With all the talk of tariffs, I’ve seen more or less this argument:
“Once the tariffs go in place, companies will start manufacturing in the USA and that’s good thing.”
However, when I think about being able to manufacture something like a laptop computer, or a car, these are both operations that require a lot of things:
- the input components to build the thing
- skilled labor that can manufacture the thing
- supply-chains that are in place from initial build all the way to retail
The premise seems to be: “OK, tariffs go in, someone INSTANTLY sets up a company that manufactures X, then USA wins”.
However, for someone to want to take the “bet” on setting up a really expensive factory, they’d have to believe that the tariff will be in place a long time, because if it is NOT… then they have made a terrible investment and the new factory will be instantly non-viable.
Am I crazy? Am I missing something? I understand that it would be great if we had domestic manufacturing but it seems like the people that are behind tariffs think you just snap your fingers and there is a factory cranking out laptops, when in my understanding this is a process that requires a huge amount of money and time.
My thinking is that the amount of people / companies in the USA that have enough capital to start up a manufacturing company like this want to make sure it’s a relatively safe bet before pulling the trigger, and if past tariff behavior from Mr. Trump is any indication, we can’t count on these tariffs being present for a long time.
I’m smart enough to understand that setting up domestic manufacturing is much more complicated and expensive than I could guess. I also know that getting a project like this from concept to steady, reliable, marketable production takes years.
I also know that the people who think this is quick and easy will proudly wear their MAGA hats today.
If Nike shoes go from $200 to $300 from tariffs, there is a big opportunity for crossborder shopping in Canada or Mexico, where in Canada they would be $226. And then more opportunity to smuggle them with volume discounts for US ebay listings. A peer to peer smuggling network takes away from “backbone of retail economy”, and then lowers value of US official market such that making $300 shoes inside the US costs a big investment, and still loses to smuggling.
Apparel industry jobs tend not to be as glamourous as Boeing, Catterpillar, Deere jobs which are pretty much only US manufacturing export sector than defense. Losing export markets from hatred of US, doesn’t get replaced with good jobs in apparel, or exports of expensive US apparel.
There’s also a good chance that competing global brands take massive market share from US aligned companies, and less scale will mean less marketing budget.
do people really think
Gonna stop you right there. No. The answer is that no, they don’t think.
Assume that, for the first time in his life, Donald meant what he said. Pretend that he won’t change his mind or panic, and assume that the same GOP which keeps missing Speaker of the House election layups won’t break and let the Democrats take the tariff power away
The midterm congressional elections are always a swing to the other party. The Democrats are more likely to take at least one chamber of Congress than Trump is to say something dumb. But let’s assume that for some reason they only take one, and you get gridlock enough to preserve the tarrifs until the next POTUS takes office in January 2029.
A factory would need to break even by that time to be worth a quick investment. And not just break even, but leave you with more wealth than if you just bought a bunch of crypto and stayed home until this all passes. And if you signed an deal today, your break even points might be as soon as only 45 months away.
You can’t even get a car loan with a team that short.
I think the supply-chain issue is often forgotten about. Sure, we can open manufacturing businesses here to make whatever, but where do people think the materials will come from? Do they think we’ve had all the materials we need to manufacture goods here in America all along and we just haven’t been because everything is cheaper to make overseas? Just look at this list of major exports by country. Does the US have SOME of this stuff? Sure, but enough to make enough goods for US consumers on a regular, as-needed basis? No way. We will need raw materials, and there won’t be enough to go around.
It is a simple solution to a complicated problem. For a segment of society, it sounds good enough.
Do people really think…
Imma stop u there
I agree, this is bad logic. That said, that’s not what I hear from the current regime when I hear them talking about tariffs. What I hear is them thinking this will force countries to lower barriers to Americans doing business abroad. Once those barriers are lowered, tariffs are reduced or go away altogether. For the record, I do not think this is good policy, but the intent of the policy (at lease as I read it) isn’t to suddenly move all manufacturing back to the United States.
You can solve our issues with investment, like Democrats do. Our economy does better under Democrats than Republicans.
Republicans seem to think this is how things work and that may explain the consistent economic downturns you see under most Republican admin’s.
Until the American people figure this out, things will suck.
Democrats may not be your cup of tea, but it’s undeniable the country does better when Republicans are not in charge over the past century or so.
“But you just like… screw stuff together, right? Cut the basic materials to make the parts, put it together, box it up, ship it out, right?”
- Someone I legitimately spoke to once. We were talking about assembling TVs.
I find that people who’ve never assembled anything more complex than Ikea furniture or something more technical than changed a pipe or switch in their home, tend to think production exists in exactly two levels: Low-tech, hand-tools-at-most labor which can be easily spun up because “anyone can do it”, and ultra-high-tech stuff like computer chips which need highly specialized factories, but where a few factories can mostly satisfy nationwide demand.
MAGA Morons are fantasizing that all these new high-paying manufacturing jobs will be coming back, but thats not the plan.
The new factories will be sweat shops without safety/ health/ environmental regulations, paying minimum wage (or less, if they can end it). They will primarily rely on teenage child labor, using young people who are desperate for jobs after all the fast food jobs have been automated.
Thats the Sociopathic Oligarchs’ dream.
Not to mention any new factories will have drastically fewer jobs than the factories that left due to newer factories being highly automated. The cost of retrofitting existing factories has stopped many companies from upgrading to keep higher their quarterly profits for investors. If they are forced to build, they will invest in money saving long run cost savings like automation.
Yeah, this is a great point. A fully automated car company in the USA is great for those who want to buy cars, but for those who want a job building cars, it does nothing. The observation that these NEW firms would be set up with massive automation makes perfect intuitive sense to me, because who’d invest in a brand new manufacturing firm and use last century technology to do so?
Creating a single permanent job costs about 100k in investment. Any potential profits will only hold as long as the tariffs are in place, and as the tariffs are as volatile as Trump, nobody is going to spend that amount of money on an idiots folly.
I see a lot of people saying “someone will build factories” and a lot less people saying “I will pay to build that factory”
Trumpers are actually dumb enough to believe that factories and jobs pop from the ground overnight and without any costs.
And without immigrant labour. Just good old obese workes who keep the gears spinning.
Why would you move to the u.s, and have to pay tariffs to every other country, except for just one?
Also because these tariffs are so overreaching they also include component parts. So you can’t build your laptop because all of the chips are built outside the US so by being in the US you actually increase your exposure to tariffs. Outside the US you can build your laptop without having to deal with tariffs on every single component, then let Walmart pay tariffs to import.
