That is what people like trump don't understand (not surprising). Instead of gradually rebuilding the manufacturing capabilities of the US while supporting essential industries (like steel production) to create competition, they think slapping tariff will magically make the domestic manufacturing come back. Like you said, the US manufacturers will just ride along the coattails of tariffs instead of trying to be competitive and/or expand their production (they have no incentive to do so).
Again, knowing how short-sighted the US politicians and the society as a whole (e.g., look at how a majority of corps only care about short-term/quarterly profit) have become, it is not surprising but saddening to observe (because I have been living in the US for a bit over two decades and cannot move back to my home country, which is, at the moment, riddle with civil war).
> they think slapping tariff will magically make the domestic manufacturing come back.
Certainly not when tariff policy changes every few days on a whim. That doesn't make you want to build a chip resistor plant in the US. Or even a smartphone plant.
> Instead of gradually rebuilding the manufacturing capabilities of the US while supporting essential industries (like steel production) to create competition, they think slapping tariff will magically make the domestic manufacturing come back.
So what would you propose as the proverbial kick in the butt to encourage domestic production? And before you say “subsidies”, remember that a large segment of the population isn’t wild about those either because they perceive it to be some sort of evil tax dodge for big corporations (see: literally every time some state gives a company incentives to build a plant or office).
The reason we’re in this mess in the first place is because we chased cheaper means of production and once everything at home was gone, we just threw our hands up and went “well it’ll be too painful to fix it, anyone who tries is an idiot.”
We've moved away from lower value manufacturing and are moving higher in the economic chain - that's great for us and how economics works. It isn't just chasing cheaper means of production - we can (and in a limited way have) put people to work elsewhere.
We dodged this in the 90s, but we
need massive training programs to move those displaced workers to new jobs + resettlement assistance to get them to where the jobs are.
Unfortunately, the vast majority of jobs and manufacturing is in The lower value manufacturing chain. So by chasing only the high value chain, you abandon the manufacturing operations that actually hire workers, thereby hollowing out the middle class of your country and reducing the consumers of the products that you sell. A counterproductive and shortsighted strategy.
> see: literally every time some state gives a company incentives to build a plant or office
You're conflating two things here, the subsidies are one issue but the bigger issue is the ability for large companies to "shop around" states looking for the most favorable tax incentives. Our government shouldn't be bidding against ourselves.
Our government shouldn't be bidding against ourselves.
Yes, it should, because that's how individual companies (and governments for that matter) find their optimal operating points.
That is the explicit central dogma behind the United States' system of government. It works pretty well for the most part. If all the states had the same laws, policies, and taxes, there would be no need for federalism at all.
But there is new incentive created here. Now someone can create a small business to serve die-cutting like the parent needs because they have the extra edge over the Chinese competition. These sorts of small shops that did small runs used to be part of the economy before they closed after they couldn't keep up with the low cost coming out of China and they can in theory come back if making stuff in China becomes expensive enough.
Is that an immediate win for the consumer and the economy? Probably not. In the long term it could be reversing the globalization which is maybe a good thing (or at least that's the argument).
Anything imposed on the whim of the executive can be taken away just as easily, so building an entire factory based on an assumption about tariffs remaining in place is probably a hard sell.
> But there is new incentive created here. Now someone can create a small business to serve die-cutting like the parent needs because they have the extra edge over the Chinese competition.
You’d need dramatically higher tariffs for there to be any chance of that. Or a complete trade embargo. And either way, it’s gonna mean much more expensive goods for consumers.
Again, knowing how short-sighted the US politicians and the society as a whole (e.g., look at how a majority of corps only care about short-term/quarterly profit) have become, it is not surprising but saddening to observe (because I have been living in the US for a bit over two decades and cannot move back to my home country, which is, at the moment, riddle with civil war).