3 ms·

This sounds like one of the oft-overlooked knock-on effects of globalization and long supply chains. Lots of tariff quackery and a whole lot of risk and uncerta

by titzer 6y ago

This sounds like one of the oft-overlooked knock-on effects of globalization and long supply chains. Lots of tariff quackery and a whole lot of risk and uncertainty for sourcing. It all ends up funneling money away from local businesses and governments. Even if it helps consumers by making goods a smidgen cheaper, what good is it if money ultimately leaves the local economy? Multiply your experience by a million and stretch it out over decades, and this is middle America getting sucked dry.

S_A_P 6y ago
Well stated.
kortilla 6y ago
There are two conflicting things at play there. Middle America is getting sucked dry on the manufacturing side because of uncompetitive costs. The knee jerk reaction of the government is then to address this with tariffs, which then results in the local retail industry getting sucked dry as well because they can’t compete with tariff bypass loopholes.
- ehvatum 6y ago
  There are steel mills down the road from my manufacturing business that were shuttered for decades and reopened when the tariffs came into effect. They were not competitive with Chinese government sponsored steel, that much is true. It’s extremely nice for me that they came back online; they order out of production precision parts from me for their heavy equipment. I’m located just across the river from St. Louis. This is middle America. Most of my consumer products are sold directly, online, but I also sell titanium weed pipes to a local chain. COVID definitely slowed retail sales. I looked into getting my motorcycle parts onto big corporate retail shelves, but the margins are tight. I’m working on that. Business has been good, so I can afford to try new things. Cutting blanks with plasma rather than waterjet and milling steel with air blast rather than coolant, together, might make big box retail rational, for me. The economics of manufacturing: extremely multi-faceted. There is a tendency for successful manufacturers to allow costs to escalate until flexibility is gone. Their employees unionize. Management borrows against the future. Then, the market changes. It’s a rough game. I chuckle when people talk about the right to a job. Sure; that can work if I have a right to sales.
  - vkou 6y ago
    > There are steel mills down the road from my manufacturing business that were shuttered for decades and reopened when the tariffs came into effect. This is a beautiful, heart-warming story that is not really supported by the data. Actually, steel employment in the US declined after the tarrifs were introduced [1]. Net steel production in the US went sideways over the past decade. It rose around the time of the tariffs, but it also fell and rose at other times [2]. The tariffs did, however, cause the cost of US steel to skyrocket [3]. Which is not fantastic for the ~330,910,000 Americans who aren't steel workers (who didn't actually win anything, since employment declined), or owners of steel plants (who I assume did win something, since they reaped the lion's share of the benefit of higher margins). [1] https://www.ibisworld.com/industry-statistics/employment/iron-steel-manufacturing-united-states/ https://www.ibisworld.com/industry-statistics/employment/iro... [2] https://tradingeconomics.com/united-states/steel-production https://tradingeconomics.com/united-states/steel-production [3] https://tradingeconomics.com/commodity/steel https://tradingeconomics.com/commodity/steel
    - Qub3d 6y ago
      This is so interesting. What I think we're seeing here in these two comments is the divide between micro- and macroeconomics. I absolutely believe that supply-chain disruptions in steel due to tariffs pushed U.S. plants to re-open in some locations, but I also can see how across the nation the production dropped. Frankly, we won't know the true effects on the tariffs until at least 2026 in my opinion -- these trends happen on the order of decades rather than years.
      - vkou 6y ago
        There's another possible explanation. Plants may have re-opened, but they aren't employing anyone, because of automation, which undermines the 'protect the local economy' aspect of tariffs. Robots don't spend their paycheque at local businesses, and it takes fewer people to build them, then they replace. [1] [1] If that weren't the case, they'd be more expensive than just employing people.

by titzer 6y ago

S_A_P 6y ago

Well stated.

kortilla 6y ago

There are two conflicting things at play there. Middle America is getting sucked dry on the manufacturing side because of uncompetitive costs. The knee jerk reaction of the government is then to address this with tariffs, which then results in the local retail industry getting sucked dry as well because they can’t compete with tariff bypass loopholes.

ehvatum 6y ago
There are steel mills down the road from my manufacturing business that were shuttered for decades and reopened when the tariffs came into effect. They were not competitive with Chinese government sponsored steel, that much is true. It’s extremely nice for me that they came back online; they order out of production precision parts from me for their heavy equipment. I’m located just across the river from St. Louis. This is middle America. Most of my consumer products are sold directly, online, but I also sell titanium weed pipes to a local chain. COVID definitely slowed retail sales. I looked into getting my motorcycle parts onto big corporate retail shelves, but the margins are tight. I’m working on that. Business has been good, so I can afford to try new things. Cutting blanks with plasma rather than waterjet and milling steel with air blast rather than coolant, together, might make big box retail rational, for me. The economics of manufacturing: extremely multi-faceted. There is a tendency for successful manufacturers to allow costs to escalate until flexibility is gone. Their employees unionize. Management borrows against the future. Then, the market changes. It’s a rough game. I chuckle when people talk about the right to a job. Sure; that can work if I have a right to sales.
- vkou 6y ago
  > There are steel mills down the road from my manufacturing business that were shuttered for decades and reopened when the tariffs came into effect. This is a beautiful, heart-warming story that is not really supported by the data. Actually, steel employment in the US declined after the tarrifs were introduced [1]. Net steel production in the US went sideways over the past decade. It rose around the time of the tariffs, but it also fell and rose at other times [2]. The tariffs did, however, cause the cost of US steel to skyrocket [3]. Which is not fantastic for the ~330,910,000 Americans who aren't steel workers (who didn't actually win anything, since employment declined), or owners of steel plants (who I assume did win something, since they reaped the lion's share of the benefit of higher margins). [1] https://www.ibisworld.com/industry-statistics/employment/iron-steel-manufacturing-united-states/ https://www.ibisworld.com/industry-statistics/employment/iro... [2] https://tradingeconomics.com/united-states/steel-production https://tradingeconomics.com/united-states/steel-production [3] https://tradingeconomics.com/commodity/steel https://tradingeconomics.com/commodity/steel
  - Qub3d 6y ago
    This is so interesting. What I think we're seeing here in these two comments is the divide between micro- and macroeconomics. I absolutely believe that supply-chain disruptions in steel due to tariffs pushed U.S. plants to re-open in some locations, but I also can see how across the nation the production dropped. Frankly, we won't know the true effects on the tariffs until at least 2026 in my opinion -- these trends happen on the order of decades rather than years.
    - vkou 6y ago
      There's another possible explanation. Plants may have re-opened, but they aren't employing anyone, because of automation, which undermines the 'protect the local economy' aspect of tariffs. Robots don't spend their paycheque at local businesses, and it takes fewer people to build them, then they replace. [1] [1] If that weren't the case, they'd be more expensive than just employing people.