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 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.