With all the talk of tariffs, I’ve seen more or less this argument:
“Once the tariffs go in place, companies will start manufacturing in the USA and that’s good thing.”
However, when I think about being able to manufacture something like a laptop computer, or a car, these are both operations that require a lot of things:
- the input components to build the thing
- skilled labor that can manufacture the thing
- supply-chains that are in place from initial build all the way to retail
The premise seems to be: “OK, tariffs go in, someone INSTANTLY sets up a company that manufactures X, then USA wins”.
However, for someone to want to take the “bet” on setting up a really expensive factory, they’d have to believe that the tariff will be in place a long time, because if it is NOT… then they have made a terrible investment and the new factory will be instantly non-viable.
Am I crazy? Am I missing something? I understand that it would be great if we had domestic manufacturing but it seems like the people that are behind tariffs think you just snap your fingers and there is a factory cranking out laptops, when in my understanding this is a process that requires a huge amount of money and time.
My thinking is that the amount of people / companies in the USA that have enough capital to start up a manufacturing company like this want to make sure it’s a relatively safe bet before pulling the trigger, and if past tariff behavior from Mr. Trump is any indication, we can’t count on these tariffs being present for a long time.
Consider:
scenario today:
labor cost for product is $3, which goes to a chinese worker. total product cost is $5.
scenario “manufactured in the USA”:
labor cost is $6, which goes to american worker. total product cost is $10.
the product gets more expensive, but the extra expenses partially go to an american worker, which again will spend the money in the US economy, so it doesn’t really cost the national economy that much.
however, the extra $4 in the “manufactured in the USA” scenario go to american middle-management and “investors” a.k.a skimmed by the owning class. that is why the people would still lose out. that is why “home-shoring” in itself is not enough; a wealth tax is also needed.
Of course it works out if you throw any numbers in that you want. Minimum hourly wage in the US is 7.25-ish in Alabama and the rest of the decrepit South, to 16-ish in California. I googled minimum wage in China and its roughly 3.40-ish at its highest. At the worst, China is half as expensive, and I wouldn’t be surprised if the disparity between the actual industrial areas of China and Califonia/Colorado for example might be 8x.
Whats happening here is that the poorly educated South is wanting me to subsidize their lack of marketable job skills by making me pay extra for American goods instead of Chinese goods.
And don’t forget that the extra money these Americans earn will be partially consumed by the extra cost of living anyways. Not to mention the years or decades of investment it will take to get factories set here anyways, all for low-skill, physically demanding, and mentally unengaging employment.
Manufacturing should be automated anyways because nobody should have to sit at a conveyor belt all day and toil their lives away assembling dumb trinkets.