Assuming they crop up at all, some of these factories in places like Vietnam and China, pay their workers anywhere from a couple dollars to a few dimes per hour. When they start to build these facilities locally, Americans are going to demand orders of magnitude more for the same labor just to meet the ridiculous cost of living in this country. That cost is going to be offset to the consumer.
I’m not an economist but it really seems dubious that many of these industries would be viable in the “consumer” countries they were meant to service. There is indeed a premium paid to the foreign manufacturer in addition to the cost of labor + materials, but is it really greater than the cost you would have to fork out to the thousands of factory workers who you must now go from paying 50 cents an hour to 15 dollars an hour? Not to mention we have a bunch of industry regulations that negatively affect production efficiency, reduce pollution, etc, that affect their bottom line, that don’t exist in these 3rd world countries. Is Trump planning on slashing those as well, and turning Chicago into the next smog capital of the Western world?
Comments
The following is a copy of the original post to record the post as it was originally written.
Assuming they crop up at all, some of these factories in places like Vietnam and China, pay their workers anywhere from a couple dollars to a few dimes per hour. When they start to build these facilities locally, Americans are going to demand orders of magnitude more for the same labor just to meet the ridiculous cost of living in this country. That cost is going to be offset to the consumer.
I’m not an economist but it really seems dubious that many of these industries would be viable in the “consumer” countries they were meant to service. There is indeed a premium paid to the foreign manufacturer in addition to the cost of labor + materials, but is it really greater than the cost you would have to fork out to the thousands of factory workers who you must now go from paying 50 cents an hour to 15 dollars an hour? Not to mention we have a bunch of industry regulations that negatively affect production efficiency, reduce pollution, etc, that affect their bottom line, that don’t exist in these 3rd world countries. Is Trump planning on slashing those as well, and turning Chicago into the next smog capital of the Western world?
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
It won’t.
Tariffs increase prices, even for domestic products.
Why would the domestic producers charge anything less than just below their competition?
If the industry is so economically irrational that it can only survive domestically via tariffs, there isn’t going to be strong competition from other domestic suppliers. You’ll get one or maybe two, and they’ll both fix prices to just below the import price.
Maybe even a bit higher than foreign imports under a chaotic tariff regime because you can’t trust that the prices for the imports won’t rise suddenly in the future.
They also won’t create very many US domestic jobs either, because the only way to get anywhere near the import price is heavy automation. Of course, that is really capital intensive, and nobody’s going to bother to even make that investment for tariffs that will evaporate the minute Trump leaves office or changes his mind.
The purpose of the tariffs is to increase prices to incentivize domestic production, NOT to reduce prices.
That’s why they are so dumb. Trump is promising stagflation. Growth will go down while prices climb.
It won’t. That’s why every educated person thinks it’s a stupid policy.
That’s the neat part. They won’t.
We don’t even know if the end goal is to tear down trade barriers or erect them — the administration is arguing both sides of it. Nobody is going to build new factories in the US while the WH is saying it’s negotiating a better trade deal with Vietnam.
It would only work if the tariffs along with other actions reduce the standard of living of Americans down to the level of places like Vietnam. Or something equally insane.
He’s already pretty much guaranteed a lower standard of living for Americans going forward, a quicker replacement of America as the leader of the world and a higher likelihood that our replacement will be authoritarian in nature.
As an added bonus he likely reduced the standard of living of the rest of the world including all the people in Vietnam he thinks are ripping us off.
Reducing prices is not the goal.
Crushing the dollar to make investments cheaper is the first goal. The second goal is to make foriegn manufacturing more expensive. The third, unreleated to the tarrifs, is to sell of federal lands and basically allow investors to make company towns.
None of this means cheaper goods to the consumer. It is just a more secure (read controlled) production process for a comparatively smaller group of people.
They won’t, because local industries won’t charge the “original” price but rather an inflated price that undercuts the tariffs just to draw business.
If an HP laptop costs 1250$ and the equivalent Toshiba costs 1225$, tariffs drive the price of the Toshiba up to 2000$, and HP produces domestically, the price will likely be something like 1950$ for the HP not 1250$.
If both companies move production to the US, prices will STILL rise despite the competition due to having to cover labor and the import of components and raw materials.
> it really seems dubious that many of these industries would be viable in the “consumer” countries they were meant to service
They would be “viable” in the sense that high tariffs may force domestic consumers to buy their products, expensive as they are going to be. But they would not be viable in the global marketplace, i.e. cannot export (at least not without large subsidies – which the country will not be able to finance).
> Is Trump planning
No
Why on Earth would you think that tariffs would drive down prices?
Uhhh….
It takes YEARS to start up new factories.
And new factories need supplies. Which have tariffs on them.
Trump’s Tariffs aren’t going to lower prices.
>industry regulations that negatively affect production efficiency
So sorry we have safety regs?
Is this a real question or are you just preaching to the choir?
Why are you asking us? We didn’t vote for this. Go ask them.
Prices of the goods subject to tariffs won’t drop until we start innovating in automation and manufacturing technology, but the best way to do that is to provide incentives. However, the prices of other goods and services such as rent will drop because tariffs discourage foreign investment in real estate, which reduces demand.
No. First, tariffs don’t do that. And second, these tariffs especially won’t do that.
I’ve honestly never heard Trump say that increasing local production is even the intent of the tariffs. Frankly I doubt this is what these tariffs are for.
That’s normally at least in the realm of intent of tariffs, but they aren’t being applied here in a way that could lead to increased domestic production. Trying to build a factory right now, for example, would be too risky since the tariffs might be temporary (he keeps flip-flopping them on & off), and too expensive since there are blanket untargeted tariffs on everything. In reality they appear intended to upend the global financial order.
Further, even some China tariffs are referred to by Trump as “fentanyl tariffs,” which is the same term he used for tariffs on Canada & Mexico. In that case those “fentanyl tariffs” are used to extract concessions unrelated to trade, mostly about border policy or—for example—forcing Canada to refer to one of their existing officials as their “fentanyl czar.”
Navarro has talked about building robots to replace overseas workers but that sounds more like procrastination by misdirection, and suggests the White House doesn’t think they even need concepts of a plan, since they don’t expect industries to actually relocate.
My best guess is that these tariffs exist primarily to get world leaders to offer up gifts or personal fealty to have them removed. It’s a form of extortion, much like his attacks on law firms, universities, and the news media. And much like with those examples, once you pay the pizzo you can never stop.