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> While Trump and others in his orbit argue that these tariffs will encourage companies to bring manufacturing and production back to the United States, observe

> While Trump and others in his orbit argue that these tariffs will encourage companies to bring manufacturing and production back to the United States, observers see this as unlikely. "Completely reshoring technology manufacturing operations back to the United States is simply not practically or economically feasible given the scale and complexity of required resources and underlying economic production structure If reshoring manufacturing was an honest goal, the way to do it with tariffs would be to start them at some very low amount, to get the systems in place running smoothly without real money being involved. Then have tariffs rise on a schedule designed specifically to give importers time to adapt economically, and provide horizons for existing & new manufacturers to plan and execute expansions. Tariff rates rise and target rates would vary for classes of products based on the relative challenges of and urgency of rehoming. Given all the tension with China, and the realization of our vulnerabilities & dependencies, I would think a sensible restoring of manufacturing to the US would have broad bipartisan support. Sudden tariffs cause disruption and losses for everyone, except the recipient of the tariffs. I.e. Gov. But economic disruption can stall economic activity too, so that “return” isn’t simple or guaranteed.

nlitened 2y ago
> If reshoring manufacturing was an honest goal, the way to do it with tariffs would be to start them at some very low amount ... > Then have tariffs rise on a schedule designed specifically to give importers time to adapt economically What were the examples of scheduled-increase tariffs that resulted in successful reshoring of manufacturing in the recent history? It does not look obvious that gradual increase would work better. It does look as if it would give manufacturers more time to adapt, but also it would give them more time to counter-lobby/circumvent/sabotage the tariffs, and the certain growth of costs would still be priced-in from day one.
- dummydummy1234 2y ago
  Maybe, but the issue is that it does not seem serious. If he was serious about restoring industries, then we would have targeted tariffs. Tariffs on coffee is not useful, and is silly. Similarly a lot of raw commodities, we will not be smelting the amount of aluminum the US needs because we do not have the same low cost power as iceland. They could have gone slower, and planned things out, but chose not to. And are doing exceptions based on who can talk to trump. If you are a business that does international business that might be onshored, how confident are you that the tarrifs are here to stay? That you should invest 200 million in American manufacturing, and that government policy will not change in 6 months,or 3 days, or 4 years. Thats the problem with these tariffs is that they rely on the belief of business that they are here to stay.
  - _heimdall 2y ago
    > They could have gone slower, and planned things out, but chose not to. And are doing exceptions based on who can talk to trump. This administration is taking a gamble on a strategy of going as fast as they can to ram changes through before bureaucracy and red tape gets in the way. I don't expect it to work, primarily because it hinges on a false hope that anyone can know exactly how such large changes will play out and avoid going down the wrong path. It is an intentional strategy though, and to their credit its been made clear by countless administrations that meaningful change quite often gets roadblocked when you try to move slower and more carefully.
- Nevermark 2y ago
  If you suddenly make importing much more expensive, you will vastly increase the demand for local supply without actually having increased local supply. Local supply prices will then go up the supply-command curve, to match pricing of importing + tariff prices. That is a very sudden shift in pricing, it cannot be good for our local businesses who import. Some will go under. The alternative is just as effective. More effective. Also, I didn't say raise tariffs gradually. I said on a schedule. If supply can be ramped up quickly here, that could mean very fast. Just at a rate the supply side of the market can actually respond to.
  - nlitened 2y ago
    > If supply can be ramped up quickly here, that could mean very fast. Just at a rate the supply side of the market can actually respond to. But with this you inevitably create a bureaucratic committee that would hold the power to decide if it's time to continue increasing tariffs or the supply (estimated by them) hasn't ramped up quickly enough yet. These people will have their own priorities in mind, they will quickly be surrounded with high-profile industry connections and lobbying budgets. Moreover, continuing with the tariff increase schedule will be their lowest priority, because as long as the schedule is complete, they lose their jobs and temporarily mandated powers over many billions of trade flows.
themaninthedark 2y ago
That doesn't make sense to me. If you can make a profit with offshore manufacturing on anything under 20%, why would you reshore until the rate hit unprofitable level. Otherwise you risk allowing your competitors to generate more profit.
- Nevermark 2y ago
  If you suddenly force everyone to buy local, by making importing unprofitable, then local prices will rise to match the import plus tariff prices. You have vastly increased local demand without increasing local supply. Businesses are forward looking. If they know they are going to become unprofitable importing over the next 2-3 years they will be scrambling to work with local suppliers. Or become local suppliers themselves. You don't need to suddenly bankrupt, or force many companies to exit markets, to make the transition if tariffs changes match the practical time it takes to make the change. Businesses are not magical. Local supply doesn't magically appear, it actually takes time. This is especially true for tariffs over a wide enough array of products and materials to impact the whole economy. If tariffs are on a schedule, you can even raise the final tariff rates higher. Achieving even deeper changes, without the waste of suddenly incentivizing the impossible.

nlitened 2y ago

> If reshoring manufacturing was an honest goal, the way to do it with tariffs would be to start them at some very low amount ... > Then have tariffs rise on a schedule designed specifically to give importers time to adapt economically What were the examples of scheduled-increase tariffs that resulted in successful reshoring of manufacturing in the recent history? It does not look obvious that gradual increase would work better. It does look as if it would give manufacturers more time to adapt, but also it would give them more time to counter-lobby/circumvent/sabotage the tariffs, and the certain growth of costs would still be priced-in from day one.

dummydummy1234 2y ago
Maybe, but the issue is that it does not seem serious. If he was serious about restoring industries, then we would have targeted tariffs. Tariffs on coffee is not useful, and is silly. Similarly a lot of raw commodities, we will not be smelting the amount of aluminum the US needs because we do not have the same low cost power as iceland. They could have gone slower, and planned things out, but chose not to. And are doing exceptions based on who can talk to trump. If you are a business that does international business that might be onshored, how confident are you that the tarrifs are here to stay? That you should invest 200 million in American manufacturing, and that government policy will not change in 6 months,or 3 days, or 4 years. Thats the problem with these tariffs is that they rely on the belief of business that they are here to stay.
- _heimdall 2y ago
  > They could have gone slower, and planned things out, but chose not to. And are doing exceptions based on who can talk to trump. This administration is taking a gamble on a strategy of going as fast as they can to ram changes through before bureaucracy and red tape gets in the way. I don't expect it to work, primarily because it hinges on a false hope that anyone can know exactly how such large changes will play out and avoid going down the wrong path. It is an intentional strategy though, and to their credit its been made clear by countless administrations that meaningful change quite often gets roadblocked when you try to move slower and more carefully.
Nevermark 2y ago
If you suddenly make importing much more expensive, you will vastly increase the demand for local supply without actually having increased local supply. Local supply prices will then go up the supply-command curve, to match pricing of importing + tariff prices. That is a very sudden shift in pricing, it cannot be good for our local businesses who import. Some will go under. The alternative is just as effective. More effective. Also, I didn't say raise tariffs gradually. I said on a schedule. If supply can be ramped up quickly here, that could mean very fast. Just at a rate the supply side of the market can actually respond to.
- nlitened 2y ago
  > If supply can be ramped up quickly here, that could mean very fast. Just at a rate the supply side of the market can actually respond to. But with this you inevitably create a bureaucratic committee that would hold the power to decide if it's time to continue increasing tariffs or the supply (estimated by them) hasn't ramped up quickly enough yet. These people will have their own priorities in mind, they will quickly be surrounded with high-profile industry connections and lobbying budgets. Moreover, continuing with the tariff increase schedule will be their lowest priority, because as long as the schedule is complete, they lose their jobs and temporarily mandated powers over many billions of trade flows.

themaninthedark 2y ago

That doesn't make sense to me. If you can make a profit with offshore manufacturing on anything under 20%, why would you reshore until the rate hit unprofitable level. Otherwise you risk allowing your competitors to generate more profit.

Nevermark 2y ago
If you suddenly force everyone to buy local, by making importing unprofitable, then local prices will rise to match the import plus tariff prices. You have vastly increased local demand without increasing local supply. Businesses are forward looking. If they know they are going to become unprofitable importing over the next 2-3 years they will be scrambling to work with local suppliers. Or become local suppliers themselves. You don't need to suddenly bankrupt, or force many companies to exit markets, to make the transition if tariffs changes match the practical time it takes to make the change. Businesses are not magical. Local supply doesn't magically appear, it actually takes time. This is especially true for tariffs over a wide enough array of products and materials to impact the whole economy. If tariffs are on a schedule, you can even raise the final tariff rates higher. Achieving even deeper changes, without the waste of suddenly incentivizing the impossible.