3 ms·

How much of a price hike can actually being more assembly jobs back to North America? Or are they already brought back?

rubyn00bie 2y ago
Likely, none, zero, zilch. It will just cause inflation as it spreads across goods and domestic companies raise prices simply because they can.
kibwen 2y ago
The only way that a 10% tariff could bring jobs back would be if the difference between paying someone in the US to do it is less than 10% more than paying someone outside the US to do it. Otherwise it will still be profitable to do this outside the US, and this is just a tax hike on Americans, who don't generally seem to understand that tariffs are taxes.
nirav72 2y ago
Bringing it all back to North America isn't going to help much, since its almost impossible to locally source every single component that goes into a modern computing device. There there is the cost of labor.
blackeyeblitzar 2y ago
Tariffs have various long term effects that are useful. One is shifting where that manufacturing is done and in the longer term it could bring it back, depending on the cost of doing it in a different, non China, country. But another long term effect is geopolitical - China is in a more difficult economic position than the US and tariffs will make it difficult for them to keep building their military and difficult to envision war. It will also weaken their authoritarian government, which has an interest in annexing Taiwan and also in undermining the US, Europe, and other free societies. The other benefits of tariffs matter - it isn’t just about the short term effects (of inflating costs or whatever).
- kibwen 2y ago
  > One is shifting where that manufacturing is done and in the longer term it could bring it back, depending on the cost of doing it in a different, non China, country. Unfortunately, the taxes in question are also targeting imports from Canada and Mexico, two countries that are firmly in the US sphere of influence, and the beneficiaries of these new taxes will be countries in SEA which are increasingly in China's sphere of influence. This is a geopolitical own-goal from an administration with no coherent strategy.
  - blackeyeblitzar 2y ago
    > Unfortunately, the taxes in question are also targeting imports from Canada and Mexico, two countries that are firmly in the US sphere of influence It is a negotiation tactic with those two countries. It is meant to get changes on issues like border security, but also fairness given existing tariffs are often unbalanced. But also, there are a lot of imports from those countries that are basically Chinese tariff evasion.
    - kibwen 2y ago
      > It is a negotiation tactic with those two countries. It is an incoherent and amateur negotiation tactic. If the US can't secure the southern border on its own, what makes anyone think that Mexico is going to be able to do a better job at that? Naturally, we are ignoring for the moment that the majority of illegal immigration does not happen at the border in the first place. As for fairness, maybe Trump should have addressed that when he timidly rubber-stamped NAFTA 2 during his first term. And you're not going to beat "Chinese tax evasion" in this way without charging these taxes on every country on Earth. These import taxes are performative posturing. Please stop trying to paint them as part of some brilliantly motivated campaign.
    - tokioyoyo 2y ago
      I think that bullying mostly works when you don't have a potential consumer base that's bigger than the bully. I know it's not going to last long, but over the night shift from "America good, China bad" to "well, China at least doesn't belittle us every minute, so screw the states" has been very interesting to watch up here in Canada.
alephnerd 2y ago
> being more assembly jobs back to North America Electronics Assembly jobs already exist in North America - but in Mexico. They aren't going to bring assembly jobs back to the US, because electronics assembly is very low value and low margins.
- ta1243 2y ago
  If you make $600 component + $200 laptop ($800) from outside the US cost say $8k through a 1000% tariff, you could assemble in the US for $1,000, buy the components for $6000, and sell for $7k. That's what the american people seem to want to happen.
  - alephnerd 2y ago
    > That's what the american people seem to want to happen I'm American, and 50.2% of Americans did not vote for this. Realistically, it will not be that bad. Most companies will just up prices to make up the cost of the tariff and consumers will eat it.
    - Gormo 2y ago
      > I'm American, and 50.2% of Americans did not vote for this. In all fairness, a good portion of the other 49.8% probably didn't vote for this (or didn't know they were voting for it) either.
      - alephnerd 2y ago
        Yep! Most likely!
      - sangnoir 2y ago
        A good chunk of that cohort specifically voted against high inflation.
        ta1243 2y ago
        Trump made it quite clear that he was going to dole out tariffs like Oprah giving away cars. This wasn't hidden, they specifically voted for higher prices.
throw0101c 2y ago
> How much of a price hike can actually being more assembly jobs back to North America? Or are they already brought back? And at what cost even if they did/do. Washing machine tariffs resulted in a pass through cost greater than 100%. The employment effect (1800-2000 jobs) but the cost to the public of those jobs was $800,000+ each: * https://www.aeaweb.org/articles?id=10.1257/aer.20190611 https://www.aeaweb.org/articles?id=10.1257/aer.20190611 Prosperous America, a partisan think tank, thought this was generally positive: * https://prosperousamerica.org/economic-view-tariff-jumping-investment-the-success-of-the-2018-washing-machine-tariffs/ https://prosperousamerica.org/economic-view-tariff-jumping-i... Looking at it from the "national security" perspective, they aren't exactly wrong: > Democratic countries’ economies are mainly set up as free market economies with redistribution, because this is what maximizes living standards in peacetime. In a free market economy, if a foreign country wants to sell you cheap cars, you let them do it, and you allocate your own productive resources to something more profitable instead. If China is willing to sell you brand-new electric vehicles for $10,000, why should you turn them down? Just make B2B SaaS and advertising platforms and chat apps, sell them for a high profit margin, and drive a Chinese car. > Except then a war comes, and suddenly you find that B2B SaaS and advertising platforms and chat apps aren’t very useful for defending your freedoms. Oops! The right time to worry about manufacturing would have been years before the war, except you weren’t able to anticipate and prepare for the future. Manufacturing doesn’t just support war — in a very real way, it’s a war in and of itself. * https://www.noahpinion.blog/p/manufacturing-is-a-war-now https://www.noahpinion.blog/p/manufacturing-is-a-war-now There's the old saying about WW2: The Allies won [against the Nazis] from British intelligence, Russian blood, and American steel. The silliness of the current situation is that American can't go it alone anymore, but allies are now being alienated. So bringing back manufacturing jobs wouldn't be a bad thing, but what do you have to do to accomplish it? If China is designated as a 'country of concern' ("enemy"), perhaps target them, but why 'go after' your nominal friends?
NAHWheatCracker 2y ago
Higher tariffs won't do it alone. Time is needed, as well. The current tariffs are likely seen as temporary. If you start a factory to produce on shore, you would have to recoup capital costs off the margin available due to undercutting offshore factories while tariffs are higher. When the administration or whims change, the tariffs go away and your factory loses that margin and isn't as profitable.
- 3D30497420 2y ago
  And probably government support too? I'd wager a lot of the initial manufacturing capacity in China was jump-started by some amount of government support (cheap loans, tax incentives, etc.).
  - sangnoir 2y ago
    Trump is on record deriding the CHIPS act, which does exactly that.
    - 3D30497420 2y ago
      Yes, which is of course contributes to the irony: They are not doing the things which actually might help. Which, of course, suggests either they are stupid or not taking these actions for the reasons they're saying. I'm wagering both.
myrmidon 2y ago
Would IMO need significantly more tariffs to effect significant shifts (and, even more importantly, some certainty that those tariffs are going to stick for the next decades, which is hard to provide). Chinese mean manufacturing wage is ~$25k/year (purchasing parity adjusted, $15k unadjusted, for an average 49h/week of work). If you want domestic products to be competitive, you basically need the difference paid by consumers/taxpayers in tariffs or subsidies. I don't think current tariff level is going to move lots of manufacturing jobs into the US (and I would personally argue that most Americans don't even want those jobs as they are currently). Instead, I'd expect a slow shift towards countries with favorable local wage/tariff combination (India, Vietnam, etc.).
- markus_zhang 2y ago
  One thing we can do is to lower the cost of housing and other big bills. If we have universal basic income in the form of housing, food and clothing for everyone, a lot of people might just won't need to move into privately held properties (i.e. renting from private landlords).
  - myrmidon 2y ago
    Even if you had free housing/food/etc-- how many somewhat qualified people in the US are willing to work for 6-10$/hour? And those additional social services would need a big budget, which the current government is never gonna grant.
randcraw 2y ago
As others here have said, an increase of only 10% or 20% will do nothing, not even motivate other countries to blink. They'll just reciprocate with tariffs of their own which will add inflation across even more products. To motivate structural change, you'd need tariffs of 100% to 500% -- forcing a new business model. The real objective of Trump's mindless minions (e.g. Musk) is to create bragging points that will motivate bloviate-receptive voters to believe something was done by the administration to 'fix' problems, thereby increasing support for the party without actually doing anything useful.
- 3vidence 2y ago
  I don't know why people are even thinking that deeply about it. Trump put tarrifs on raw materials... There is no way to recoup the cost there. This is just the largest single tax increase in US history.
rstuart4133 2y ago
What drove labour intensive assembly jobs away from the USA was wages that are a fraction of what the USA has, and correspondingly lower standing of living. If sustained long enough tariffs will fix that. Costs will rise in the USA, exports will drop because the price of everything made in the USA will go up, the dollar will then drop, living standards will drop, and eventually comparative wages will start to approach those in Asia. Once that happens, assembly jobs will naturally migrate back to the USA. The USA has avoided that outcome for years by manufacturing very high margin products. Think Intel, SpaceX, vaccines, and the software giants like Microsoft, Google and Meta. That came at the cost of bifurcation of the economy, with tech sector jobs paying outlandish wages compared to what someone manufacturing a car could get. It seems that pissed so many people off they elected Trump. Trump probably thinks is the fix, but changing is coming no matter who is in power. As China, India in particular, now even those "high brain power" jobs are under price stress. Chip manufacturing has almost gone, the software companies are paying 1/4 or 1/10 the price of engineering talent by hiring overseas, India has become the pharmaceutical manufacturing powerhouse of the world. So you don't need lower tariffs to fix it. The fix is coming regardless of who you vote for. All tariffs will do is accelerate the process. But if there is one process you didn't want accelerated, it's this one. It's not all doom and gloom. Look to Canada, Australia and Europe to see what the final outcome will be like. It's not so bad, is it? You probably don't want to end up like the Britain, as that would mean a few rich with most of the USA ending up at the living standard of Mississippi.

Likely, none, zero, zilch. It will just cause inflation as it spreads across goods and domestic companies raise prices simply because they can.

kibwen 2y ago

The only way that a 10% tariff could bring jobs back would be if the difference between paying someone in the US to do it is less than 10% more than paying someone outside the US to do it. Otherwise it will still be profitable to do this outside the US, and this is just a tax hike on Americans, who don't generally seem to understand that tariffs are taxes.

nirav72 2y ago

Bringing it all back to North America isn't going to help much, since its almost impossible to locally source every single component that goes into a modern computing device. There there is the cost of labor.

blackeyeblitzar 2y ago

Tariffs have various long term effects that are useful. One is shifting where that manufacturing is done and in the longer term it could bring it back, depending on the cost of doing it in a different, non China, country. But another long term effect is geopolitical - China is in a more difficult economic position than the US and tariffs will make it difficult for them to keep building their military and difficult to envision war. It will also weaken their authoritarian government, which has an interest in annexing Taiwan and also in undermining the US, Europe, and other free societies. The other benefits of tariffs matter - it isn’t just about the short term effects (of inflating costs or whatever).

kibwen 2y ago
> One is shifting where that manufacturing is done and in the longer term it could bring it back, depending on the cost of doing it in a different, non China, country. Unfortunately, the taxes in question are also targeting imports from Canada and Mexico, two countries that are firmly in the US sphere of influence, and the beneficiaries of these new taxes will be countries in SEA which are increasingly in China's sphere of influence. This is a geopolitical own-goal from an administration with no coherent strategy.
- blackeyeblitzar 2y ago
  > Unfortunately, the taxes in question are also targeting imports from Canada and Mexico, two countries that are firmly in the US sphere of influence It is a negotiation tactic with those two countries. It is meant to get changes on issues like border security, but also fairness given existing tariffs are often unbalanced. But also, there are a lot of imports from those countries that are basically Chinese tariff evasion.
  - kibwen 2y ago
    > It is a negotiation tactic with those two countries. It is an incoherent and amateur negotiation tactic. If the US can't secure the southern border on its own, what makes anyone think that Mexico is going to be able to do a better job at that? Naturally, we are ignoring for the moment that the majority of illegal immigration does not happen at the border in the first place. As for fairness, maybe Trump should have addressed that when he timidly rubber-stamped NAFTA 2 during his first term. And you're not going to beat "Chinese tax evasion" in this way without charging these taxes on every country on Earth. These import taxes are performative posturing. Please stop trying to paint them as part of some brilliantly motivated campaign.
  - tokioyoyo 2y ago
    I think that bullying mostly works when you don't have a potential consumer base that's bigger than the bully. I know it's not going to last long, but over the night shift from "America good, China bad" to "well, China at least doesn't belittle us every minute, so screw the states" has been very interesting to watch up here in Canada.

alephnerd 2y ago

> being more assembly jobs back to North America Electronics Assembly jobs already exist in North America - but in Mexico. They aren't going to bring assembly jobs back to the US, because electronics assembly is very low value and low margins.

ta1243 2y ago
If you make $600 component + $200 laptop ($800) from outside the US cost say $8k through a 1000% tariff, you could assemble in the US for $1,000, buy the components for $6000, and sell for $7k. That's what the american people seem to want to happen.
- alephnerd 2y ago
  > That's what the american people seem to want to happen I'm American, and 50.2% of Americans did not vote for this. Realistically, it will not be that bad. Most companies will just up prices to make up the cost of the tariff and consumers will eat it.
  - Gormo 2y ago
    > I'm American, and 50.2% of Americans did not vote for this. In all fairness, a good portion of the other 49.8% probably didn't vote for this (or didn't know they were voting for it) either.
    - alephnerd 2y ago
      Yep! Most likely!
    - sangnoir 2y ago
      A good chunk of that cohort specifically voted against high inflation.
      - ta1243 2y ago
        Trump made it quite clear that he was going to dole out tariffs like Oprah giving away cars. This wasn't hidden, they specifically voted for higher prices.

throw0101c 2y ago

> How much of a price hike can actually being more assembly jobs back to North America? Or are they already brought back? And at what cost even if they did/do. Washing machine tariffs resulted in a pass through cost greater than 100%. The employment effect (1800-2000 jobs) but the cost to the public of those jobs was $800,000+ each: * https://www.aeaweb.org/articles?id=10.1257/aer.20190611 https://www.aeaweb.org/articles?id=10.1257/aer.20190611 Prosperous America, a partisan think tank, thought this was generally positive: * https://prosperousamerica.org/economic-view-tariff-jumping-investment-the-success-of-the-2018-washing-machine-tariffs/ https://prosperousamerica.org/economic-view-tariff-jumping-i... Looking at it from the "national security" perspective, they aren't exactly wrong: > Democratic countries’ economies are mainly set up as free market economies with redistribution, because this is what maximizes living standards in peacetime. In a free market economy, if a foreign country wants to sell you cheap cars, you let them do it, and you allocate your own productive resources to something more profitable instead. If China is willing to sell you brand-new electric vehicles for $10,000, why should you turn them down? Just make B2B SaaS and advertising platforms and chat apps, sell them for a high profit margin, and drive a Chinese car. > Except then a war comes, and suddenly you find that B2B SaaS and advertising platforms and chat apps aren’t very useful for defending your freedoms. Oops! The right time to worry about manufacturing would have been years before the war, except you weren’t able to anticipate and prepare for the future. Manufacturing doesn’t just support war — in a very real way, it’s a war in and of itself. * https://www.noahpinion.blog/p/manufacturing-is-a-war-now https://www.noahpinion.blog/p/manufacturing-is-a-war-now There's the old saying about WW2: The Allies won [against the Nazis] from British intelligence, Russian blood, and American steel. The silliness of the current situation is that American can't go it alone anymore, but allies are now being alienated. So bringing back manufacturing jobs wouldn't be a bad thing, but what do you have to do to accomplish it? If China is designated as a 'country of concern' ("enemy"), perhaps target them, but why 'go after' your nominal friends?

NAHWheatCracker 2y ago

Higher tariffs won't do it alone. Time is needed, as well. The current tariffs are likely seen as temporary. If you start a factory to produce on shore, you would have to recoup capital costs off the margin available due to undercutting offshore factories while tariffs are higher. When the administration or whims change, the tariffs go away and your factory loses that margin and isn't as profitable.

3D30497420 2y ago
And probably government support too? I'd wager a lot of the initial manufacturing capacity in China was jump-started by some amount of government support (cheap loans, tax incentives, etc.).
- sangnoir 2y ago
  Trump is on record deriding the CHIPS act, which does exactly that.
  - 3D30497420 2y ago
    Yes, which is of course contributes to the irony: They are not doing the things which actually might help. Which, of course, suggests either they are stupid or not taking these actions for the reasons they're saying. I'm wagering both.

myrmidon 2y ago

Would IMO need significantly more tariffs to effect significant shifts (and, even more importantly, some certainty that those tariffs are going to stick for the next decades, which is hard to provide). Chinese mean manufacturing wage is ~$25k/year (purchasing parity adjusted, $15k unadjusted, for an average 49h/week of work). If you want domestic products to be competitive, you basically need the difference paid by consumers/taxpayers in tariffs or subsidies. I don't think current tariff level is going to move lots of manufacturing jobs into the US (and I would personally argue that most Americans don't even want those jobs as they are currently). Instead, I'd expect a slow shift towards countries with favorable local wage/tariff combination (India, Vietnam, etc.).

markus_zhang 2y ago
One thing we can do is to lower the cost of housing and other big bills. If we have universal basic income in the form of housing, food and clothing for everyone, a lot of people might just won't need to move into privately held properties (i.e. renting from private landlords).
- myrmidon 2y ago
  Even if you had free housing/food/etc-- how many somewhat qualified people in the US are willing to work for 6-10$/hour? And those additional social services would need a big budget, which the current government is never gonna grant.

randcraw 2y ago

As others here have said, an increase of only 10% or 20% will do nothing, not even motivate other countries to blink. They'll just reciprocate with tariffs of their own which will add inflation across even more products. To motivate structural change, you'd need tariffs of 100% to 500% -- forcing a new business model. The real objective of Trump's mindless minions (e.g. Musk) is to create bragging points that will motivate bloviate-receptive voters to believe something was done by the administration to 'fix' problems, thereby increasing support for the party without actually doing anything useful.

3vidence 2y ago
I don't know why people are even thinking that deeply about it. Trump put tarrifs on raw materials... There is no way to recoup the cost there. This is just the largest single tax increase in US history.

rstuart4133 2y ago

What drove labour intensive assembly jobs away from the USA was wages that are a fraction of what the USA has, and correspondingly lower standing of living. If sustained long enough tariffs will fix that. Costs will rise in the USA, exports will drop because the price of everything made in the USA will go up, the dollar will then drop, living standards will drop, and eventually comparative wages will start to approach those in Asia. Once that happens, assembly jobs will naturally migrate back to the USA. The USA has avoided that outcome for years by manufacturing very high margin products. Think Intel, SpaceX, vaccines, and the software giants like Microsoft, Google and Meta. That came at the cost of bifurcation of the economy, with tech sector jobs paying outlandish wages compared to what someone manufacturing a car could get. It seems that pissed so many people off they elected Trump. Trump probably thinks is the fix, but changing is coming no matter who is in power. As China, India in particular, now even those "high brain power" jobs are under price stress. Chip manufacturing has almost gone, the software companies are paying 1/4 or 1/10 the price of engineering talent by hiring overseas, India has become the pharmaceutical manufacturing powerhouse of the world. So you don't need lower tariffs to fix it. The fix is coming regardless of who you vote for. All tariffs will do is accelerate the process. But if there is one process you didn't want accelerated, it's this one. It's not all doom and gloom. Look to Canada, Australia and Europe to see what the final outcome will be like. It's not so bad, is it? You probably don't want to end up like the Britain, as that would mean a few rich with most of the USA ending up at the living standard of Mississippi.