No. The point is to make foreign goods more expensive in order to bring production back to the US. People who don't realize this point out who is actually paying and claim its a problem.
Will this bring manufacturing back? It seems to be working to some extent, but its a risk to manufacturers because the whole thing could get reversed after an election.
The whole thing could get reversed on a daily basis as this admin commits massive graft, carving out loopholes & rollbacks for their buddies companies/industries/etc..
Not to mention the incoherence that one day its a tool to bring jobs back, the next day its just a negotiation tactic so they get reduced/dropped on a country by country basis over and over.
> Not to mention the incoherence that one day its a tool to bring jobs back, the next day its just a negotiation tactic so they get reduced/dropped on a country by country basis over and over.
I thought it was retaliation for Canada not doing enough to stop their 20-odd kilogram contribution to the 4 tons of fentanyl smuggled in every year? [0]
(Which is to say I agree with you. Just trying to support your point that the reasoning has been so completely all over the map that anybody trying to assign any real meaning seems delusional. At this point I think most people have entirely forgotten half the reasons that have been made up along the way.)
The "smart MAGA" guys always crack me up because by the time they craft an intellectual justification for his previous moves, he has pivoted/reversed and pantsed them once again.
Frequently we get the "he's been poor advised" fallback as well.. Good Czar, Bad Boyars.
That doesn’t mean manufacturing is down, if new output is automated.
The trade deficit is shrinking, and which necessarily means there is more domestic flow as foreign hoards of dollars are liquidated. That flow has to go somewhere.
> That doesn’t mean manufacturing is down, if new output is automated.
You are correct. Of course, if new output is automated, then the purported goal of the tariffs (more manufacturing jobs!) is defeated.
The fact that any new manufacturing will of course be automated shows how little thought went into designing these tariffs and how transparently false the administration's promises are.
> The trade deficit is shrinking
This is totally irrelevant. The size of the trade deficit does is a red herring.
The trade deficit is shrinking because fewer goods are being imported. Producing countries are finding alternate markets that are outside of the US' punitive tariffing.
Perhaps because the inputs to domestic manufacturing are currently more expensive. Actually increasing manufacturing capacity first requires construction and capital expenditure. I'm not sure how those metrics are doing.
> domestic manufacturing are currently more expensive
Because factory machines and raw materials are being tariffed. Also because a source of cheap labor (immigrants) is being excised.
> Actually increasing manufacturing capacity first requires construction and capital expenditure.
It certainly does. And companies are rightfully hesitant to invest, because the legally dubious basis for the tariffs may not survive this month, much less into the next administration.
That is one of the given reasons, but as with everything else about these tariffs, it's nonsensical:
1. It isn't now, nor has it ever been, the role of the federal government to dictate what types of jobs exist in the private sector.
2. Even if this was the end goal, making it easier and more affordable to manufacture in the US would be far better for all parties involved rather than brute forcing it through arbitrary taxes.
If China and the US were producing the same things but the US version was just a bit more expensive, then sure, consumers might switch yo the US version if the Chinese version overnight became the more expensive one.
But that isn't what's happening generally. China is producing stuff that the US simply doesn't produce, and so consumers just need to pay the increase out of their own pockets for the same Chinese product. It takes multiple years lead time to set up a manufacturing operation for anything of note, and I doubt many people are convinced of the stability of the tariffs to make that leap.
My spouse and I regularly import vintage toys and collectables from Asian countries. We've paid hundreds of dollars in tariffs on items that this point about manufacturing doesn't apply to at all
There are a few problems with how Trump is going about this:
1. The tariffs are too broad, they don't target a single or a few industries.
2. Trump has gone back and forth many times on them, using them as negotiating leverage, not as long term incentives.
3. They are on very shaky legal grounds and will likely end up getting reversed by either the Supreme Court or the next president.
If you want to use tariffs to encourage on-shoring you make them targeted and pass them with bipartisan support through congress. Companies need stability and long term guarantees for the kind of capital expenditure that is needed. Even better if you use a mix of carrot and stick, rather than all stick
I agree that's actually the problem. The problem with discourse in the US is that it comes in soundbites, division and confusion. This predates, arguably ENABLED Trump.
There could have been an argument for tariffs, done rationally and with a very specific program to rebalance trade. I'm not saying it's necessarily correct, but it could have entered as an option for voters to consider. But that's an alternative universe to people at this point, and we end up with an unpredictable waffling that scares businesses and doesn't appear to have obvious aims at this point beyond petty attacks.
And with China a key target in the Trump Tariff debacle, China is punching holes in these punitive tariffs. Besides shipping goods to intermediary countries that are not as heavily tariffed then exporting to the U.S., China is taking ownership stakes in American businesses, thus circumventing the whole tariff thing. And the beauty of this is, they can take advantage of U.S. taxpayer benefits, such as an R&D tax credit, to sweeten the deal.
Tariffs can be used to support domestic production. But not with how Trump is implementing them. Pointing out that tariffs can be used this way is ignoring what's actually happening.
> its a risk to manufacturers because the whole thing could get reversed after an election.
It's a risk to manufacturers when Trump might wildly change tariffs for a country / set of goods / whatever, up or down, at any time, because someone said something he didn't like somewhere, or some other non-economic rationalization.
The instability and lack of cohesive direction mean it's impossible for manufacturers to respond to tariffs with investment even within Trump's term.
I work at a manufacturing supplier (packaging and logistics) and our business has been on fire since the trade war kicked off. Pre-COVID we were at ~$25MM yearly and now we are $150MM+ and growing steadily.
We just bought a million sq ft building (that was an old RCA plant) and millions in new machinery to keep up.
It’s not entirely clear to me why tariffs would help your local logistics businesses? Doesn’t the same amount of stuff get moved around , just changes origin? I believe you I just would like to understand
Packaging is a support industry (other than stock boxes which are bulk manufacturerd for things like moving companies, etc).
So... the more companies making things or shipping things, the more boxes are needed. Financial and govt analysts use the packaging industry as kind of a canary for the general health of mnaufacturing and retail as it is on the end of the long tail for supply chains. Packaging is the first to decline and the last to pick up with the cycles of the economy.
What has been the impact on the distribution in the firm. Have more staff been hired, have more supply contracts been handed out, have worker bonuses increases or has it all flowed to the bottom line?
This is the other side of tariffs that few discuss. It may put import prices up, but it also increases the domestic flow of income.
Which means that those who rely solely on imports pay the cost and those who make the domestic supply get an increase in income as an offset.
We've doubled (or more) in headcount. Mostly in the 'special projects' area (complex shippers, partitions, pallets, parts movers, etc) and truck drivers (we have our own trucking company)
Our prices are primarily pegged to what brown paper is (used to make corrugated) which ebbs and flows. Our prices were affected a little because a lot of pulp and raw material comes from Canada (they sell soft wood incredibly cheap... it's actually been a point of contention in our treaty for decades) but the cost change has been fairly slight (close to inflation).
Labor prices have gone up a decent amount and so has health care. We've found savings in increased efficiency due to scaling up production (there are some big fixed costs wrt machinery that becomes a smaller piece of the pie with increased production).
Nobody imports boxes... cost of transport is more than the product which is why almost all box makers have regional plants.
Given the sheer volume of cheap stuff that had been coming straight from China, and the end of de minimus, my first guess would be the majority of this is Chinese and other foreign goods that are now being imported in bulk to minimize duties and costs of handling paperwork, then distributed state-side. Lots of new business (and resulting extra costs to consumers) in logistics, without as much of an increase on the manufacturing side.
I mean, it’s not like US clothes manufacturers, for example, can compete with East Asia even with 100% tariffs (on the wholesale price). Not even close. Ditto electronics, most toys, et c. Lots and lots of really high-volume stuff that was getting drop shipped through e.g. Amazon sellers, not to mention lots of traditional US brands that were shipping straight from overseas warehouses.
That’s not the way they are presented at all.
And making foreign goods much more expensive when we don’t currently produce enough of those products domestically to offer actual alternatives is a clear harm to consumers, not a boon to domestic manufacturing.
Of course, with the on/off again nature of these tariffs, the Supreme Court challenge and the fact that practically every country is being tariffed, uncertainty in the business world is epic right now. This uncertainty makes it difficult for manufacturers to see out 6 months, nevermind years down the road. Besides, it would take years to re-shore most manufacturing operations, some supply chains are very complex and the result of years of tuning and adjustments. This is not an overnight migration, as is being intimated. Frankly, I wonder if this is just a money-grab at the expense of the American consumer.
Is the US administration hoping to increase (digital) camera production in the US? Camera lenses? Is there a moribund American camera industry that could thrive if given a chance?
During Trump 1.0 he raised tariffs on steel and got 1k job in steel manufacturing… but lost 75k jobs in manufacturing that used steel as an input:
Will this bring manufacturing back? It seems to be working to some extent, but its a risk to manufacturers because the whole thing could get reversed after an election.