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re: Will tariffs really increase domestic manufacturing?
Posted on 4/3/25 at 10:57 am to dcw7g
Posted on 4/3/25 at 10:57 am to dcw7g
quote:
Are companies really going to invest in building manufacturing that won't come online for 2-3 years when Trump may reverse the tariffs in a few weeks or months? When the next president almost certainly will?
This is the fundamental problem with the new political approach we are seeing.
We cannot lurch dramatically on policy every 4-8 years and expect to see large investment of capital in the country.
You may not have liked the prior guy, but a certain level of comity from one administration to the next is a big ingredient in the American economic secret sauce.
I think you will see a lot of paper commitments over the next 12-24 months to mollify the president.
0
Posted on 4/3/25 at 10:57 am to CharlieTiger
quote:
That's great, but what kind of manufacturing?
UAE Emirates pledged $1.4T. The only fully outlined detail I've been able to see so far is an Aluminum smelter.
Posted on 4/3/25 at 10:59 am to GoCrazyAuburn
quote:
This is incorrect.
The other countries drop tariffs to 0. We drop tariffs to 0.
How does this bring manufacturing jobs back?
Now, if you argue the other "tariff theory" that the tariffs will remain and raise the price of goods domestically, that could justify bringing back lower-level manufacturing (as it would become more in-line with the pricing increases due to the tariffs).
The people supporting the tariffs kind of vacillate between these 2 arguments and pretend we can get both outcomes, somehow.
Posted on 4/3/25 at 11:00 am to GoCrazyAuburn
Hey guys the UAE pledged 3x their yearly gdp in US based manufacturing 
Posted on 4/3/25 at 11:03 am to SlowFlowPro
quote:
The other countries drop tariffs to 0. We drop tariffs to 0.
How does this bring manufacturing jobs back?
This is answered in my first post.
Posted on 4/3/25 at 11:04 am to JohnnyKilroy
quote:
Hey guys the UAE pledged 3x their yearly gdp in US based manufacturing
Okay?
Maybe you missed this part of my original post?
quote:
(obviously there needs to be follow through, a pledge is just a pledge).
This post was edited on 4/3/25 at 11:08 am
Posted on 4/3/25 at 11:07 am to dcw7g
Not unless prices go way up lol. Labor costs would skyrocket to pay American workers instead of foreign workers, and unless all the inputs come from America, the price of imported inputs will rise too. This HAS to translate to higher prices if it happens. Otherwise moving those jobs here won’t be profitable.
More likely outcome: companies move to other markets if they can, or take a hit and produce less stuff if they can’t.
More likely outcome: companies move to other markets if they can, or take a hit and produce less stuff if they can’t.
Posted on 4/3/25 at 11:08 am to GoCrazyAuburn
quote:
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.
Which manufacturing jobs are going to pay well? We’re assuming that prices across the board are going to substantially increase on manufactured goods, or that companies are broadly going to eat the increased cost of labor. So either demand is likely to get crushed from price increases, or there will be significant divestment in unprofitable manufacturing ventures, or both.
Any level of manufacturing that is dependent on developed materials (for example, assembling complex machinery from various manufactured components) is going to see a huge increase in input costs, either from import tariffs or increased cost from domestic production. Is this going to stimulate an increase in labor demand, or is this going to depress labor demand and wages?
Posted on 4/3/25 at 11:08 am to GoCrazyAuburn
quote:
Maybe you missed this part of my original post?
I think the point he is making is going over your head
This post was edited on 4/3/25 at 11:09 am
Posted on 4/3/25 at 11:08 am to GoCrazyAuburn
quote:
This is answered in my first post.
quote:
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.
It's not. We both lower tariffs to 0. Foreign markets are still poorer than the US and can't afford our expensive goods. Foreign labor is still cheaper and a better option for US companies.
Posted on 4/3/25 at 11:10 am to GoCrazyAuburn
quote:
This is incorrect.
Please explain?
We are not a manufacturing-centric economy anymore. This idea that tariffs are just going to "make American manufacturing great again" presupposes that American manufacturing can be made great again, which is debatable at best.
Posted on 4/3/25 at 11:10 am to UltimaParadox
quote:
I think the point he is making is going over your head
It's not. it is a silly point.
Posted on 4/3/25 at 11:13 am to GoCrazyAuburn
quote:
It's not. it is a silly point.
Where does the uae come up with the capital to invest so much money from? They going to borrow from us?
Posted on 4/3/25 at 11:15 am to bluemoons
quote:
Please explain?
If the foreign markets are currently charging 1+X on our goods, if through all this we get them to lower it to 1 for our goods in their markets, we are not back to square 1 (assuming our proposed tariffs get eliminted when they eliminate theirs, which is what the stated goal is at least). Domestically, things are back where they were, obviously. In the foreign markets, our goods have just had a massive price decrease.
You are operating under the assumption in your original post I responded to that square one is both sides are currently equal. That isn't the case. So, if this gets the other countries to lower or eliminate the tariffs they impose on our goods, then it will make our goods more competitive in their markets.
This post was edited on 4/3/25 at 11:20 am
Posted on 4/3/25 at 11:18 am to UltimaParadox
quote:
Where does the uae come up with the capital to invest so much money from? They going to borrow from us?
Don't know. It is a 10 year pledge.
I've not once said I think they can or will actually commit to it all. But, seeing as people are wanting specifics what has been pledged so far, I am offering examples.
If he wants to have a discussion on how much we think these pledges will actually materialize, that is a different discussion. Seeing as this entire thread is based on a theoretical question, it makes his resposne a silly one, when I flat out admit in my first post that a pledge is just a pledge and ultiamtely means nothing until hard dollars are committed.
Posted on 4/3/25 at 11:18 am to dcw7g
quote:
Will tariffs really increase domestic manufacturing?
THAT is the key issue as it WILL NOT happen overnight. Jobs have been moving overseas in some sectors of industry for decades, under various administrations, and bringing them back to the US is laughable. How much is it going to cost IRT facilities, tooling, LABOR, etc which will all be transferred directly to consumer pricing.
He thinks he is playing with monopoly money, not retirements, savings, 529's for education, etc.
Posted on 4/3/25 at 11:21 am to CharlieTiger
Smart multinationals will release glossy PRs that say they plan to invest $xB in the US, give Trump the optics win, get a carveout and then never actually fulfill the obligation. Execs are smart enough to just wait out this administration.
Posted on 4/3/25 at 11:22 am to bluemoons
Well, remember that tariffs are fees paid by us based businesses for items they import. If yesterday totals are to be believed, this will result in a massive amount of new fed govt revenue. Which apparently they intend to use as an offset to tax cuts. So build it here or pay the tariff.. Clearly they're going for broke now before mid terms. I admire what they're attempting. The media of course spins as negative as possible.
This post was edited on 4/3/25 at 11:23 am
Posted on 4/3/25 at 11:32 am to SlowFlowPro
quote:
It's not. We both lower tariffs to 0. Foreign markets are still poorer than the US and can't afford our expensive goods. Foreign labor is still cheaper and a better option for US companies.
This is an absurd point. Foreign markets currently afford our goods with their current required markup. If that markup gets removed, they will become more competitive, which will naturally increase their demand. Arguing otherwise is just folly.
If you want to discuss if that demand increase will be enough to make a real impact on our domestic production to make all of this worthwhile, we can have that discussions as that is aperfectly valid concern. Acting like getting the other countries to eliminate their tariffs won't make our products more competitive over there is beyond the pale.
This post was edited on 4/3/25 at 11:33 am
Posted on 4/3/25 at 11:43 am to GoCrazyAuburn
quote:
Foreign markets currently afford our goods with their current required markup.
The trade deficit argues otherwise.
quote:
If that markup gets removed, they will become more competitive,
How is Cambodia going to (1) "remove the markup" that is based on the trade deficit and (2) have the money to buy our goods without tariffs? It may cause a marginal increase, but there will always be a deficit due to the inequity in economic position.
And Cambodia is always going to have cheaper labor than the US.
quote:
if that demand increase will be enough to make a real impact on our domestic production to make all of this worthwhile,
I'll answer that: it will not. Again, that's why the trade deficit for the US exists.
quote:
Acting like getting the other countries to eliminate their tariffs won't make our products more competitive over there is beyond the pale.
The countries poor enough to provide the cheap labor that replaced our lower-level manufacturing?
You seem to be applying European economies to Vietnam, Cambodia, Bangladesh, etc. That's your rhetorical issue.
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