Emerging American Toy Smugglers

Forget 1930s bootleggers. The 2025s will be the year of the toy smugglers thanks to Trump

Factories in China produce nearly 80 percent of all toys and 90 percent of Christmas goods sold in America. Think about that. Right now Americans have plenty of toys in the stores because it takes time to eat through inventory. From New York Times:

Meanwhile, major retailers have told Seroka that they have about a six- to eight-week supply of inventory but that "will quickly dry up." The Los Angeles Port is the major point of entry for cargo ships from China and Southeast Asia into the U.S.

But that inventory is not going to be replenished. Due the tariffs which were 145% last time I checked container ships are no longer leaving from Chinese ports for the US.

Trump announced his "liberation day" tariffs on April 2. It takes about 20 to 40 days for container ships to sail to the U.S. from China, according to Apollo. Slok estimates that container ships coming to U.S. ports could come to a stop by mid-May.

So when we approach summer American parents are going to struggle hard to buy toys for birthdays or other occasions. And if this keeps up what will Christmas in America look like when 90% of the toys on the shelves are gone?

There will be chaos and price hikes I bet. And as I alluded to in this title, I think we are going to see the emergence of a massive amount of Toy smuggling from Canada. This always happens with very high tariffs. It creates a massive incentive for smuggling. The Cartels in Mexico may find a new income stream besides drugs: Toys. Perhaps an even more lucrative business as the punishment for being caught as a Toy smuggler is likely a lot less sever than getting caught smuggling drugs.

And toys is just tip of the iceberg. Criminal enterprises will see opportunities for profits like never see before. Every possible product could be smuggled. When you got a whopping 145% tariff there is a huge amount of money to be made smuggling.

The ban on liquor in the US caused a massive surge in organized crime. Trump might outdo the prohibitionists and cause the emergence large crime organizations not seen before.

It is much faster for criminal to figure out a way to smuggle in things from China than it will be for factories to relocate to the US. One of the largest toy producers in the world, Lego began setting up a factory in the US in 2022. But it is still not up according to Business Journals:

Lego Group said Thursday production at its forthcoming $1 billion Richmond-area manufacturing facility would begin in 2027, about a year later than initially planned.

In other words, it will take years for most companies to relocate to the US. That will be golden years for smugglers and organized crime syndicates. And let us get real: No sensible business will begin construction of a factory in the US today.

Let me give some context. Norwegian state run oil company Equinor is building a massive offshore wind park outside New York called the Empire Wind Project:

The construction phase has put more than 1,500 people to work in the US. Empire wind 1 has the potential to power 500,000 New York homes.

Now this project which has cost billions and billions to construct thus far is on hold and who knows if it will ever complete:

On 16 April, Empire received notice from the Bureau of Ocean Energy Management (BOEM), ordering Empire to halt all activities on the outer continental shelf until BOEM has completed its review.

It is not hard to guess why. Trump loves coal and hates any kind of renewable energy. But this really beside the point. Plenty of politicians don’t like renewables but they do not sabotage ongoing project incurring billions of dollars in losses for petty reasons.

This is just one of many examples showing how there is no predictability for business under the Trump regime. As any businessman will tell you: Predictability is everything in business. It matters far more than tariffs or tax rates. When you are making huge investments, you need to think ahead for years. It is important to know that there will be a market for your product and what kind of conditions these products will be sold under. You also need to know what your billion dollar investment isn’t going to be shut down in the middle of construction.

We see with Trump that he renegades on deals and promises he has made constantly. He tore up the trade agreement he himself negotiated with Canada when he was last in office. What point is there in making deals with a man that will tear apart his one deals on a whim? Such a man cannot be trusted. His word carries no value.

This is one of the reasons stable democracies despite much higher labour costs can often outcompete poorer countries in many areas. Nobody will setup a business in a poor country with low wages if that country lacks stability. Political stability is incredibly valuable, and a country where the government bureaucracy is being torn down in a whirlwind against court orders cannot qualify as a stable country from a business perspective.

Hence, I do not think foreign business will pour in to the US to setup factories to get around tariffs. It is far more likely that they will just eat the losses and sit and wait to see what happens. Some will likely do it because a lot of business people are frankly idiots.

You think that is unfair to say? Well, the market dropped a lot due to Trump tariff, suggesting they not expected the tariffs would be coming. Likewise you see tech bros panicking about Trump tariffs and handling of the economy. A lot of these business people vocally and loudly supported Trump and are now in panic mode. And in all earnestly who could be so thick in the scull as to not see what the effect of a Trump presidency would be like? The signs were big and bright colored. You couldn’t miss it. And this is not the first time they screw up. Way too many business tycoons sided with Hitler in the 1930s. Then as now it was abundantly clear he was a dangerous man.

So, never allow yourself to feel inferior because some guy made billions. Having the capital and connections to make lots of money is not quite the same as being a wise or intelligent person. A lot of the things that matter to have success in business such as drive, high work capacity, convincing personality, good connections, confidence, willingness and stomach to take on risk, enjoyment of business etc has little to do with wisdom and intelligence.

Mind you, I am not saying stupid people are likely to succeed in business. Intelligence is obviously a great asset when it comes to business. But there are a huge number of highly intelligent people who are not rich. Norway has a billionaire which called Petter Stordalen who I quite like. He is self-made but acknowledges that he isn’t that clever. But what you can quickly tell from the guy is that he has a tremendous amount of energy and drive. A lot of charisma and he understands his own limitations well. He gets people to help him with things he does not understand.

I have seen this up front myself before. I know someone who did very well. Built a decent size company from scratch with a lot of employees. We spent enough time together for me to know he was quite average in intelligence. His grades in school were totally average. If we worked on technical problems, I could always solve those much better than him.

But here is how he effectively outcompeted me: He was very good at utilizing the talents of other people. He would always know others who could help him solve a problem. People liked working with him because he was simply a nice guy it was easy to be around. And just like Stordalen he had tremendous drive and was willing to work a lot. Also he took on risk and failed many times but never gave up.

Okay, that was a little detour, but it was my way of saying that there will certainly be business leaders, even now, that will place trust in Trump and begin construction of factories in the US.

And I am quite certain that will end up as a major decision failure. By the time these factories get up and running the US will have been forced to roll back tariffs because the effect of them would have been too disastrous. Those factories will thus no longer make business sense as the calculation relies on shielding from foreign competition with high tariffs.

That is why a smart leader who wanted to go down the tariff route would have done it gradually over a much longer timer period, while limiting it to selected industries. An all out tariff war with the whole world guns blazing is peak idiocy.

There is no way such tariffs will last. If they last, it will only because Trump either:

1. Borrows like an insane person, splurging money on the economy to keep it going, raking up the national debt.

2. Employs heavy suppression to stop the storm of protests he will get over this policy.

Whatever happens he will leave behind a significant economic loss, and likely growth of organized crime. I also think there is a real danger of an emergence of a police state. Dictators rarely just start imprisoning people at random. It is always on the context of people objecting to their policies.

If you are a MAGA Trump supporter you may delude yourself into think you are safe. Surely Trump only goes after liberals, socialists and illegal immigrants right?

Then I want you to remember the words of Martin Niemöller:

First they came for the Communists
And I did not speak out
Because I was not a Communist
Then they came for the Socialists
And I did not speak out
Because I was not a Socialist
Then they came for the trade unionists
And I did not speak out
Because I was not a trade unionist
Then they came for the Jews
And I did not speak out
Because I was not a Jew
Then they came for me
And there was no one left
To speak out for me

Many have seen this text before but few know that Martin Niemöller was actually a Nazi. He supported Hitler. Her was one of the more moderate Nazis I guess you could say, but still a Nazi. He had indeed watched everyone get taken away and he was fine with that because he saw many of these as enemies.

And I am sure many of you who are MAGA now will be gloating when immigrants are deported without any due process. Families split, liberals crying. To you all their anguish feels like “winning.” But then some of you suddenly discover that your job is gone because of Trump tariffs. You cannot make ends meet because costs increase.

Perhaps you start joining protests. You still love Trump but you want him to change. Surely he will listen to you right? I mean… you supported him… he takes care of his own right?

No, he wont. This is exactly what Martin Niemöller learned. You cannot protest an authoritarian. Doesn’t matter if you have been a supporter. If you do not display blind loyalty then you are no different from liberals in his view.

Many of you will cling to a belief in Trump even when the police beat you. It has happened before. Plenty of people still clung to a belief in Stalin when he sent them to the Gulags. It was the same in absolute monarchy: A naive belief that the King was a good guy and the nasty things that happened to you was only because of corrupt and incompetent underlings. If only the king got to hear your pleas it would all be good again.

Let me do a little recap: Started by talking about Toy Smugglers. It will be just one silly example of what the Trump tariffs will lead to. But ultimately this will cause a snowball effect and eventually there will be a storm of protests, but a man like Trump will not tolerate that. If you are lucky he back down. Sometimes he does, but there is a very real danger that it will trigger an evolution towards an authoritarian police state.

At this point it is worth saying some words about predictions. I see right-wingers always to this little stilly dance about left-wing predictions. One is the claim that the worry about the ozone layer was unfounded because the problem fixed itself. In other words the dire predictions did not pan out.

Such arguments are so stupid, one wonders why we need to address them, but we do. The ozone layer got “fixed” because governments listened to the dire prediction. Policies were implemented globally that fixed the problem. In other words a problem will not materialize if people take the problem serious.

The Trump 1.0 presidency was similar. We made many warnings about it even then that did not pan out, but that was in large part because Trump got thwarted by people who took the danger he represented serious.

We have a similar case with global warming. Early climate models made wrong predictions because we managed to reduce emissions more than was assumed in those early predictions. That made people think the models were wrong. They were not. Had we actually done less to reduce CO2 emission and we had followed original assumptions made for the first climate models back in the 80s and 90s then the results would have been as predicted.

In fact if we adjust the models from the 80s to match our actual CO2 emissions, you will find that the models would have predicted current temperature and climate quite accurately.

Likewise I do not have a crystal ball. I cannot guess accurately how strong the opposition to Trump will be. Will Republicans turn their back on him? That is hard to tell. So my predictions about a descent into authoritarian police state may very well end up totally wrong.

But I will argue that insofar as I get my predictions wrong, it will not be because I got Trump wrong, but because I was not able to foresee the strength and courage of the opposition.

In fact my prediction is in fact not that Trump will succeed in implementing an authoritarian state because he is simply too incompetent. He has created so much chaos before he has properly consolidated power and that might end up being his undoing in the end. At the end of the day I am an optimist.

But unfortunately the American people will have to suffer for a while before they can get rid of Trump.