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> If the tariffs remained in effect for three decades, or more, there may have been incentive to move manufacturing back to the US; I don't understand why peop

> If the tariffs remained in effect for three decades, or more, there may have been incentive to move manufacturing back to the US; I don't understand why people take this as a given. Tariffs are a two-way street. What incentive does a company have to move a billion dollar facility to the USA when it will face reciprocal tariffs on any exported goods from the USA? The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities? Also income disparities; Americans can more afford to pay a 25% premium on a good than most of the rest of the world can; so maybe you just make Americans pay more. Or, maybe you do both, have a world-wide facility and a American facility, but still charge Americans the tariff premium, and pocket the 25% as profit instead (steel producers model; also pickup trucks); this works well in conjunction with the USA's low business taxes. Then there's "hacks" like shipping goods to a country that has lower tariffs with the USA, then using cheap local labor to do the bare minimum to have the goods considered to be produced there. There are some obvious good choices here, supposing the country's leadership is willing to play ball into the ninth inning. So it's not a given that that long-term effects are increased domestic production. It's just as likely to be a siphon of prosperity and a impediment to wealth generation since it will be hard to start companies in the USA that export products.

rafaelmn 2y ago
> What incentive does a company have to move a billion dollar facility to the USA when it will face reciprocal tariffs on any exported goods from the USA? Access to the richest single market in the world ?
- hnaccount_rng 2y ago
  But that only works if you compare the US with other single countries. The EEA is similar to the US, China will be larger than the US, India will be larger than the US. Any of those combine and you loose by a factor of 2, etc
  - rafaelmn 2y ago
    EEA, despite decades of EU efforts, is not a single market. China and India are nowhere near in terms of purchasing power or individual consumption and won't be for decades.
    - davedx 2y ago
      > EEA, despite decades of EU efforts, is not a single market. Huh? It really is. There's free trade and free movement of labour. How is it not a single market?
      - Jensson 2y ago
        Language barriers.
        deleted 2y ago
        [deleted]
      - rafaelmn 2y ago
        We have 24 official languages, regulations/legal systems vary from county to county and we don't even have a common currency. It's a lot better than having to deal with each county individually but still way more overhead than US.
        hnaccount_rng 2y ago
        But we don’t have tariff regimes. That what a common market means. It doesn’t mean that you can sell the same product to everyone. It just means that you can move that product everywhere. And even the regulatory regime is overwhelmingly European (that’s why you get manuals in 20 languages)
        deleted 2y ago
        [deleted]
        2y ago
- liuliu 2y ago
  That's not going to be true after your facilities are built.
- dns_snek 2y ago
  Tariffs aren't bans. They still have access to the US market, US consumers are just forced to pay higher taxes for these goods.
  - rafaelmn 2y ago
    It's government eating into your margins - unless there's no domestic substitutes.
  - deleted 2y ago
    [deleted]
- bgirard 2y ago
  > Access to the richest single market in the world ? How long do they stay the richest single market in the world if rest of the global world are producing and trading at greater efficiency while the US are facing large short term supply disruptions, higher costs and reciprocal trading tariffs on their exports?
  - saturn8601 2y ago
    The majority of countries have a negative birth rate. The US is doing "OK" (stopping immigration is why I put it in quotes). This is going to catch up to most countries very soon. The US will be in a small group of the ones last standing.
    - daveguy 2y ago
      I don't think quotes are the appropriate modifier to adjust for the damage from draconian and short-sighted immigration policy. Past tense use of the verb is probably more appropriate since countries are issuing do-not-travel warnings against the US (for the first time ever?). This administration is arrogant fools all the way down. I hope the messages sent by the electorate in 2026 and 2028 are loud enough and the brain drain is still reversible.
      - saturn8601 2y ago
        The point of the quotes was that we wont see the outcome of these decisions until years from now. Which is why today it is still OK but its like the car speeding and then jumping off the cliff. Will it reach the other side or fall to its doom? Too early to tell, we are still watching.
    - deleted 2y ago
      [deleted]
    - reverendsteveii 2y ago
      How do you think economic turmoil is going to affect the birth rate in the US and how do you justify labelling a birth rate that's been below replacement for 18 years as "OK"?
- Breza 2y ago
  If these tariffs continue for 30 years, it's hard to know if we'd still be the largest single market in the world.
mystified5016 2y ago
The answer to your conjecture is simple Darwinist capitalism. By whatever mechanism, imports are now more expensive, leading to less demand. Demand for those products actually stays constant, but the demand for imports goes down. Now we have a niche. If you can produce a good locally for less than the net cost of import, you have an entire continent ready to buy from you. The reason this has historically gone the other way is labor costs. Factoring the entire global supply chain into your product, it makes much more sense to do the work in a country where work costs less. If the additional cost to import is less than the delta on labor, you've won capitalism or something. Or, take another angle. If the US can no longer import vital goods, what do you think will happen? Will the goods magically stop being vital? Will we sit on our hands for several decades and wait for the problem to resolve? Or does the market respond to a need and rearrange itself to provide as profitably as possible?
- saturn8601 2y ago
  You are ignoring the 'Optimus' angle. Maybe Elon's stupid robot can actually do something and he has been whispering this into Trump's ear. That would take care of the labor cost issue. Lets see what happens.
  - deleted 2y ago
    [deleted]
  - daveguy 2y ago
    Hahahaha. Wait. Are you serious? Elon has been promising all kinds of things AI that are "just around the corner" for at least a decade now. It's always in the next year or two. There is no chance they cracked autonomous robots with those puppet bots they were showing off not long ago.
    - saturn8601 2y ago
      Look at all the braindead moves this administration has already done and we aren't even 6 months in. Maybe they actually believe his stupid robot can actually solve their problems. All we can do is sit back and see what happens.
saturn8601 2y ago
>The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities? Also income disparities; Americans can more afford to pay a 25% premium on a good than most of the rest of the world can; so maybe you just make Americans pay more. Or, maybe you do both, have a world-wide facility and a American facility, but still charge Americans the tariff premium, and pocket the 25% as profit instead (steel producers model; also pickup trucks); this works well in conjunction with the USA's low business taxes. 25% margins are huge. Sounds like that margin is someone else's opportunity....which is exactly what the Administration hopes will happen. There is an opportunity here: Cozy up to Trump, have him give you a ton of government money and spin up a company that will take those margins.
- grey-area 2y ago
  It is an interesting and somewhat macabre parlor game to play at a large gathering of one’s acquaintances: to speculate who in a showdown would go Nazi. By now, I think I know. https://harpers.org/archive/1941/08/who-goes-nazi/ https://harpers.org/archive/1941/08/who-goes-nazi/
  - lovich 2y ago
    That was an interesting read, thank you for the link
autoexec 2y ago
> The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities? It's not about efficiency. Companies in the US only build and ship their products from the opposite side of the planet because over there they can abuse the local slave labor and pollute the environment in ways that would never be accepted in the US. Even when they could easily afford to by accepting less profit, they aren't going to move production to the US when it means they can't take advantage of those things.

rafaelmn 2y ago

> What incentive does a company have to move a billion dollar facility to the USA when it will face reciprocal tariffs on any exported goods from the USA? Access to the richest single market in the world ?

hnaccount_rng 2y ago
But that only works if you compare the US with other single countries. The EEA is similar to the US, China will be larger than the US, India will be larger than the US. Any of those combine and you loose by a factor of 2, etc
- rafaelmn 2y ago
  EEA, despite decades of EU efforts, is not a single market. China and India are nowhere near in terms of purchasing power or individual consumption and won't be for decades.
  - davedx 2y ago
    > EEA, despite decades of EU efforts, is not a single market. Huh? It really is. There's free trade and free movement of labour. How is it not a single market?
    - Jensson 2y ago
      Language barriers.
      - deleted 2y ago
        [deleted]
    - rafaelmn 2y ago
      We have 24 official languages, regulations/legal systems vary from county to county and we don't even have a common currency. It's a lot better than having to deal with each county individually but still way more overhead than US.
      - hnaccount_rng 2y ago
        But we don’t have tariff regimes. That what a common market means. It doesn’t mean that you can sell the same product to everyone. It just means that you can move that product everywhere. And even the regulatory regime is overwhelmingly European (that’s why you get manuals in 20 languages)
        deleted 2y ago
        [deleted]
        2y ago
liuliu 2y ago
That's not going to be true after your facilities are built.
dns_snek 2y ago
Tariffs aren't bans. They still have access to the US market, US consumers are just forced to pay higher taxes for these goods.
- rafaelmn 2y ago
  It's government eating into your margins - unless there's no domestic substitutes.
- deleted 2y ago
  [deleted]
bgirard 2y ago
> Access to the richest single market in the world ? How long do they stay the richest single market in the world if rest of the global world are producing and trading at greater efficiency while the US are facing large short term supply disruptions, higher costs and reciprocal trading tariffs on their exports?
- saturn8601 2y ago
  The majority of countries have a negative birth rate. The US is doing "OK" (stopping immigration is why I put it in quotes). This is going to catch up to most countries very soon. The US will be in a small group of the ones last standing.
  - daveguy 2y ago
    I don't think quotes are the appropriate modifier to adjust for the damage from draconian and short-sighted immigration policy. Past tense use of the verb is probably more appropriate since countries are issuing do-not-travel warnings against the US (for the first time ever?). This administration is arrogant fools all the way down. I hope the messages sent by the electorate in 2026 and 2028 are loud enough and the brain drain is still reversible.
    - saturn8601 2y ago
      The point of the quotes was that we wont see the outcome of these decisions until years from now. Which is why today it is still OK but its like the car speeding and then jumping off the cliff. Will it reach the other side or fall to its doom? Too early to tell, we are still watching.
  - deleted 2y ago
    [deleted]
  - reverendsteveii 2y ago
    How do you think economic turmoil is going to affect the birth rate in the US and how do you justify labelling a birth rate that's been below replacement for 18 years as "OK"?
Breza 2y ago
If these tariffs continue for 30 years, it's hard to know if we'd still be the largest single market in the world.

mystified5016 2y ago

The answer to your conjecture is simple Darwinist capitalism. By whatever mechanism, imports are now more expensive, leading to less demand. Demand for those products actually stays constant, but the demand for imports goes down. Now we have a niche. If you can produce a good locally for less than the net cost of import, you have an entire continent ready to buy from you. The reason this has historically gone the other way is labor costs. Factoring the entire global supply chain into your product, it makes much more sense to do the work in a country where work costs less. If the additional cost to import is less than the delta on labor, you've won capitalism or something. Or, take another angle. If the US can no longer import vital goods, what do you think will happen? Will the goods magically stop being vital? Will we sit on our hands for several decades and wait for the problem to resolve? Or does the market respond to a need and rearrange itself to provide as profitably as possible?

saturn8601 2y ago
You are ignoring the 'Optimus' angle. Maybe Elon's stupid robot can actually do something and he has been whispering this into Trump's ear. That would take care of the labor cost issue. Lets see what happens.
- deleted 2y ago
  [deleted]
- daveguy 2y ago
  Hahahaha. Wait. Are you serious? Elon has been promising all kinds of things AI that are "just around the corner" for at least a decade now. It's always in the next year or two. There is no chance they cracked autonomous robots with those puppet bots they were showing off not long ago.
  - saturn8601 2y ago
    Look at all the braindead moves this administration has already done and we aren't even 6 months in. Maybe they actually believe his stupid robot can actually solve their problems. All we can do is sit back and see what happens.

saturn8601 2y ago

>The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities? Also income disparities; Americans can more afford to pay a 25% premium on a good than most of the rest of the world can; so maybe you just make Americans pay more. Or, maybe you do both, have a world-wide facility and a American facility, but still charge Americans the tariff premium, and pocket the 25% as profit instead (steel producers model; also pickup trucks); this works well in conjunction with the USA's low business taxes. 25% margins are huge. Sounds like that margin is someone else's opportunity....which is exactly what the Administration hopes will happen. There is an opportunity here: Cozy up to Trump, have him give you a ton of government money and spin up a company that will take those margins.

grey-area 2y ago
It is an interesting and somewhat macabre parlor game to play at a large gathering of one’s acquaintances: to speculate who in a showdown would go Nazi. By now, I think I know. https://harpers.org/archive/1941/08/who-goes-nazi/ https://harpers.org/archive/1941/08/who-goes-nazi/
- lovich 2y ago
  That was an interesting read, thank you for the link

autoexec 2y ago

> The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities? It's not about efficiency. Companies in the US only build and ship their products from the opposite side of the planet because over there they can abuse the local slave labor and pollute the environment in ways that would never be accepted in the US. Even when they could easily afford to by accepting less profit, they aren't going to move production to the US when it means they can't take advantage of those things.