Tariffs Are Proving 'Big Headache' for Tech Giants, Says Foxconn | Hacker News Reader

Tariffs Are Proving 'Big Headache' for Tech Giants, Says Foxconn

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Everyone hates tariffs because everyone hates taxes. If a government uses protectionism for a specific policy goal, like developing a domestic auto industry, that can be very effective and we've seen that work lots of times in lots of countries. The US may have recently managed to achieve this with microchip production.

But when tariffs are applied broadly we all pay more in taxes. And it's worse than a more familiar increase in sales or income tax because it can absolutely wreck supply chains.

If tariffs work at all (which is doubtful), they're supposed to be part of an overarching plan with a long-term strategy in coordination with industry so that they can actually invest in creating new manufacturing. It certainly isn't going to work when tariffs are going on-off-on-off-25%-200%-10%-off-on-sometimes-off-on again. How in the world is _anyone_, American or otherwise, supposed to plan around this?

Also, they shouldn't be part of 4-front trade war against the country's biggest partners comprising >50% of all trade.

"Do something or we'll trade with somebody else" is not a credible threat if they know you've already pissed off everybody else.

The US is the world's largest domestic economy. Trade with all nations around the world is 24% of the USA's GDP. You could shut it all down and the country would probably enter a mild recession while the rest of the world would face complete economic collapse. For example, 67% of Canada's GDP is reliant on the United States in some way.

The US has an insane amount of leverage. Leaders in Canada, Europe, etc talk a big game but then ultimately talk to an economist and realize they have to come to the table. That's why these leaders keep announcing things and then walking them back.

Removing 24% of GDP is not just a "mild recession", leaving aside all the interconnected parts of the economy that would immediately be destroyed.

Also, according to Peter Zeihan (I know) a significant part of that trade consists of the US's exporting the light sweet crude oil produced by fracking, which is easy to refine, and importing heavy sour crude oil, which the US has a comparative advantage in refining. Clearly, the US could switch to refining the crude oil produced in the US with very little disruption.

How does this account for the different classes of things that go into a GDP?

The US imports a lot of goods because we can't or don't want to make them here. Meanwhile, the bulk of US GDP is services done by knowledge workers...

I am certainly not an economist but it seems like it would be a hell of a lot harder for the United States to build a bunch of factories and learn how to run them compared to the effort other countries would have to go through to import knowledge workers to build their own local services.

24% of US GDP divided by US GDP is a larger number than 24% of US GDP divided by non-US GDP. Any changes to US foreign trade affect the US more than the rest of the world.

When we start talking about 24% of the GDP we gotta go more specific into what industries depend on to understand the impact. Agricultural industry as a whole (imports, local production, etc.) represents much less than 24% of USA's GDP but if it disappeared it would be cataclysmic for the nation.

And 24% of GDP is a whole fucking quarter of the whole economic production of the largest economy in the world, it's not a "mild recession"...

The current situation is the result of decades of free trade and reliability. There will likely be a shift if the market forces pull in a different direction. Not today right away but in the timescale of years.

GDP fell 29% during the Great Depression. 80% of the way to the Great Depression is not a "mild" recession!

I agree that it would be less severe for the US than for other countries. It's essentially saying, economically, "Do what I want or I'll kill you." It's a mafia-style negotiation. I despise it when others do it, and I despise that the US is doing it.

I don't understand this argument. Every negotiation between countries should end in "do what I want or I'll kill you". Yes, executing those threats is only possible if the country threatening destroys itself in the process, but countries certainly can destroy almost anyone they're negotiating with if they disregard the cost to their own citizens.

Now what has kept Europe stable was the US having a bigger economy, good intentions (as in the intention was to increase ALL trade, not just US' immediate advantage), an unbeatable army and a nuclear armed threat to fight. Perhaps ironically, this approach made the US the most powerful country in the world, when countries that directly pursued their own interests faded, or outright failed (most famously USSR).

This appears to be ending. And every country has politicians just salivating to do what Trump is (or appears to be) doing: getting themselves what they want at any cost to their own country's citizens. Sooner or later they'll come to power and ...

So how do you negotiate as a country, really? If the country you're negotiating isn't a psychotic aggressor at the moment ... the time will come when they are. Doesn't this make war the inevitable outcome?

Tariffs are one thing. Saying we are going to be the cherished 51st state is another.

For me (European) this is an incentive to first check if there is an non-us alternative for the product from another country.

Quite sad times. I liked the 2000s and 2010s with rather free trade a lot.

> If tariffs work at all (which is doubtful)

Of course they work. China has used them to go from people living in huts to the high tech manufacturing center of the world.

Protectionism only works in combination with other measures. If you indiscriminately shield domestic enterprise from competition, you just get less competition and nothing else. Which is usually not enough.

Arguable. But yes of course the best lesson to learn is that tariffs are one of the fundamentals tools of an effective industrial policy.

This administration works on threats and chaos. Trump said Biden’s CHIPS act was “horrible, horrible” and all he had to do was threaten Taiwanese chip companies instead. I can’t imagine anyone with any power in this admin organizing something strategically. It’s all ego and vibes.

Brazil and India have both successfully forced Apple to move production onto their soil using tarrifs in the past.

If the object is to bring in local manufacturing jobs, it's hard to claim that tarrifs can not be successful.

However, you can naturally expect vocal opposition from companies that want to avoid higher labor costs.

In the case of India, it's worked out very well as a proof of concept after Apple decided to reduce their reliance on China.

> Apple Aims to Make a Quarter of the World’s iPhones in India

https://www.wsj.com/tech/apple-aims-to-make-a-quarter-of-the...

While tariffs have been used as a protectionism measure in Brazil for decades, and before tariffs there was a complete import ban for a lot of manufactured goods during the military dictatorship. It never ever helped local industrialisation, instead the country is stuck paying absurd prices for electronics goods while the local production, research and development, etc. are extremely subpar.

It only helped locally produced shoddy products to win a larger market share, quality is underwhelming since they don't have to compete with more better products at the same price.

Chip on shoring may lose its subsidy: https://www.reuters.com/technology/trump-wants-kill-527-bill...

Everyone hates tariffs because they are now created by the executive branch of the government at a whim of one person. Undermining democracy and creating economic uncertainty globally.

Americans wanted small government, and the smallest possible government is one raging asshole.

Tariffs are little better than VAT/sales taxes as taxes imho (I'd rather have more progressive taxes like LVT, inheritance, wealth or at worse income), but in most countries, VAT is set extremely low on essential products like food. Setting global tariffs is idiotic. At least let the food and AG products free.

It's wild - tariffs meant to shield U.S. interests end up giving Apple and Foxconn headaches, shifting their entire strategy. Reminds me of closing one door only to notice everyone's sneaking in through the window. Protectionism might feel good, but tech always finds another route around.

They don’t really want to collect tariff $. They want to force production in the US, which the article says is what they are going to do. That’s not a window being jumped through, that’s the intent. Or am I missing something here?

But Trump is also saying that he wants to get rid of income taxes and replace them with tariffs. That suggests that they do want to actually collect tariff dollars long term.

Only if you believe he's being honest.

No, you're not missing anything. That's the intent.

That's the intent ... of the sales pitch, you're meant to believe in, yes.

The reality is however quite different. Frankly for tariffs to work, you need a clear battle plan. There isn't any. Chaos has never been good for business and cherry picking one (positive) example isn't statistically relevant either

Is there actually an equitable plan for that? Because everyone I turn around a raid is on then off then on then off.

You have to look past the stated intention. It's quite clear by logical deduction that it cannot be the stated purpose.

If the policy is intended to bring back US manufacturing, it would not be haphazardly implemented where the rates/industries/countries affected change by the hour. The best example are auto tariffs and steel/aluminum tariffs, which are going to absolutely destroy US auto manufacturing (where do we think the steel and aluminum used in cars are coming from?). An actual "reshoring" policy would be (1) targeted and (2) scheduled well in advance. So it obviously isn't that.

It also can't be part of a drug policy, since whatever Trump is saying about Canada is clearly false (Canada accounts for less than 1% of illicit fentanyl trade and is a net _importer_ of illegal drugs and guns _from_ the US), thus no policy can really impact this trade.

It also clearly can't be part of an energy policy, since US refineries are designed to accept a huge amount of Canadian and South American heavy crude (very little of which is produced in the US), so the oil tariffs can't possibly "onshore" more production of heavy crude.

The long-held theory by some that he's wrecking the economy for insider trading also doesn't make sense, because his favoured allies like Musk are losing tons of money right now, and an "insider trading" strategy would be much more regularly spaced rather than changing by-the-hour.

That leaves, by deduction, only a few possibilities:

* Trump really is intentionally wrecking the economy, for known or unknown reasons:

* He's wrecking the economy by instruction from a foreign agent (e.g. Putin - certainly indirect evidence exists)

* He's wrecking the economy because his donors told him to (e.g. Musk, other billionaires - unlikely because why would they want that? They would rather have the stock market go straight up, right?)

* He's wrecking the economy so that his "friends" can trade on the market with insider information (see above - seems unlikely based on the pattern)

* He's wrecking the economy so that his "friends" can buy things cheaply (would have been plausible but for the widespread collateral damage he's causing)

* Trump actually genuinely believes in tariffs (he's a product of the 80s after all)

* Trump actually genuinely hates Mexico, Canada, Europe, and China (seems plausible based on his personality and that of his political base)

* Trump really has no idea what he's doing (judge for yourself)

> scheduled well in advance

I suspect they only have 4 years.

> They don’t really want to collect tariff $. [...] Or am I missing something here?

You may have missed where Trump and apparatchiks repeatedly stated they want to collect so many billions of dollars from tariffs that it replaces Federal Income Tax. [0]

Do they really want that in their souls? With the benefit of the past few years, I say that's the wrong question. Hanlon's Razor [1] fails on some pathological inputs, flavors of bullshit that cause it to time-out and situations where the costly result has no practical value. Sometimes it's just malcompetence.

[0] https://www.cnn.com/2025/02/20/economy/trump-abolish-irs/ind...

[1] https://en.wikipedia.org/wiki/Hanlon%27s_razor

I think apple still makes the mac pro in the US.

I’m skeptical the tariffs were mean to shield US interests rather than just being intended to do exactly what they’re achieving: isolating the US by driving investment and allies away, while contributing to a recession where oligarchs can further consolidate power and wealth.

If you look at them as an attack on the US, everything makes a lot more sense.

I think the idea is definitely to trigger a recession, but I doubt they care about "allies"; this crowd loved the zero-interest rate days. A strong enough recession should bring those back without the drama of the president forcing the fed chief to do so through coercion.

Agreed, it's exactly what I'd do if I wanted the US to withdraw from global relevance.

This is the correct way of thinking about it. The tariffs aren't meant to drive economic growth, they are meant to tank the economy and drive a wedge between the US and allies. The ultimate goal is to start a recession and an extra bonus goal would be to get US army bases in Europe shut down. That would make Putin extra happy.

Yep, when Trump is through America will lie in ruins.

> Isolating the US by driving investment and allies away

Foreign government's have an easy solution to solve the problem.

Don't unfairly advantage your goods and services against American products and we won't do the same. Free trade shouldn't mean "Free trade for one side". Free trade should be contingent on reciprocity, both in terms of social and economic alignment.

...as mediated by individual buyers and sellers deciding whether they'll pay a price based on the quality of the goods. Not based on some kind of dick waving contest that's happening in the corridors of power.

By now it's clear that "fair" in this administration is defined by whoever is the biggest bully in the room, so

> unfairly advantage your goods and services against American products

is just a fancy way to say: "let us push you around."

Trump signed the trade deal with Canada in his first term. Now he's calling it unfair.

Trump stated that the Canadian tariffs were a reaction to fentanyl crossing the Canadian border into the US.

That has nothing to do with trade fairness or Canadian protectionism.

Ahh yes, America uses tarrifs to force a new trade agreement and then says that trade agreement is bad.

The US just isn't planning things anymore and trying to justify it makes people look silly.

Offshoring to stable countries is looking really smart now.

Exactly. The US has revealed itself to be prone to wild swings of policy, which will not be a lesson soon forgotten by prior trade allies.

Even if sanity and democracy are brought back by a future adminstration, the US public have proven they can't be trusted not to vote in another clone of their current dictator. DJT Jnr and Barron will probably have a shot at the title in the not too distant future to maintain some kind of North Korean-like dynasty.

There's enough of an undercurrent of overconfident, no-consequence, chest thumping "individuality and independence" in the US that, unless complete ruination occurs this time around, they'll vote for having another bash at complete ruination.

Good trade relations is what keeps the trust and respect for the laws of the US in place in other developed countries. Copyright for example. If the US isn't a reliable trade partner then their power to influence copyright laws around the world would rapidly diminish, which Disney wouldn't be happy with. (I'm sure there are other examples of this, but international US copyright Law is one I'm vaguely familiar with. Use of the US Dollar for trade is another possible avenue for decline of US global influence).

Yes, the US could be self sufficient to keep it's entire population alive and well, but not with the lifestyles to which many of them have become accustomed.

The US doesn't need to prove to the world that a bad president will never be elected again, which as you say is probably impossible and definitely false. What the US can do to rejoin the world in something akin to its former capacity is to walk back the extreme levels of authority granted to an individual who changes every four years (why is the executive able to change tariff levels every day?) in a way that relatively elevates rule of law and deliberative, compromising decision making.

As an outsider, it certainly seems like the US is entirely incapable of doing that in the foreseeable future.

Yes but at least the nature of the problem is one of getting people informed and in agreement and not some kind of economic miracle or unhinged reconquista.

Yet the executive branch, regardless of which party was in office, has done nothing but push to extend its powers for decades. They all get drunk on power and can’t help themselves. And here we are.

It will be impossible until the Supreme Court’s decision on Citizens United is reversed. Prior to this it would have been illegal for Musk to contribute $300 million to Trump. Now he is contributing another $100 million after the Tesla car show at the White House south lawn.

I'm hoping that the Democrats (and sympathetic Republicans) started working on a plan for this a few weeks ago. It needs to be comprehensive, and it needs to deal with both houses being majority single party, and deal with the ability for a president to select appointees to the powerful roles that are now filled with Trump catspaws.

They also need to fix their voting rules and gerrymandering.

I hope.

One thing that might help is if we stop thinking of them as, "they," as if they were some kind of occupying force.

Government is an occupying force. That some people hold sympathies with the regime and even voted for it in hopes that its serves their personal interests doesn't change the nature of the monopoly on violence.

> Disney wouldn't be happy with

... and something like half of the companies comprising the US GDP.

Much of the value that the US exports heavily depends on foreign nations enforcing intellectual property rights for the US.

If the world decided that the US is hostile and stopped enforcing US trademarks, patents, copyright, and trade secrets... it would be over for the US economy.

Any software could be "stolen" legally by anyone and sold under the original name and the US could do nothing about this except stomp their feet and threaten military invasion.

China and Russia already do this to an extent, but if everyone else did it too, it would be curtains for: The entire US game industry, movie industry, music industry, software industry, and more. Pharma and manufacturing would take a hit too.

Maybe the tariff should be a separate line item, like sales tax?

That’s how it is at DigiKey and some other B2B focused distributors.

Sounds like airline bills.. I don't really see how that has worked out for them.

At least you specifically see what each charge is costing you.

Only at the last second of the purchase, when you're already mentally commited to buy at a lower previously advertised price

Maybe tech giants shouldn't have been so quick to trip over themselves to kiss the ring

I like even less how they use slander lawsuit settlements to achieve bribes. I imagine it would be hard for anyone else who would have to counter evidence that they raped their ex-wife to sue people because more recent sex crimes were not rapes.

I can't imagine someone as rich as Bezos doesn't have expensive advisors who have told him the patterns suggest that his best move for his businesses is to at least fake that he can get in a testosterone war with Trump through his paper.. So the likely explanations for why he hasn't that I can think of are not kind.

https://archive.is/rNixb

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