Things at Cisco are about to get very expensive and business will nose dive with tariffs. Subsequently expect to see layoffs. The results of decades of bad decisions are about to be felt.
Outsourcing manufacturing reduces domestic job opportunities and makes supply chains more vulnerable to global disruptions, while local manufacturing strengthens the economy, creates jobs, and ensures greater control over product quality and delivery.
22 replies (most recent on top)
The inconvenient truth is that the West is no longer willing to do some of the more unpalatable jobs, we’ve outsourced a lot of that to China and Africa.
Japan did the same thing. The jobs they exported were known as 3K jobs where the Japanese words beginning with K translate to dirty, dangerous and difficult (Google seems to give the English words in various orders.)
It’s the blue-collar sector that will suffer the most through the inevitable inflation and recession caused by these tariffs.
With the gutting of education along with the investments in science and R&D white collar workers aren't more than a generation behind, but that's been the published plan for ages.
Building in the USA is required for many key and critical products and raw material. USA learnt a lesson during Covid.
National security is the main focus. Many of you don’t get it. This is not all about profits.
You are not wrong, I think many nations realised this during Covid but…
This will be a long play. Building a factory is easy (unless you have to import the machinery from China). It is recruiting and training the workers that takes time. Getting from zero to effective is a four or five year journey. To misquote the old joke, if that’s where you want to get to, you shouldn’t start from here.
DJT was elected in 2016, in part, on a promise to re-shore manufacturing to the rust belt states. It never happened. I work in those states and manufacturing capacity has barely changed in the last ten years. That said, there has been some substantial changes, the F150 Lightning plant for example.
The inconvenient truth is that the West is no longer willing to do some of the more unpalatable jobs, we’ve outsourced a lot of that to China and Africa. Yes, America has a lot of natural resources. However, what’s missing is the capacity to extract and process those resources. Both of which are quite unpleasant activities that your average Joe doesn’t want to do.
The sad irony is that the rust belt voted for DJT in 2016 on the promise of a resurgence in manufacturing. He didn’t deliver and yet they re-elected him in 2024 on the promise of a resurgence of manufacturing.
DJT doesn’t care what he says or does, as long as it’s in his best interest. It’s the blue-collar sector that will suffer the most through the inevitable inflation and recession caused by these tariffs.
Why is China not developing their own chips better than NVDA.
Why do ASML and TSMC dominate the chip making equipment and high end chip markets given neither is US based? Why did Intel stall in 14nm and 10nm processes when others in other countries kept going?
There is no question China is starting from behind but given the scope of changes that are likely to occur in all the different forms of AI over the next 10-20 years it's anyone's game. During that time all sorts of companies will rise and fall just as they did in personal computer and networking markets.
Building in the USA is required for many key and critical products and raw material. USA learnt a lesson during Covid.
National security is the main focus. Many of you don’t get it. This is not all about profits.
Enough of cheap goods from China. Enough of currency manipulation and flooding markets with cheap labor & now good working conditions.
Why is China not developing their own chips better than NVDA. They are importing them secretly from other countries.
Deepseek is a deep copy of American AI technology and improved from it. Smaller LLM model and small accuracy. Get the facts right !
Chinese economy is struggling from real estate crash and Covid lockdowns. Huge unemployment!!
Why are 80-100K students are coming to USA every year ?
Many countries will decouple from China soon. Wait for 3-4 years, they will crash and burn. Jobs will be back to other countries!
Building in the US is not an option, that ship has sailed. The US needs to focus on IP security from all the “college professors” originating from mainland China. Their advancement in tech over the last five years had been astounding and we gave it to them.
Why would anyone want to build new manufacturing capacity in the USA?
The cost of employing someone in the USA is almost double that in Europe, once things like 401k and healthcare are factored in. Compared to SE Asia USA employment casts are at least an order of magnitude higher.
One of the reasons that manufacturing went to SE Asia was that, increasingly, Americans didn’t want to do those jobs. Working a production line is not that pleasant. It’s repetitive and, frankly, boring. The same is true in Europe, with the notable exception of Germany. It also applies to hospitality. When was the last time the cleaning staff in your hotel were not Hispanic? Or, in Europe, Eastern European. Where would we be without Australians, who are genetically engineered for bar work?
Getting a new factory to full production takes time. Building/equipping the factory is relatively quick and easy (but pricy if most of the equipment is coming from China. What takes the time is trading the people and getting them to full effectiveness. That takes years to do properly.
To justify the capital investment, you need ten+ tears of economic stability. Given the flip flopping of Trump on tariffs, you do not have that stability. Those tariffs that appear to make investing in a new plant justifiable could be gone in two years. Then you are back to being very expensive compared with SE Asian imports.
The USA might be the biggest economy in the world but it accounts for about 10% of total trade. Do you think the Chinese are that bothered? They’ll just ramp up sales in other markets. Markets that will be willing customers because all trust in the USA has been broken.
Trump’s second presidency (like Brexit for the British) will come to be seen as the greatest example of state self harm in history. The USA is currently being led by a bunch of economic illiterates. I would like to believe that there is some underlying grand plan that we have yet to learn. Otherwise, this is all about corruption and insider dealing.
So, why would anyone want to build new manufacturing capacity in the USA?
China got all the technology from western nation[s].
America did the first versions of many things, but we also failed to commercialize many technologies which seeded follow on technologies completely developed outside the US. From WWII through the 1980s the US government provided massive resources like computing available through both educational and R&D organizations making that not a source of pure capitalistic free trade.
you cannot refuse to spy if government demands or forces you to spy. You cannot say no.
Welcome to the US! National security letters are not approved by judges where the entity served cannot reveal it's been drafted in addition to not being able to say no. License plate and RF readers for any kind of MAC address along roadways (how do you think those signs that say how long until the next interchange work?) Most people now carry cameras, microphones, radios, location services, motion and temperature sensors, and account and password information for many parts of their lives which are easily hacked, and the same goes for modern cars. Currency tracking. Reporting all transactions over $600 as of 2026. Additional fixed cameras everywhere. Not just social networks but anyone making anything with access to cellular or WiFi networks collecting everything they can and all of it within reach of the government.
quality of goods made in China are from western technology and design.
There are plenty of American design companies that did production prototyping with both Chinese and US manufacturers and China won not only on price but on yield, reliability and delivery time. If you want to see American labor at its worst where it doesn't have foreign competition just look at the home inspector videos on YouTube. With new construction not providing required and labeled structure under trusses to having the vent pipes from fireplaces ending a few inches below sealed plywood roofs many are criminally stupid.
Fair trade is the way forward. critical manufacturing needs to move back to USA so that we don’t depend on other countries during war or another Covid like scenario.
Those two sentences are completely contradictory. Is failing to sell trucks that can't fit on foreign roadways and consume an absurd amount of gas unfair trade or American incompetence in foreign markets? Is forcing countries to purchase sterile seeds so they can't grow their own crops without perpetually buying new seeds from the US fair? You mention COVID but don't seem to understand that American won't even manufacture sterile saline in a bag required by the medical community because it's not profitable enough, which means either the government subsidizes a lot of what we need to survive in isolation or we keeping buying this stuff from abroad.
None of this covers the impact of automation and AI, both of which have the ability to dramatically cut jobs up and down the skill and pay scales so all the complaining about lost jobs in the US may remain completely unaddressed. The world economy is the largest system humans have ever constructed and the idea one change can be made in complete isolation that will solve everything isn't just naïve, it's insane.
Someone replied: Employers don't want American workers and employees don't want American quality.
My reply: China got all the technology from western nation. You need to give them all the intellectual property before you move the production to them. Thousands of Chi nese are at USA universities and companies, they copy everything, and steal it from USA and European countries. Look at China before Mao signed treaty with USA, they were a farming country.
Law in China: you cannot refuse to spy if government demands or forces you to spy. You cannot say no.
Quality: quality of goods made in China are from western technology and design. USA steel quality is better than Chinese. Tools and bolts are of top quality.
CEOs and Wall Street outsourced almost everything to China. Working class need two jobs to support family.
Tech employs just 9-10 million people in USA. Rest are in non-tech. USA needs good paying manufacturing jobs. Not like China, who pays slave wages and flood cheap goods in other countries.
Fair trade is the way forward. critical manufacturing needs to move back to USA so that we don’t depend on other countries during war or another Covid like scenario.
CEOs and Wall Street have looted this country for 4-5 decades. No more !
735 billionaires have more wealth than the bottom half of the US population. The billionaires in the current administration are worth more than the GDP of 172 countries. Tariffs mean they can raise prices on the US consumer, taking even more. How do you get from this to "no more?"
Every company in USA wants to outsource everything and import it cheap. With this mentality, they will do everything possible to change laws and break laws.
You must have missed the explanations of how America will be able to produce cheap products via automation and child labor in the US, or how Americans won't pay an additional two pennies for jeans of identical quality for foreign ones. Employers don't want American workers and employees don't want American quality.
Made in Mexico and Vietnam by China ! Hence tariffs on those countries.
Every company in USA wants to outsource everything and import it cheap. With this mentality, they will do everything possible to change laws and break laws. Lobbyists are real busy now in Washington DC.
Let’s see how it will all end soon in few months? Time will tell. Many of them say one thing in public and do exactly opposite in private. Let’s wait and see.
Can anything be done for the non-stop outsourcing of tech jobs to other countries? Something will happen very soon.
tariffs are a bad idea, pretty much all the time.
then why do so many of America's "allies" implement them without earning your scorn?
It's spelled T A R I F F.
Half of Cisco's revenue is annualized recurring revenue from software and services. Cisco's gross margins on hardware are around 64%. With hardware not being the vast majority of Cisco's sales there will be an impact but perhaps not as much as some might assume.
If he's such a business genius, how did he bankrupt a CASINO! This tariff nonsense will end like steaks, water, airlines, casinos, "university". It 's like explaining quantum physics to a chimpanzee. As investors in the US, we are being fleeced.
Even if it's only for 3 months, this will have lasting impact. Remember how we went from "amazing sales! Here's a higher bonus" to "well theyre implementing those devices so we need to do layoffs".
Wake up and smell the routers, tariffs are a bad idea, pretty much all the time. Surprised some of you oldies have changed tune on that, I remember free trade being the big thing a few admins ago.
If tariffs are temporary how would that achieve bringing manufacturing back here in the US? Why would anyone do large capital investment if tariffs are gone in 6 months?
And even if some comes back what would the hourly wage be to compete to rest of the world? Be careful what you wish for : replacing $60 per hour office jobs with $30 toiling in a factory.
And even if tariffs are gone next week, the bigger damage is already done - loss of trust!
The rest of the world will make sure they are not going to be so vulnerable as they are now, and over time will divest and create new aliances.
For companies like Cisco while this might create bump in US sales, the rest of the world will pivot more towards Huwaei and other foreign competitors. What we manufacture is not that cutting edge as we think anyways.
Why does everyone assume tariffs are forever? They're a negotiated tool, several countries have caved already. They probably won't be in place more than 6 months for most countries.
The reduction in profit will hit Cisco & competitors roughly the same...unless some companies are able to make a deal for reduced or exempted tariffs. Cisco has the best probability there.
Will Cisco do layoffs?...probably, but not because of tariffs, even though tariffs will be the stated cause.
Potentially, US-based contract manufacturer facilities are about to get busy.
What remains to be seen is if tariffs are here to stay or if they are simply a short-term negotiating tool.
Yes, I voted for this; yes, I'm loving it; and yes, I'm buying the dip.
Cisco will survive. It is used in many sectors and in many countries. USA government and others rely on it.
Cisco shutting down or closing in few years ? I heard this for almost 15 years. Haha !
CEOs and Wall Street have looted this country for 4-5 decades. No more !
Intellectual property theft by Asian country is going on for years. Jobs lost, middle class are becoming poor and no hope for many of them.
Trump is changing the Republican Party now. They are focusing on stopping this Asian country not to flood USA with cheap goods and plunder everything.
Global trade is not free trade. Many countries are breaking rules by manipulating their currency, cheap labor and unfair trade.
CFO already said months ago they had contingency plans for this by diversifying their supply chain