How a reshored manufacturing base will look? … the mathematics behind onshoring … Luke Lango’s “MAGA 7” shares … will China blink first? … tariffs start to chew
As we’re going to press, information is breaking that america has reached a commerce settlement with an unspecified nation.
From Commerce Secretary Howard Lutnick:
I’ve a deal carried out, carried out, carried out, carried out, however I would like to attend for his or her prime minister and their parliament to provide its approval, which I count on shortly.
Given our publishing deadline, we’ll must convey you extra on this tomorrow, however the market is leaping as I write. All three main indexes are increased, led by the Dow, up 0.80%.
The U.S. employee is fats, lazy, and deeply unfulfilled…
In line with China.
About two weeks in the past, Chinese language state media launched a video mocking the thought of a revitalized U.S. manufacturing base, operated by American staff.
Right here’s a screenshot:
Supply: jambo1286/TikTok
If the Trump Administration is to reshore millions of manufacturing jobs successfully, the coming labor force will appear nothing like what Beijing suggests.
Let’s go to our technology expert Luke Lango:
Trump’s industrial renaissance only works if robots build it.
The 21st-century American factory will not look like Detroit in the 1950s. It will look like Tesla Inc.’s (TSLA) Gigafactory, multiplied throughout industries.
There might be fewer people working inside them, changed as an alternative by dozens of business arms, autonomous materials dealing with, machine vision-based quality-assurance programs, and zero-light warehouses.
The objective could also be to interchange Chinese language or Indian labor with American labor. The fact is that we’ll exchange international people with home machines.
Common Digest readers know that I’ve been hammering this identical level in latest weeks
In our April 16 Digest, we zeroed in on “the Real Winner of Trump’s Onshoring Push,” which was:
The businesses that leverage robotics, and the buyers who noticed the writing on the wall.
This conclusion is pushed by primary company finance.
Reshoring requires far larger payroll expense, actual property prices, and electrical energy/power expense (amongst different prices). If cost-averse CEOs don’t reshore and eat such bills, it seems they’ll face new tariff prices.
Damned in case you do, damned in case you don’t.
This leaves company managers dealing with a lose/lose tradeoff the place Choice 1 erodes revenue margins, and Choice 2 weighs on revenues from cost-conscious customers.
CEOs will go for a 3rd possibility: Changing human staff with robots.
This makes for a a lot simpler comparability…
People: huge wage expense, advantages expense, sick days, trip days, human error on the job…
Robots: one time CapEx expense, marginal yearly upkeep expense, excellent job execution without having for relaxation/breaks/advantages/and so forth…
Backside line: Onshoring will speed up the transition to robotics/humanoids.
Luke once more:
That’s the reason our group sees bodily AI — robots, automation programs, machine imaginative and prescient — as the following leg of the AI Revolution.
Till now, a lot of the AI hype has revolved round language fashions, chatbots, and digital copilots. These software program breakthroughs have been transformative for information work.
However the subsequent frontier is the bodily world:
- Manufacturing facility robots that may see, study, and adapt.
- Warehouse pick-and-pack bots powered by machine imaginative and prescient fashions.
- Autonomous forklifts and cell platforms.
- AI-driven robotic arms that may manufacture, weld, and examine.
Within the Digest final week, I beneficial the biggest AI/robotics ETFs as essentially the most conservative method to play robotics. However I added that I’d “be bringing you a number of the prime concepts from our consultants.”
Properly, right here’s our first batch of these prime concepts.
This Thursday at 7 PM Jap, Luke will unveil his “MAGA 7” shares
MAGA is just not a reference to President Trump’s “Make America Nice Once more” slogan; it’s Luke’s twist on the idea…
Make AI Great in America
On Thursday, Luke will focus on a small basket of AI/robotics leaders and why he believes they’re about to be on the receiving finish of a wave of “panic” shopping for.
In brief, it has to do with an occasion Luke sees occurring on Could 7 that can spur a frantic sprint into bodily AI stocks.
Again to Luke:
If I’m proper, Could 7 may mark the beginning of a melt-up — one by which physical-AI winners change into the brand new titans of American business.
That’s the kind of alternative usually described as “generational wealth.” It’s not about including just a few share factors to a portfolio. It’s about doubtlessly altering a household’s steadiness sheet for many years.
This isn’t merely a coverage pattern. It’s an funding megatrend.
- The financial math factors to automation.
- Political momentum factors to home buildout.
- The AI infrastructure construct factors to a bodily AI supercycle.
To affix Luke this Thursday for extra on these MAGA 7 shares, the next hyperlink will mechanically register you to attend. Click here to instantly sign up.
Extra on this tomorrow.
“It’s a full-blown disaster already”
So says Peter Friedmann, government director of the Agriculture Transportation Coalition (AgTC), a number one export commerce group for farmers.
Friedmann is referencing the U.S. farming business, which is coping with the fallout of the commerce battle. China’s sudden cancellation of big volumes of agricultural merchandise is leading to what the AgTC calls “huge” monetary losses.
Right here’s CNBC:
Knowledge launched by the U.S. Division of Agriculture on Thursday revealed China made its largest cancellation of pork orders since 2020, halting a cargo of 12,000 tons of pork…
A wooden pulp and paperboard exporter reported to the commerce group the rapid cancellation or maintain of 6,400 metric tons in a warehouse and a maintain of 15 railcars sitting in what is understood within the provide chain as “demurrage,” when charges are charged for delayed motion of products.
In the meantime, the exporter mentioned there are 9,000 metric tons on the water to China anticipated to reach on Could 13 and dealing with the specter of pricey diversion to Chinese language bonded warehouses or to different nations as Chinese language patrons could refuse the cargo and abandon it at port.
One grass seed exporter advised AgTC it obtained two weeks discover that eight masses have been being canceled by Chinese language clients regardless of vessels bookings already being in place.
The delivery visitors from China to U.S. exhibits a dramatic slowdown.
In line with Vizion World Ocean Bookings Tracker, China-to-U.S. vessel visitors has fallen 22.2% during the last two weeks. On a year-over-year foundation, it’s off 44%.
Right here’s a Vizion spokesperson:
What we’ve seen within the final two weeks is a continued correction in reserving demand for U.S. imports, particularly U.S. imports from China.
We at the moment are seeing this translate to a drop in departures as nicely.
This morning, information broke that the Port of Los Angeles predicts shipments from China will fall 35% subsequent week as tariffs start to chew.
From Gene Seroka, the chief director of the Port of Los Angeles:
Realistically talking, till some accord or framework might be reached with China, the amount popping out of there — save a few totally different commodities — might be very gentle at finest.
This trade-war escalation has buyers asking a key query…
Who will blink first between the U.S. and China?
In line with Treasury Secretary Scott Bessent, it have to be China:
I imagine that it’s as much as China to de-escalate, as a result of they promote 5 instances extra to us than we promote to them, and so these 120%, 145% tariffs are unsustainable.
That is more likely to be difficult.
Chinese language tradition locations a significant emphasis on “saving face.”
Historical past buffs will recall the “Century of Humiliation” (1839–1949), throughout which Western powers imposed treaties on China that they discovered humiliating. The fashionable-day influence is that Beijing stays particularly delicate to any offers that seem one-sided. Appearances are vital.
We noticed shades of this within the 2019 commerce battle. From President Xi Jinping at the moment:
Within the West, you will have the notion that if any person hits you on the cheek, you flip the opposite cheek.
In our tradition, we push again.
This morning introduced one other instance when The Wall Avenue Journal reported that the Chinese language Ministry of International Affairs posted a video to social media saying, “China received’t kneel down.”
Supply: China Ministry of International Affairs
So, what might China do instead of blinking? Here are a few ideas off the top of my head:
- Eliminate all exports of critical rare earth minerals, which are essential for various technologies
- Increase imports from countries like Brazil and Argentina to replace U.S. products
- Completely suspend imports from certain U.S. companies to apply financial pressure in an effort to get them to lobby President Trump for change
- Increase spending, issue new bonds, and provide consumer subsidies to stimulate domestic demand to offset the economic pain
- Use the People’s Bank of China to cut interest rate cuts and reduce bank reserve requirements to support growth
“Jeff, China can’t handle losing the U.S. as a trading partner. We’re too big. Our loss would cripple them. They’ll blink”
You’re right. We could inflict enormous economic damage on China.
However, China’s political climate isn’t like ours…
Unlike the United States, where public opinion quickly influences elections, China’s authoritarian system allows its leadership to impose economic austerity without immediate political cost.
The Chinese Communist Party faces no free elections. State-controlled media can frame economic sacrifices as patriotic struggles.
Translation – Beijing can implement wildly unpopular economic policies, saving political face at the expense of its people.
Not so much in Washington…
U.S. administrations must quickly respond to voter dissatisfaction, limiting their ability to sustain painful trade policies over time.
Take this morning’s news that Amazon was reportedly planning to display the cost hike associated with President Trump’s trade war.
Knowing what this could do in the court of public opinion, White House press secretary Karoline Leavitt told reporters, “This is a hostile and political act by Amazon.”
Just a few hours later, Amazon backed away from the idea, with a spokesperson saying, that the plan “was never approved and not going to happen.”
We also see this sensitivity to voters and appearances in the investment markets.
Though President Trump insisted that the aggressive bond selloff from earlier this month did not prompt his “pause” on reciprocal tariffs, that feels highly unlikely.
It’s more realistic that Trump was well aware of escalating market turmoil – particularly in the bond market – and his advisors warned that a lack of action would implode the market, and the surging 10-year Treasury yield (at that time) would kneecap the economy.
So, we hope Bessent is right about China blinking first. But as we just saw, they don’t like to “kneel down.”
Seeing the big picture
If the trade war escalates and drags on, it will drive prices higher.
While that will cause economic pain for U.S. companies and consumers, it will also spark what adversity often does: innovation.
One likely outcome will be the accelerated adoption of AI and robotics as businesses look for ways to cut input costs and blunt the impact of rising trade-related expenses.
And that brings us full circle to Luke and his event this Thursday: the 2025 Summer Panic Summit at 7 PM Eastern. Here’s that one-click, instant/automatic sign-up link again.
Right here’s Luke with the ultimate phrase:
President Trump desires to convey manufacturing again to America, however solely robots could make the mathematics work.
That’s the reason this coming Thursday, Could 1, at 7 p.m. Jap, I’m internet hosting an pressing technique on-line session. In the course of the occasion I’ll present you the way we can’t solely shield our portfolios this summer season… but in addition see triple-digit positive factors within the coming years.
I’ll element seven new alternatives – the “MAGA 7” – on the middle of this historic Summer season Panic.
Hope to see you there.
Have a great night,
Jeff Remsburg
