Frontloading

Do you know of anyone who rushed out to buy a phone last week to avoid a possible price spike from the tariffs?

If you do, you're not alone. And companies are doing the same thing.

I spoke to a big investor, who shared this: "My companies pulled all of their orders up and ordered everything they could for the rest of the year to avoid the tariffs. One of them sent a fleet of trucks to Mexico and packed everything that they could. I think the second quarter will look fine. But the demand all got pulled forward so the third and fourth quarters are going to look terrible by comparison."

He also shared: "A couple companies I know are moving their headquarters from the U.S. to Europe because of tariff uncertainty. It's getting harder to get certain folks to move to the U.S. for work." He says that many companies are complaining about the difficulty in planning when you don't know how high the tariffs are going to be from various countries and for how long. "Their costs are shooting up, and right now they don't know whether to eat those costs or raise prices, especially if the tariffs might then disappear." So for many firms their margins will weaken and they'll fire people, or they'll raise prices.

Another wrinkle he observed is that Canadians are demonstrating patriotism by not crossing the border. "It's going to hurt small businesses near the border and big tourist destinations alike," as European tourists are doing the same.

What do you do if it's tough to plan for the future? Maybe you buy a bunch of supplies, throw them in the basement, and get ready to settle in.

I believe that is now happening throughout the country in ways big and small, for both companies and people. It will be tough to discern for a while because the numbers will look fine through the reporting of the second quarter, which could take you through mid-summer.

"These tariffs are economic mismanagement of the highest order," shared Noah Smith, popular economics blogger of Noahpinion, on the podcast this week. Noah is worried about stagflation, a combination of a lack of economic growth and prices going up. "A ton of federal debt is going to need to be refinanced in the next 12 months, and interest rates are higher not lower which means that interest payments on the debt will be a lot more expensive for the federal government." This could crowd out other spending and make the deficit unmanageable.

On cue, Trump has lashed out at Fed Chairman Jerome Powell and is suggesting that he be fired for not aggressively lowering rates. The Fed's mandate is to be vigilant on both economic growth and inflation, which is likely to increase because of . . . tariffs.

It's an incredibly important balancing act that is being played out, with risks on every side. Noah says, "The only other country that has been in a similar situation in terms of servicing their debt was Japan, but Japan's savers were content to keep their money there, which won't be the case for the U.S. There have been some early signs of capital flight from U.S. assets already, which would be a disaster."

I confess to feeling that we are experiencing a new era of economic history that is being led by Trump's instincts on tariffs. The reactions are already happening; the consequences will come to light soon. Give it 90 days.

For my interview with Noah click here. To see what Forward is doing in your state, click here.