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That makes sense. With import tariffs in both countries aimed at goods from the other a firm may find it economically viable to shift production (like Apple) to
by jjwhitaker 7y ago
That makes sense. With import tariffs in both countries aimed at goods from the other a firm may find it economically viable to shift production (like Apple) to another country with costs lower than tax paid to customs.
That will force US firms to move production out of China and/or the US to cut costs long term, which makes sense. It takes a lot to build a steel mill or DRAM plant and those projects will probably try to weather the storm but other countries can make shirts and plastic toys easily enough. For Micron, they already have manufacturing capacity outside the US but not in China. Defending their legal argument of being a US company that doesn't make US goods is probably hugely cheaper than tariffs.
Tariffs probably shouldn't be used like they are here anyway. They can be an incredibly powerful negotiation tactics when applied surgically to industries where production can't shift or is specialized to the target country. Like sanctions they can push a deal from on or off the table but they work best when the countries/economies are mismatched like Iran vs the US+EU.
When applied like a blanket you just end up taxing imports without a plan and hurting everyone. There was no obvious need to do so here especially as the lopsided trade deficit (which is not explicitly bad) lends so much leverage to China who does have cash on hand to invest in industry to offset losses while the US has a spiking deficit once again like with the last few GOP administrations.
- chunkyLafunga 7y agoIf you look at how China has been applying tariffs on US goods, its surgical, they only tariff goods that they know they can get somewhere else, they haven't put tariffs on anything they they know they can only get from the US.