Talked to a few people in India who manufacture and export clothing to US brands. 

The most likely outcome if tarriffs stick for a year is that manufacturing still stays offshore, but the average American gets lower quality stuff for the same price.

Flexport's team was able to reverse engineer the formula the Administration used to generate the "reciprocal tariffs." 

It's quite simple, they took the trade deficit the US has with each country and divided it by our imports from that country. 

The chart below shows the https://t.co/01bUpfKgk8

This is nuking every single supply chain that passes through the US in any way, under the illusion that 45 years of deindustrialization can be fixed in one day of 45% tariffs.

Countless low-margin businesses, including US exporters, will be pushed into unprofitability.

Balaji

Talked to a few people in India who manufacture and export clothing to US brands. 

The most likely outcome if tarriffs stick for a year is that manufacturing still stays offshore, but the average American gets lower quality stuff for the same price. 

https://x.com/balajis/status/1907645443221463105

Technowatermelon. Elder Millenial. Building Farcaster. 

nf.td/varun

The low end outcome is the most interesting. 

Brands won't raise prices, so they end up pushing manufacturers to lower costs. Manufacturers can't run at a loss so they cut costs somewhere - either by reducing the process (less likely) or by using cheaper goods (most likely). 

What will brands do? 

Some of them will explicitly accept this, and other will do so implicitly. There is a lot of corruption in the buying process, and its not unrealistic that money changes hands and certain quality checks are ignored.

The bottom line for the average American is that stuff is going to be more crappy for a little bit. And these jobs aren't coming back to America anytime soon.

What's happening at the negotiating table is that: 

- Higher end brands are staying with the same manufacturers, and passing increased costs onto customers.

- Low end brands are pushing manufacturers to absorb costs. They can't raise prices without losing customers to other low-end brands. 

- No one is realistically considering moving any manufacturing to America.

stocking up used to be smart. Buy a ton, ship it cheap, stash it in a warehouse. Profit.

That playbook? dead and buried.

W/ tariffs and interest rates going up, holding extra inventory is like burning cash in slow motion. Warehouses aren’t savings accounts anymore—they’re money pits.

The new reality? JIT. Light, fast, precise.  

Adapt or get buried under boxes you can’t afford.

Except this has already been happening with clothing manufacturing moving out of China

It does just about destroy most emerging brands who have non existent margins

Good explanation that actually makes sense. I wish more people would understand it like this.

Why did USA outsource the industry to other countries in the first place? 

In my opinion, balajis is overreacting and emotional in the attached tweet and this actually feels unusual seeing him talking this way.

If you’ve ever worked in supply chain, you know how dirty the game is. Cutting corners is an art form in this industry