Will tariffs really increase domestic manufacturing?

Many companies have announced manufacturing investments earlier this year.

The goal, or hope at least, from all this is one of two things:

1. Foreign companies or domestic companies move production back to the US to avoid the tariffs. This has already been announced by multiple companies, foreign and domestic. I hadn't looked at the number in a while, but I want to say as of a couple weeks ago there had been somewhere around ~3T investment pledges over the next 10 years made, because of what is going on. So, that is a good start (obviously there needs to be follow through, a pledge is just a pledge).

2. Other countries lower or eliminate their tariffs on US made goods, which will make them more competitive in the foreign markets. This should naturally increase production needs.

Could be any combination of the two depending on how the the rest of the world decides to act.

Now, there can also be a downside, though I think the sky screamers over this are being way dramatic. Any trade war is a gamble. If we overvalue our importance to the rest of the world and they don't blink, then the tariffs we impose will make a lot of products that dominate our market more expensive. Long term, there will be benefits to domestic products and other things will come about to help offset, but it would cause some short term pain for sure.

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Many companies have announced manufacturing investments earlier this year.

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Many of which will require huge infrastructure upgrades which will take years and Trump will be out of office by then anyway. Announcements don't really mean anything until things start getting built.

From a real and pragmatic standpoint, I don’t see it really happening.

The reason most of these jobs went overseas is simply because the labor is cheaper and a willing workforce is easier to find.

It takes years to establish a manufacturing business. If I’m a CEO, I’m thinking to myself that Trump has a tendency to reverse his positions often and there’s a real likelihood that three years from now; he will no longer be in office, and all of his tariffs will be reversed.

Meaning, if you commit to building in the US you’ve made a costly investment which may prove to be not very fruitful.

To me; that CEO is waiting for the midterms. If it’s a massacre for the GOP I’m content to wait Trump’s term out. If the Red prevails again I’m now a bit more confident in diving in.

YMMV…

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The reason most of these jobs went overseas is simply because the labor is cheaper and a willing workforce is easier to find.

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One thing that will be interesting about some of this, is there is a degree to this that is finally taking some action against what are illegal labor practices around the world. Not saying that is what they are actually doing, but in reality it is kind of what is going to happen.

Everyone kind of turns a blind eye to all of that, as long as their products get made.

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It takes years to establish a manufacturing business. If I’m a CEO, I’m thinking to myself that Trump has a tendency to reverse his positions often and there’s a real likelihood that three years from now; he will no longer be in office, and all of his tariffs will be reversed.

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Yea, this is another aspect I didn't really touch. Huge problem in our political landscape right now. There is so much polarity in what each side wants, that it is so hard to plan long term. Mix that in with congress not actually doing their jobs and the courts not doing their properly, and it is a terribly volatile environment for businesses to try and plan long term. That was part of the reason it was supposed to be hard as hell for the government to actually change laws, so that we weren't dealing with massive pendulum swings every 2-4 years.

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Is there a significant uptick due to tariffs is the question at hand here.

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I mean, yes, there has been specifically announced due to the tariffs. Again, it needs to materialize, but there has been commitments specifically because of Trump's plans.

I don't think so at a significant level. It's a global economy based upon the cost of labor in foreign countries. Commitments vs. actual deployment of capital will be two different things.

I think Trump was initially bluffing with threats of tariffs to try to level the playing field. Not that it isn't necessary, but these other countries essentially called his bluff with their own and he had to follow through with the tariffs.

Surprised the markets are reacting to this the way they are given all the rhetoric over the past month. But apparently there'll be more to come.

VIX Signally Bear Market

Watch the BLS measurement of manufacturing jobs, total manufacturing employment for job creation potential or regional trends as the eventual and true litmus test.

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Secondary question - are Americans really seeking jobs in manufacturing?

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Very valid question. If we can ever get rid of the stigma and people realize the amount of money that can be made in these fields, can easily happen.

Will it? Hard to say.

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2. Other countries lower or eliminate their tariffs on US made goods, which will make them more competitive in the foreign markets. This should naturally increase production needs.

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I don't disagree with you in theory, but I think this is counterintuitive. I'm operating under the assumption that the Trump administration is using tariffs for leverage (because there really is no other reasonable justification). If other countries eliminate their tariffs then, in theory, Trump should drop the US tariffs. Once that happens, we're right back to square one. Once the tariffs are removed, companies go back to taking advantage of cheaper labor and more manufacturing moves overseas. We are 80 years removed from WWII and we are no longer a manufacturing-centric economy.

If the intent of the tariffs is to actually revitalize broad-scale American manufacturing, then the tariffs should not be dropped - ever.

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nce that happens, we're right back to square one.

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This is incorrect.