the airline’s Executive Vice President Josh Earnest, Obama’s former press secretary.
Captain Renault said to Major Strasser in Casablanca, “I have no conviction, if that’s what you mean. I blow with the wind, and the prevailing wind happens to be from Vichy.”
In earnings calls, Scott Kirby is candid – and willing to stake out bold claims. Agree or disagree, he’s anything but mealy-mouthed. When it comes to the things that truly matter, though, he seems to have no conviction – and the prevailing winds come from Mar-a-Lago.
Though I suppose he might think there’s little he can do, so he might as well position himself to ask for things from the administration at the margin. Our best hope for the economy may actually come from the Supreme Court, since the tariffs are probably illegal and certainly run afoul of the Court’s major questions doctrine which it leaned into during the Biden administration. The only problem is that this takes time and by then the damage may have already been done.
Got down on his knees and opened his mouth knowing soon he will be asking for more govt handouts.
“THE SKY IS FALLING!!!! LITERALLY!!!”
No matter what Trump does. The #TDS lefty crowd is so tedious.
(Can you people ever dial down the derangement just a bit and give the guy more than 15 minutes before announcing the next way Trump will end all civilization? You’re always at Vol 11 freakout level. Sheez you people are exhausting.)
@chris – you can be the biggest fan of Trump but recognize that trade restrictions are bad *FOR THE U.S.* economy, and that the policy that was promulgated is nonsensical on its face as it relates to Trump’s past statements and to U.S. strategic interests. By the way, Trump is supposed to be a great negotiator but he’s proving counterparties can’t trust him! That’s when you have to overpay in any negotiation!
Exactly what do you expect Scott Kirby or any other corporate executive who relies on interaction with federal officials and infrastructure to do?
It is damned if you do and damned if you don’t!
He certainly didn’t provide any lavish praise on the “new situation.” If he openly and publicly criticized it, suddenly Kirby and United would be in the gunsights of the current administration as well as a large number of stock shareholders and customers.
In a bad situation, I think he handled this OK, whether or not I like what is going with tariffs or not!
He needs a green light from the Administration on a JetBlue and you have to kneel down and praise Dear Leader’s Ego to get anything. He knows this and it is really that simple.
@chris Trump is upending the world order with the U.S. on top, that has kept us safe and prosperous for the past 80 years. He almost destroyed the world 4 years ago with his inept response to the pandemic; fortunately we were smart enough to get rid of him then, but then we got collective amnesia last year and put him back in office and he went right back to work destroying everything.
Worst airline in the world’s worst country for airline travel says what?
@chris: The White House put tariffs on Heard Island and McDonald Island, inhabited only by seals and penguins. Why? Because a nameless staffer added them to the list of countries. (What programmers call an “easter egg””. It illustrates TDS – how deranged and unthinking MAGAts are.in their uncritical worship of Trump.
Hard to know what to do with 401Ks, as the conventional wisdom to just ride out market corrections etc. doesn’t quite seem to fit the current circumstances, but perhaps it does. So much uncertainty with Trump and these stupid tariffs. Any thoughts?
I was a 28 yr Air Force aviator and a lifelong Republican. Until Trump. Put simply he’s an evil human being. He has no soul, no conscience, no honor. Thin-skinned and incredibly vindictive. I wouldn’t trust him with my daughter, and I definitely wouldn’t want to do business with him. The fact that Bush Jr wouldn’t vote for him speaks volumes.
I disagree with Gary regarding Vietnam. They are an enemy country and worse than China. They killed Americans and dribble info about the bodies, even decades later. When China fought a war with Vietnam in the late 1970’s, the US should have helped and bombed Vietnam.
Vietnam is also very unfair with restricting American products. Trump’s tariffs on them is too low.
Gary, thank you for doing your best to report the facts and provide your analysis.
These are indeed objectively bad policies, all self-imposed, from the betrayal of our allies to using the pretext of a fake ’emergency’ to unilaterally and arbitrary tariff nearly all of trading partners.
The markets know this. Economists know this. Historians know this. We all should know better. None of this ends well for any of us. Not even our oligarchs. It leads to wars. Violence. Bad things.
@chris — Yes, we know… TDS… and you have “ODS”… which sounds like ‘odious’ (like you).
While I do like a lot of things that Trump is doing, like common sense policies regarding illegal immigration and allowing violent, hateful, material terrorist supporters in, this tariff situation is mind boggling. I can understand the threat of tarrifs to induce companies to produce here, but it takes time to scale up production here. The world was taking his threats seriously and he could have granted them time to scale up here, so the threats works to bring jobs here, while his base still doesn’t suffer the consequences of tariffs. By rushing this, he seems to be just throwing a wrecking ball in the whole economy for no good reason. The implementation of the tariffs are even worse. Counting the trade imbalances as tariffs imposed by foreign countries when it’s really just a size and wealth imbalance (for example, Israel with 9 million citizens vs the USA with 330 million and much less rich per capital) is nonsensical and doesn’t set any realistic goal for the foreign country to try and please the US. There is pretty much nothing they can do about that trade imbalance.
@chris has no problem with Trillions of dollars going up in smoke for absolutely no reason. Trump left the stock market in shambles and is doing it again. The blind leading the blind….
If you’re an elite jet-setter, consider a Delta One flight from ATL.
Chris I agree. God knows I don’t agree with everything Trump but the hysteria from the left is over the top.
A little reasoned debate instead of setting Teslas on fire would do them wonders. Swastikas on private property…really? You think this is winning converts…how stupid can you get? The cars you’re destroying are primarily owned by those who voted the way you did.
Maybe he’s counting on the collected tariffs at Treasury to be used as Trump’s slush fund to hand out to people, companies and industries as Trump chooses.
But beware, Kirby and others: kissing-up to a bully and a lying cheat is a bad strategy. Apple’s CEO tried to be nice to Trump, and Apple is in line to get burned by Trump’s big tariffs on imports from China.
@ Gary — What Ray said. It is disgusting.
This whole thing will end as follows — markets will crash 25-40%, Republicans will cut taxes becasue the Fed won’t help. Trump fires Powell and puts in some moron who slashes rates.Trump ends tarriffs, stocks skyrocket. Billionaires increase their combined wealth by trillions. Average guy pays more taxes and suffers with double-difgit inflation.
@ 1990 — Such the pessimist!
@Matt — As always; thank you for your service. Keep Climbing!
@Gene — You know me well. Bah! Well, do you have any better theories for us?
@ 1990 — I suspect this ends very well for oligarchs. Violence, like war? Nah. We’ll be OK once a few of these idiots die of old age.
Does Scott Kirby have any conviction? No, he doesn’t.
He wants a return on HIS $1 million donation to Trump’s inauguration.
And, yes, United’s international network is by far the most exposed of any US airline…. even as UA has over $60 billion in aircraft on order and $10 billion committed to terminal expansions.
ALL while nearly EVERY non-pilot unionized employee at UA will be working under an amendable contract by the summer; not a single other airline is in the same position. UA’s labor costs could swell by $1 billion/year PLUS far more than that in retro pay – which could wipe out the profits that UA has touted.
And Kirby and co. knew all of that when they announced their tags to SGN and BKK – which will get some of the highest tariff rates – on top of the trillions of dollars of wealth that was wiped off of stock markets worldwide today – and a repeat is already underway for tomorrow.
Kirby’s plan, AT BEST, would have worked in the best of conditions. We don’t live in the best of conditions and anyone can see that a remake of the world economic order – even if results in the intended goals in the end will result in enormous carnage in the process of transition.
If UA gets its hands on B6, then AS ACQUIRES AA, and DL acquires WN.
Consolidation will happen. Markets will fail. UA is highly vulnerable to a downturn in international travel – which is almost certain to happen.
thank you for covering this, Gary
Kirby wants a return on HIS $1 million donation to the inauguration party.
And, yes, United’s international network is by far the most exposed of any US airline…. even as UA has over $60 billion in aircraft on order and $10 billion committed to terminal expansions.
ALL while nearly EVERY non-pilot unionized employee at UA will be working under an amendable contract by the summer; not a single other airline is in the same position. UA’s labor costs could swell by $1 billion/year PLUS far more than that in retro pay – which could wipe out the profits that UA has touted.
And Kirby and co. knew all of that when they announced their tags to SGN and BKK – which will get some of the highest tariff rates – on top of the trillions of dollars of wealth that was wiped off of stock markets worldwide today – and a repeat is already underway for tomorrow.
Kirby’s plan, AT BEST, would have worked in the best of conditions. We don’t live in the best of conditions and anyone can see that a remake of the world economic order – even if results in the intended goals in the end will result in enormous carnage in the process of transition.
If UA gets its hands on B6, then AS ACQUIRES AA, and DL acquires WN. Consolidation will happen. Markets will fail. UA is highly vulnerable to a downturn in international travel – which is almost certain to happen. thank you for covering this, Gary
The Felon is getting exactly what any narcissist with a sociopathic twist would want. A legacy. His name will go down in history like the dictators, Genghis Kahn and Benedict Arnold. He doesn’t care how many people he hurts or kills in the process.
@ Tim — I actually think DL would be the least likely of these mergers to occur. Will poor little Delta end up in 3rd place? Too bad. And, nice of you to steal my merger ideas.
How does EVERYTHING have to be Delta-centric in your worldview? Me thinks you are jealous that UAL is up 35% over the past 12 months, while DAL is down 10%. Take your meds. It will be OK.
@Charles — I was thinking more like Caligula. Just waiting for the horse to be named consul.
Gene,
-Delta doesn’t NEED anything like AA and UA do – the former on the west coast AND NYC/BOS but AA has multiple east coast hubs including the 2nd largest slot pool in NYC; the fact they can’t make what they have work is not much of a justification to give them more.
UA needs a presence in Florida and wants desperately to make up for its mistake of leaving JFK.
DL has the least overlap with WN and has a proven track record of making secondary hubs work – which is exactly the definition of WN. Plus, WN and DL’s cultures are more alike than any other two airlines.
If it is your idea, then why are you so convinced it won’t work? if it really is the one thing we agree on, then it would indeed be quite the point to have in common.
I don’t recall you said that AS would be the buyer and AA would be the bought.
I don’t want to see any of them because it means the acquirees have failed – but let’s also be real that the world is hurdling quickly to economic meltdown unless something quickly changes.
and there are news reports that a few countries are offering to eliminate their own trade barriers – problem is that it isn’t the biggest US trading partners. In the case of Asia, Japan, S. Korea and Taiwan have a billion plus reasons sitting to the east of them to get along very well w/ the US. It is Europe that will be the issue. they aren’t backing down easily.
and as long as the world order is in chaos, the weakest players will be vulnerable.
and, btw, as noted, UA is HIGHLY vulnerable to a downturn not just because of their international footprint but because of their massive expenditures which are based on growth – which just simply can’t happen when the economy is falling apart
That’s a lot of gravy, seasoning, and hot sauce on the steaming pile of shit your eating.
@Tim Dunn — Everything you said makes sense to me. It’s definitely going to get turbulent here and everywhere. At least some pilots have the decency to prepare their passengers for the bumps ahead. The seatbelt sign is on! Flight attendants to your jump seats!
@Chris, I pity you. Utter fool.
I don’t like Trump, I don’t like his policies, including this one, and I don’t like his pushing of executive authority. I can’t disagree with the conclusion about Kirby having a bit of a lack of conviction here either..
But, “Some may disagree with the way and tactics, but the goal I think is a laudable one.” I don’t think that’s a bad statement. It’s diplomatic, and there’s nothing wrong with finding points you agree with someone on even if you largely disagree with them. I mean, I can agree with this statement — I don’t think a tariff war will help anyone (I disagree with the way and tactics) but a goal of bringing more and better paying jobs to the US is laudable.
I think that the tariffs will do their job and end in a better situation for the USA with lower tariffs on goods sold by the USA that could boost the economy in the long run. The saying is that you have to break a few eggs to make an omelet. As far as crashing the economy, maybe a reset, like the crash caused by excess inflation a few years ago under the previous regime. The excess inflation caused everyone to get a haircut and that is still being felt. So crashes by two different regimes, no real difference except the haircut.
To me it is looking like blood in the street so a time to buy, which I have already started. (quote that is probably somewhat paraphrased – Baron Nathan Rothschild: “the time to buy is when there’s blood in the streets, even if that blood is your own.”) Yes, some of the blood today was mine. I was ahead for 2022 but only by a few percent. I wonder how this year will play out. 2020 had a crash but a nice return on the year. 2018 had a crash and a nice return the next year. The only caution is the crash of 2000 that continued worse in 2001 and even worse in 2002.
@ Tim — Under a normal federal administration, a DL acquisition of WN seems highly unlikely due to too much market concentration at ATL.
I never was much of a Kirby fan. He was a soulless bean counter who destroyed a lot of the good work Oscar did before him. Nevertheless, Kirby did make a few surprising changes and he showed leadership – something sorely lacking at AA. I often disagreed with Kirby’s decisions but until now had never actually thought he was stupid. Now he’s in favor of a massive economic downturn, which will hurt United? If he was just sucking up to the current administration he would have mouthed a few platitudes that could be interpreted in different ways. The fact that he’s basically doubling down on stupid shows that Forest Gump was right – Stupid Is As Stupid Does.
Finally a CEO earning his massive pay, having to get on his knees and taste Donny. Kirby has shown he’ll pretty much say or do what he has too.
@Gene – there is very much a worry about ending Fed independence, even if Trump doesn’t try to fire Powell the Fed chair’s term ends next year and Trump can appoint someone subservient to him, while Republicans still control the Senate.
@derek – the Vietnam War began 70 years ago.
Our trade deficit has been growing at an alarming rate since the early 1970s, when poor fiscal policies set us on the path to ruin. Short-term market adjustments are required to bring us back into balance with many other countries that impose tariffs on the USA. Now, or very soon, will be the time to buy many stocks in this market adjustment.
There is something really wrong with Kirby — you have no doubt read the sickening letter he wrote to Trump to congratulate him on his ascension as our new Pasha. Can you blame him though? With a depraved man again in the White House why not take the easy path to favour: flattery, in this case, gets you everywhere.
Gene
you clearly have missed that WN has pulled down ATL considerably.
just as they are doing at ORD.
UA is bashing WN silly at DEN.
WN does not do well at legacy carrier hubs because even before all these changes, WN’s product was legacy minus. now, it is legacy minus minus.
DL has the least overlap with WN of the big 3.
IF and it is still a big IF the downfall of the weak in the US airline industry parades in line w/ the stock market yesterday and today, there will be failure and consolidation.
and the bigger story for the aerospace industry is that Airbus and Boeing will effectively lose their ability to sell between the US and Europe. Given that the 787 is heavily made of non-US components, even the 787 for AA and UA will become prohibitively expensive.
@DaninMCI – “Our trade deficit has been growing at an alarming rate since the early 1970s”
Our prosperity has been growing at an amazing rate as well!
Imports are a good thing!
and, Gary, the whole point is not whether the US should be making what it consumes in the US but whether the US and the world can afford the whiplash in change of economic policies.
The reality is that the red team will be done in 2 years if this mess is left unchecked. Even if it contained, you can’t overcome the damage that has been done so far.
even the best ideas don’t work if they can’t be implemented w/o killing the patient or in this case everyone that is impacted – which most certainly includes aviation
The US had an enormous trade surplus in services,.of which transportation is one, so it has been ripping off other countries.
High time that United is subject to a tariff by other countries. There’s even a formula to calculate how much each country should tariff US services like United’s by what percentage.
CEOs of large corporations as a rule will always kiss the ass of the current administration. It makes good business sense because they may need that administration to look favorably on that corporation for various situations/needs. People on this thread that think differently don’t quite understand how the real world, high above their pay grade, really works.
It’s business, not personal.
@hwertz — I’m not fan of the guy either, including His (lack of) character and His (objectively bad) methods. It’s not some fake-syndrome–my conclusion is based on 10+ years of empirical evidence of Him in the global spotlight.
Yes, as you said, the “goal of bringing more and better paying jobs to the US is laudable.” And also wanting greater ‘efficiency’ and to eliminate ‘corruption’ is a good idea as well. There are actual ways to do all that effectively, with transparency and accountability, and by following our laws.
But He isn’t actually doing any of that. No, His policies are doing the opposite. There are real consequences. Real harm to real people. Here and everywhere.
Instead, He violates our laws and civil liberties by demagoguing vulnerable groups (renditioning innocent people to gulags in El Salvador); by cruelly firing talented civil servants and experts in favor of incompetent sycophants; and by attacking our former allies and trading partners, while benefitting our former adversaries, directly and incidentally. These aren’t conspiracy theories. It’s really happening.
Yet, if any of us have Fox/OAN/Newsmax propaganda on in the background 24/7, then, ignore all that, because this is a ‘golden age’ and everything is ‘great’ forever and ever. Amen. But, even those ‘networks’ removed their ‘stock ticker,’ recently, so as to further ignore ‘reality’.
Gravity is still real. This may have to harm a critical mass of people personally before anyone does anything. It did not have had to come to that. We all should have known better.
@jns — Your (and others) ‘break a few eggs’ metaphor is pure ‘copium’–you’re lying to yourself. Same goes for the use of terms like ‘reset’ and ‘haircut.’ It’s cute, but it won’t really help you.
If it were the ‘other team’ (you know, those ‘evil’ Democrats) attempting any of these objectively horrendous policies (namely, the tariffs as far as it relates to the economy), folks on the ‘far-right’ would be ‘storming’ the Capitol yet again.
As for your final metaphor of ‘blood in the street’ Oof. How vivid. But, not yet, really. Please, by all means, if you wish to ‘bet the farm’ on this, feel free throw all your money into the market today, you know, vote with your feet, own it! The Dow is down to 40K from peak of 45ish–who knows how far this goes, but this is just the beginning (10%+ already), not a simple dip.
On the tariffs, other countries already are and will certainly retaliate with tariffs of their own (the EU and China are not doing ‘appeasement’ this time). And the price shocks have not yet hit suppliers, retailers, or consumers–this is going to cost a lot of jobs, and is a long-term loss. There might be better opportunities at the true bottom, but we are nowhere near there yet.
Please feel free to attack me personally instead of addressing any substance. I do get off on that.
@DaninMCI — Ah, just like @jns, using another well-know euphemism for when things go wrong: it’s just a “short-term adjustment.” Psh, yeah, if Joe was in the Office, you folks would not be so kind.
Friends, unless Congress defies this mad-man, there is nothing ‘short-term’ about any of this–He truly believes in this, even when practically nobody else does (nearly all the economists, historians, business leaders, and other rational people know this is not going to end well for us).
So, the Emperor has no pants, yet no one will say so, out of fear for their own jobs and safety. Please, feel free to put all your money in stocks today. Help your guy out. He’ll return the favor, right? He always pays his debts, no? Ask those contractors in Atlantic City. (Yikes.)
@Mary — I hear your point, but ‘free trade’ is the better way, generally.
There should never be broad tariffs–as in, we shouldn’t be doing +10% on all-countries-except-Russia, like he just did. *facepalm*
Tariffs, if any, should be used sparingly and with very specific targets, like a vital, vulnerable industry, or against a hostile adversary (like, there *should* be tariffs against Russia, ironically).
However, the President is simply acting like a bully, abusing power and leverage for no good reason, other than seemingly for his own ego.
(I know, I know… His ‘official’ stated reason is to ‘bring back American manufacturing’, but this is not the way to do that. Folks should know that the required infrastructure is not in-place to all-of-the-sudden ‘make everything here.’ It would take years and years to create those factories, yet the business community cannot tell whether any of this will even last, or if He’ll change his mind next Tuesday, so they won’t do any of that significant ‘investment’ in-reality. Rather, we’re all just going to have to pay more for everything in the meantime. And even if they did build new factories here, it will be mostly automated, so not too many new ‘jobs’ anyway.)
So, as is the case with bullies, other countries should not cave-in to the tariffs, because if they do, they will get shaken down yet again some time soon. They should remain united. Build a coalition of the new ‘free’ world and trade among themselves. China is truly the greatest beneficiary of our abdication from global trade.
Finally, I will say, it was hilarious to watch Treasury Secretary Lutnick ‘urge’ countries not to retaliate, from yesterday on the White House lawn. He said: “Just take a deep breath…” (Yeah, right… after our former allies just got punched in the face by us, yet again.) They’re response: No, you.
“Some may disagree with the way and tactics, but the goal, I think, is a laudable one,”
And feeding the world is a laudable goal too but you don’t give all your food away at the expense of your own countries people. Maybe a stupid analogy but just because a goal is “laudable” doesn’t mean the methods to achieve it are smart or good or beneficial. What a crock.
@George N Romey — Aww, another ‘cute’ retort: “It’s business, not personal.”
That one’s often said when a person or business does something horrible to someone else. Like, a betrayal. Or, an abuse of power, law, rules, prices, etc. Basically, it’s used by bullies.
But, no, it’s not ‘just business’ this time around. These are not ‘normal’ times, and the ‘appeasement’ that you describe is ineffective under these circumstances.
If (more like ‘when’) the economy collapses in-part due to these unnecessary and harmful tariffs, the business community should finally turn on Him, namely because more and more everyday people will turn on Him.
As I’ve said before, gravity still exists. Nothing lasts forever. Let’s pick better leaders next time.