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The important quote: "If the tariff from China is 100%, and you know it is going to be 100 % for the next 10 years, you will make a different business decision

The important quote: "If the tariff from China is 100%, and you know it is going to be 100 % for the next 10 years, you will make a different business decision than if it is, ‘Might be 100%, not sure what's going to be in three months, what's it going to be in a year from now, and what's it going to be in three years from now.’ That uncertainty does not create stable markets. It does not create very accurate business decisions."

GaggiX 2y ago
We don't know what will happen in three days at this point.
timewizard 2y ago
> That uncertainty does not create stable markets. Stable markets with bad outcomes are not worth defending on stability alone. > It does not create very accurate business decisions The business environment is not great. It does seem some part of that is the result of cheap Chinese goods that have displaced labor _and_ environmental costs flooding foreign markets. That China even uses proxy countries to push out even more is instructive. So, if not tariffs, then what should we use to solve this?
- gmm1990 2y ago
  Maybe start with smaller tariffs and go from there. But its not even worth defending current administration policies. Its either completely stupid or deliberately malevolent.
  - ahmeneeroe-v2 2y ago
    On what basis are you making this recommendation? Your personal experience negotiating nation-state level agreements between two hegemons?
    - BDPW 2y ago
      There is a deluge of experts in economics and other fields who clearly state this is not the right approach to bringing manufacturing to the US. Why wouldn't we trust experts in their fields?
      - ahmeneeroe-v2 2y ago
        What makes them experts in their fields? They have never done anything like this. Nor are historical analogues abundant.
        gmm1990 2y ago
        That probably means its not a good strategy. Look at business activity, people are comparing it to early covid business conditions but its entirely self inflicted. You don't need to be an expert to see this is a failure. The assumption shouldn't be that Trump is acting in the interest of the average American or the American government.
- thebruce87m 2y ago
  > So, if not tariffs, then what should we use to solve this? I’d argue that tariffs that increase at a known rate are better than surprise large ones. Even a 1% increase a week every Monday for a year lets everyone’s supply chain adjust gradually. You’ll know within a few weeks how your product is affected and you’ll plan for the increase over the year. That’s probably still too fast though, since factories take time to build and the whole point is to encourage local manufacturing. Given the 4 year term trump could have gone for 3 years of increases with the hope that companies would start building factories and have them running by year 4.
- grey-area 2y ago
  Oh I don’t know, how about: Not imposing ludicrous tariffs based on flawed economics on the entire world at once? Not imposing tariffs with no warning on your closest allies and attempting to bully them into submission? Not imposing huge tariffs on some of the weakest nations you trade with (e.g. Laos, Vietnam). Not changing trade policy radically every few days and announcing it on social media? Not crashing the stock market, announcing a reverse on your social media platform, then boasting about how much money your billionaire friends made? Not calling one of your largest trading partners peasants and the then very clever, alternating between insults and praise like a two-bit mobster? This administration has made America a laughing stock; I don’t think many Americans realise just how much trust has been burned with allies since ‘liberation day’.
  - timewizard 2y ago
    > based on flawed economics It's a simple formula based on balance of trade. > tariffs with no warning Some Hacker News types like to bury their head in the sand when inconvenient political news occurs but to say this happened without warning simply flags you as part of this group. > on some of the weakest nations you trade with (e.g. Laos, Vietnam). There is room for these countries to buy more American goods. These two countries also rebadge and ship out a lot of Chinese goods to evade tariffs. > changing trade policy radically every few days and announcing it on social media? So, do you want warnings, or not? > Not crashing the stock market, announcing a reverse on your social media platform, then boasting about how much money your billionaire friends made? If you didn't make any trades during this period how was your portfolio actually impacted? I would assume this is the majority of non billionaire investors. So the only ones who lost in the crash were the same billionaires. > calling one of your largest trading partners peasants and the then very clever, alternating between insults and praise like a two-bit mobster? Does that trading partner also act like a two bit mobster? If so, wouldn't this just be turnabout, or why is deference to hostile economic partners justified? > has made America a laughing stock That's an absurdly biased point of view. > I don’t think many Americans realise just how much trust has been burned with allies since ‘liberation day’. Not much. They didn't actually "trust" us before. I'm not sure how you'd measure that anyways. From my reading of foreign news they're mostly taking it in stride, having seen this coming since last year, and not being particularly surprised by it. This zeitgeist only exists in half of America right now.
- buu700 2y ago
  * Lower corporate income tax to the global minimum of 15% * Reshoring incentives * Regulatory reform to remove barriers to building things * Strict export controls around AI, robotics, and fusion * Massive subsides for production of useful humanoid robots and deployment of useful fusion power generation To the extent that tariffs are considered at all, it should only be if they're implemented with bipartisan support, selective with specific strategic goals in mind, gradually phased in, and explicitly long-term policy. Extreme tariffs without clear staying power are just disruptive for no good reason. They won't change business behavior; they'll just temporarily jack up costs, create an unnecessary customs backlog, and roadblock some commercial activities entirely. Even if implemented carefully, I would argue that tariffs in general are counterproductive in the long run. If a domestic industry isn't internationally competitive, the goal should be to fix that, not insulate it from competition.
- nickpsecurity 2y ago
  I'll add that the elites who pushed for earlier trade deals often did it specifically to get rich selling off America's domestic manufacturing and many jobs. Now, countries like China have them. So, Trump's policies should be seen as an attempt to reverse for Americans' benefit damaging policies from before which are still active. Now, whether that will do good or harm in the long term is anyone's guess. We already see companies investing more in American infrastructure, though.
- analog31 2y ago
  If an entrepreneur is smart enough to figure out how to land a rocket ship on its feet, that person can figure out how to manufacture printed circuit boards economically in the US.
  - ben_w 2y ago
    One is a fight against nature; the other — to make it economic — is a fight against all the other highly skilled entrepreneurs not in the USA. Single player, multiplayer.
notahacker 2y ago
Yeah. If you actually wanted to bring manufacturing back to the US you'd figure out which industries you wanted to develop, probably subsidise them, communicate very clearly what you were going to do and then ratchet up the tariffs on those specific finishes products, whilst being sure to maintain access to raw materials and components you still needed. What you wouldn't do is slap unexpectedly high tariffs on absolutely everything, shout about how you'll do a deal if only they respect you, and then walk them back in as inept and inconsistent a manner as possible. That's what you'd do if you wanted to destroy what's left of your industry. Think there's anyone in the rest of the world relying on US suppliers that hasn't started looking elsewhere? And it might now be cheaper for Americans to import from Japan or South Korea than from US companies dependent on Chinese components in their supply chain...
- ahmeneeroe-v2 2y ago
  >If you actually wanted to bring manufacturing back to the US you'd... Sure this seems like a great way for if you can sustain a multi-decade effort If you have 3.5 years to re-negotiate a deal, maybe you need to move faster.
  - notahacker 2y ago
    If you're spending 3.5 years trying to "renegotiate a deal", you don't have a strategy to bring manufacturing back. If you change your policy multiple times in a week you don't even have a strategy. Easier to onshore manufacturing with multi-year timelines, but you don't need multi-year timelines to impose tariffs on carefully selected industries, not penguins and your existing industries' key suppliers.
    - ahmeneeroe-v2 2y ago
      This ignores the reality of power in the US. Presidents can't implement multi-decade initiatives. >If you change your policy multiple times you're missing the forest for the trees. the policy has not changed: bring manufacturing back to the US.
ty6853 2y ago
The business decision of these tariffs very well be to just offshore American operations altogether. Better to keep most the world market and lose America. It's not a given businesses will choose to invest in an isolationist country even if they are from there if protectionist policies they may benefit from narrow their horizons.
- raincom 2y ago
  Most of the demand (in terms of dollars/euros) is confined to the developed world. What happens when both US and EU want to bring back operations back to the home countries? Then these companies are left with serving less of the global demand.
  - sosowegowelp 2y ago
    Only about 1B people in EU+US. Majority of people only need one phone. If I were a cell manufacturer, I'd drive down costs to service the other 7B people. Of course, you won't make the same margins as EU+US business. Not sure if that is enough incentive to onshore consumer manufacturing.
    - rtkwe 2y ago
      The margins get really thin after the first 2 billion or so. Middle income globally is ~10-20 PPP dollars a day and that's only ~17% of the world's population. They're generally radically different phones between markets too no one's really dominating the cheap phone market. https://www.pewresearch.org/short-reads/2021/07/21/are-you-in-the-global-middle-class-find-out-with-our-income-calculator/#:~:text=As%20our%20study%20defines%20it%2C%20people%20who,and%20high%20income%20on%20more%20than%20$50. https://www.pewresearch.org/short-reads/2021/07/21/are-you-i...
      - asadotzler 2y ago
        The margins are only thin if you're used to 40% as Apple has been. They're not at all so thin that the rest of the pack aren't making actual profit filling the gap for the other 7B people who aren't well off westerners.
ajross 2y ago
Sure, but say it is: you assume a long-term trade barrier with China, invest in US factories and employee training, bring folks in from outside, start your production, get some competitive wins in the domestic (but obviously not international!) electronics market... Then some future administration decides on detent and signs a free trade agreement to open markets or whatnot, yada yada. China marches right in and eats your lunch. Again. Trade barriers do not do anything to address fundamental inequities in production efficiency. To be blunt: China is great at making electronics not because they have all the talent. They have all the talent because China is poor, still. The US is not (though it looks like we're aiming that way). Ergo Chinese production efficiency will be higher. What trade barriers with China actually do isn't to bring manufacturing back to the US, of course. It's to move production from China to Vietnam or the Philippines or India or wherever isn't tariffed. Then of course we'll need to apply tariffs to them, and so on.
- realusername 2y ago
  > or wherever isn't tariffed. Since he's even taxing empty islands, I doubt the end result will be anything else than either not selling to the US or selling to the US with a grey market. If you put tariffs on the whole world, it's basically the same thing as a global economic sanction, similar to what Russia suffered.
- seanmcdirmid 2y ago
  China really isn’t that poor anymore. A lot of their recent productivity gains are coming from automation, and they are leaning into harder than the Japanese did in the 90s.
  - ajross 2y ago
    Chinese wages remain about 6-10x lower than US workers expect for the same kind of job. Whether that's "poor" or not is arguable. There are much poorer nations. Nonetheless US wage levels simply aren't going to compete, and it isn't even close.
    - 2y ago
deleted 2y ago
[deleted]
DonHopkins 2y ago
Make that 145%. Until next week.
yibg 2y ago
In addition, by definition if the only way to bring manufacturing back to the US is by putting up import barriers, it means US manufacturing isn't competitive, domestically or globally. Unless there is some hunker down period of isolation that'll make US manufacturing globally competitive somehow, all this will do in the long run is either isolate US manufacturers to the domestic market, or provide a temporary advantage that will disappear the minute the barriers are dropped.

GaggiX 2y ago

We don't know what will happen in three days at this point.

timewizard 2y ago

> That uncertainty does not create stable markets. Stable markets with bad outcomes are not worth defending on stability alone. > It does not create very accurate business decisions The business environment is not great. It does seem some part of that is the result of cheap Chinese goods that have displaced labor _and_ environmental costs flooding foreign markets. That China even uses proxy countries to push out even more is instructive. So, if not tariffs, then what should we use to solve this?

gmm1990 2y ago
Maybe start with smaller tariffs and go from there. But its not even worth defending current administration policies. Its either completely stupid or deliberately malevolent.
- ahmeneeroe-v2 2y ago
  On what basis are you making this recommendation? Your personal experience negotiating nation-state level agreements between two hegemons?
  - BDPW 2y ago
    There is a deluge of experts in economics and other fields who clearly state this is not the right approach to bringing manufacturing to the US. Why wouldn't we trust experts in their fields?
    - ahmeneeroe-v2 2y ago
      What makes them experts in their fields? They have never done anything like this. Nor are historical analogues abundant.
      - gmm1990 2y ago
        That probably means its not a good strategy. Look at business activity, people are comparing it to early covid business conditions but its entirely self inflicted. You don't need to be an expert to see this is a failure. The assumption shouldn't be that Trump is acting in the interest of the average American or the American government.
thebruce87m 2y ago
> So, if not tariffs, then what should we use to solve this? I’d argue that tariffs that increase at a known rate are better than surprise large ones. Even a 1% increase a week every Monday for a year lets everyone’s supply chain adjust gradually. You’ll know within a few weeks how your product is affected and you’ll plan for the increase over the year. That’s probably still too fast though, since factories take time to build and the whole point is to encourage local manufacturing. Given the 4 year term trump could have gone for 3 years of increases with the hope that companies would start building factories and have them running by year 4.
grey-area 2y ago
Oh I don’t know, how about: Not imposing ludicrous tariffs based on flawed economics on the entire world at once? Not imposing tariffs with no warning on your closest allies and attempting to bully them into submission? Not imposing huge tariffs on some of the weakest nations you trade with (e.g. Laos, Vietnam). Not changing trade policy radically every few days and announcing it on social media? Not crashing the stock market, announcing a reverse on your social media platform, then boasting about how much money your billionaire friends made? Not calling one of your largest trading partners peasants and the then very clever, alternating between insults and praise like a two-bit mobster? This administration has made America a laughing stock; I don’t think many Americans realise just how much trust has been burned with allies since ‘liberation day’.
- timewizard 2y ago
  > based on flawed economics It's a simple formula based on balance of trade. > tariffs with no warning Some Hacker News types like to bury their head in the sand when inconvenient political news occurs but to say this happened without warning simply flags you as part of this group. > on some of the weakest nations you trade with (e.g. Laos, Vietnam). There is room for these countries to buy more American goods. These two countries also rebadge and ship out a lot of Chinese goods to evade tariffs. > changing trade policy radically every few days and announcing it on social media? So, do you want warnings, or not? > Not crashing the stock market, announcing a reverse on your social media platform, then boasting about how much money your billionaire friends made? If you didn't make any trades during this period how was your portfolio actually impacted? I would assume this is the majority of non billionaire investors. So the only ones who lost in the crash were the same billionaires. > calling one of your largest trading partners peasants and the then very clever, alternating between insults and praise like a two-bit mobster? Does that trading partner also act like a two bit mobster? If so, wouldn't this just be turnabout, or why is deference to hostile economic partners justified? > has made America a laughing stock That's an absurdly biased point of view. > I don’t think many Americans realise just how much trust has been burned with allies since ‘liberation day’. Not much. They didn't actually "trust" us before. I'm not sure how you'd measure that anyways. From my reading of foreign news they're mostly taking it in stride, having seen this coming since last year, and not being particularly surprised by it. This zeitgeist only exists in half of America right now.
buu700 2y ago
* Lower corporate income tax to the global minimum of 15% * Reshoring incentives * Regulatory reform to remove barriers to building things * Strict export controls around AI, robotics, and fusion * Massive subsides for production of useful humanoid robots and deployment of useful fusion power generation To the extent that tariffs are considered at all, it should only be if they're implemented with bipartisan support, selective with specific strategic goals in mind, gradually phased in, and explicitly long-term policy. Extreme tariffs without clear staying power are just disruptive for no good reason. They won't change business behavior; they'll just temporarily jack up costs, create an unnecessary customs backlog, and roadblock some commercial activities entirely. Even if implemented carefully, I would argue that tariffs in general are counterproductive in the long run. If a domestic industry isn't internationally competitive, the goal should be to fix that, not insulate it from competition.
nickpsecurity 2y ago
I'll add that the elites who pushed for earlier trade deals often did it specifically to get rich selling off America's domestic manufacturing and many jobs. Now, countries like China have them. So, Trump's policies should be seen as an attempt to reverse for Americans' benefit damaging policies from before which are still active. Now, whether that will do good or harm in the long term is anyone's guess. We already see companies investing more in American infrastructure, though.
analog31 2y ago
If an entrepreneur is smart enough to figure out how to land a rocket ship on its feet, that person can figure out how to manufacture printed circuit boards economically in the US.
- ben_w 2y ago
  One is a fight against nature; the other — to make it economic — is a fight against all the other highly skilled entrepreneurs not in the USA. Single player, multiplayer.

notahacker 2y ago

Yeah. If you actually wanted to bring manufacturing back to the US you'd figure out which industries you wanted to develop, probably subsidise them, communicate very clearly what you were going to do and then ratchet up the tariffs on those specific finishes products, whilst being sure to maintain access to raw materials and components you still needed. What you wouldn't do is slap unexpectedly high tariffs on absolutely everything, shout about how you'll do a deal if only they respect you, and then walk them back in as inept and inconsistent a manner as possible. That's what you'd do if you wanted to destroy what's left of your industry. Think there's anyone in the rest of the world relying on US suppliers that hasn't started looking elsewhere? And it might now be cheaper for Americans to import from Japan or South Korea than from US companies dependent on Chinese components in their supply chain...

ahmeneeroe-v2 2y ago
>If you actually wanted to bring manufacturing back to the US you'd... Sure this seems like a great way for if you can sustain a multi-decade effort If you have 3.5 years to re-negotiate a deal, maybe you need to move faster.
- notahacker 2y ago
  If you're spending 3.5 years trying to "renegotiate a deal", you don't have a strategy to bring manufacturing back. If you change your policy multiple times in a week you don't even have a strategy. Easier to onshore manufacturing with multi-year timelines, but you don't need multi-year timelines to impose tariffs on carefully selected industries, not penguins and your existing industries' key suppliers.
  - ahmeneeroe-v2 2y ago
    This ignores the reality of power in the US. Presidents can't implement multi-decade initiatives. >If you change your policy multiple times you're missing the forest for the trees. the policy has not changed: bring manufacturing back to the US.

ty6853 2y ago

The business decision of these tariffs very well be to just offshore American operations altogether. Better to keep most the world market and lose America. It's not a given businesses will choose to invest in an isolationist country even if they are from there if protectionist policies they may benefit from narrow their horizons.

raincom 2y ago
Most of the demand (in terms of dollars/euros) is confined to the developed world. What happens when both US and EU want to bring back operations back to the home countries? Then these companies are left with serving less of the global demand.
- sosowegowelp 2y ago
  Only about 1B people in EU+US. Majority of people only need one phone. If I were a cell manufacturer, I'd drive down costs to service the other 7B people. Of course, you won't make the same margins as EU+US business. Not sure if that is enough incentive to onshore consumer manufacturing.
  - rtkwe 2y ago
    The margins get really thin after the first 2 billion or so. Middle income globally is ~10-20 PPP dollars a day and that's only ~17% of the world's population. They're generally radically different phones between markets too no one's really dominating the cheap phone market. https://www.pewresearch.org/short-reads/2021/07/21/are-you-in-the-global-middle-class-find-out-with-our-income-calculator/#:~:text=As%20our%20study%20defines%20it%2C%20people%20who,and%20high%20income%20on%20more%20than%20$50. https://www.pewresearch.org/short-reads/2021/07/21/are-you-i...
    - asadotzler 2y ago
      The margins are only thin if you're used to 40% as Apple has been. They're not at all so thin that the rest of the pack aren't making actual profit filling the gap for the other 7B people who aren't well off westerners.

ajross 2y ago

Sure, but say it is: you assume a long-term trade barrier with China, invest in US factories and employee training, bring folks in from outside, start your production, get some competitive wins in the domestic (but obviously not international!) electronics market... Then some future administration decides on detent and signs a free trade agreement to open markets or whatnot, yada yada. China marches right in and eats your lunch. Again. Trade barriers do not do anything to address fundamental inequities in production efficiency. To be blunt: China is great at making electronics not because they have all the talent. They have all the talent because China is poor, still. The US is not (though it looks like we're aiming that way). Ergo Chinese production efficiency will be higher. What trade barriers with China actually do isn't to bring manufacturing back to the US, of course. It's to move production from China to Vietnam or the Philippines or India or wherever isn't tariffed. Then of course we'll need to apply tariffs to them, and so on.

realusername 2y ago
> or wherever isn't tariffed. Since he's even taxing empty islands, I doubt the end result will be anything else than either not selling to the US or selling to the US with a grey market. If you put tariffs on the whole world, it's basically the same thing as a global economic sanction, similar to what Russia suffered.
seanmcdirmid 2y ago
China really isn’t that poor anymore. A lot of their recent productivity gains are coming from automation, and they are leaning into harder than the Japanese did in the 90s.
- ajross 2y ago
  Chinese wages remain about 6-10x lower than US workers expect for the same kind of job. Whether that's "poor" or not is arguable. There are much poorer nations. Nonetheless US wage levels simply aren't going to compete, and it isn't even close.
  - 2y ago

deleted 2y ago

[deleted]

DonHopkins 2y ago

Make that 145%. Until next week.

yibg 2y ago

In addition, by definition if the only way to bring manufacturing back to the US is by putting up import barriers, it means US manufacturing isn't competitive, domestically or globally. Unless there is some hunker down period of isolation that'll make US manufacturing globally competitive somehow, all this will do in the long run is either isolate US manufacturers to the domestic market, or provide a temporary advantage that will disappear the minute the barriers are dropped.