9 ms·

A lot of argument against tariffs seems to assume that prices in the US will rise and stay increased permanently assuming production stays in China. Wouldn't t

by vtange 8y ago

A lot of argument against tariffs seems to assume that prices in the US will rise and stay increased permanently assuming production stays in China. Wouldn't the downsides of tariffs actually only remain until production moves to say, Vietnam, etc.?

ceejayoz 8y ago
Wouldn't that lead to the same trade deficit Trump decries, and thus new sanctions? A production move would be expensive, and presumably hasn't already happened because of cost differences between China and, say, Vietnam. You might be able to keep the cost increase down, but not non-existent.
hangonhn 8y ago
No. It's not that easy to move. Factories don't work in isolation. One of the major advantages of China is that all the suppliers are located very close to each other so you can get very fast turn arounds. Some people have the mistaken notion that it's only because of cheaper labor, which is only partly true. But in the area where a lot of the manufacturing is happening, Shenzhen, labor cost isn't that cheap because the cost of living has skyrocketed. This is an old but really insightful article on why manufacturing happens in China: https://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&ref=charlesduhigg&pagewanted=all https://www.nytimes.com/2012/01/22/business/apple-america-an... It's similar to why tech startups largely start in or move to Silicon Valley. It's the ecosystem of VC, pool of talent (Stanford, Berkeley, the other UCs, and tech companies), and existing large tech companies. This all can change but not overnight. Wendover Productions did a nice video on manufacturing in Shenzhen: https://www.youtube.com/watch?v=E7Jfrzkmzyc https://www.youtube.com/watch?v=E7Jfrzkmzyc (Highly relevant to the big picture and issues around the tariffs)
- dv_dt 8y ago
  This is similar to the the original dynamic that allowed Silicon Valley to be Silicon Valley and produce ICs, then computers, home computers and game consoles, etc.
code_duck 8y ago
What would the benefit be to the United States for production to shift to Vietnam? Simply to avoid it being done in China? I thought the idea was to increase domestic production.
- defertoreptar 8y ago
  The idea is to address China's IP theft in the tech sector, amongst other shady trade practices.

by vtange 8y ago

ceejayoz 8y ago

Wouldn't that lead to the same trade deficit Trump decries, and thus new sanctions? A production move would be expensive, and presumably hasn't already happened because of cost differences between China and, say, Vietnam. You might be able to keep the cost increase down, but not non-existent.

hangonhn 8y ago

No. It's not that easy to move. Factories don't work in isolation. One of the major advantages of China is that all the suppliers are located very close to each other so you can get very fast turn arounds. Some people have the mistaken notion that it's only because of cheaper labor, which is only partly true. But in the area where a lot of the manufacturing is happening, Shenzhen, labor cost isn't that cheap because the cost of living has skyrocketed. This is an old but really insightful article on why manufacturing happens in China: https://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&ref=charlesduhigg&pagewanted=all https://www.nytimes.com/2012/01/22/business/apple-america-an... It's similar to why tech startups largely start in or move to Silicon Valley. It's the ecosystem of VC, pool of talent (Stanford, Berkeley, the other UCs, and tech companies), and existing large tech companies. This all can change but not overnight. Wendover Productions did a nice video on manufacturing in Shenzhen: https://www.youtube.com/watch?v=E7Jfrzkmzyc https://www.youtube.com/watch?v=E7Jfrzkmzyc (Highly relevant to the big picture and issues around the tariffs)

dv_dt 8y ago
This is similar to the the original dynamic that allowed Silicon Valley to be Silicon Valley and produce ICs, then computers, home computers and game consoles, etc.

code_duck 8y ago

What would the benefit be to the United States for production to shift to Vietnam? Simply to avoid it being done in China? I thought the idea was to increase domestic production.

defertoreptar 8y ago
The idea is to address China's IP theft in the tech sector, amongst other shady trade practices.