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Comment by swordsmith | Hacker News Reader

Everyone focusing on consumer prices. But tariffs also function to incentivize domestic reindustrialization, which has huge national security implications. You see this clearly in the venture space as increased investment interest in hardtech and manufacturing. It's great that the federal government is looking long term again.

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No one is risking multi-year commitments of millions or billions of dollars to build a factory in America when the tariffs change week to week.

If you want to incentive domestic reindustrialization, you do it with things like the Inflation Reduction Act, CHIPS act or the "Green New Deal" where congress lays out clear sets of rules in law with a mixture of tax incentives, loan programs and spending to give investors and corporations confidence to make decade-long commitments of capital to major projects.

The problem is now it will be very hard to convince anyone to ever be confident that they can ever make decade-long commitments to anything, because anything laid out in law might be upended by a president who doesn't care about the law, aided and abetted by courts and legislators who also don't care.

We're going to need a deep reckoning with some foundational concepts of governance to dig our way out of this.

There was a pretty good NYT Daily interview with a small manufacturer on the 14th of April this year, "Her Business Was Thriving. Then Came the Tariffs". The business owner outlines a lot of "on the ground" issues around the tariffs & building in America (including looking at building the factory to build their products themselves).

https://www.youtube.com/watch?v=v3pfM5v0F9U

They change week to week, but they're consistently an order of magnitude above where they were.

> They change week to week, but they're consistently an order of magnitude above where they were

They've about doubled [1], from $55bn to $110bn.

[1] https://www.politico.com/interactives/2025/trump-tariff-inco...

Ah, so a base-2 order of magnitude /s

> No one is risking multi-year commitments of millions or billions of dollars to build a factory in America

Yes because of all the silicon fab plants popping up in the EU and Africa?...

>No one is risking multi-year commitments of millions or billions of dollars to build a factory in America when the tariffs change week to week.

Apple: $500M over four years including a facility in Houston opening next year

Chobani: $1.7B for new facilities in Idaho and NY

J&J: $55B over four years into new facilities, a 25% increase over previous

Honda: moving 100% of Civic hybrid hatchback production to the US

Hyundai: $25B over three years

IBM: $150B over five years

Merck: $1B for a new plant in Delaware

Nvidia: For this first time in history will be manufacturing chips in the US

Roche: $50B

TSMC: $165B

https://www.cbsnews.com/news/us-manufacturing-domestic-tarif...

I don't know anything particular about the others, but Apple has been investing at least that much in increasing US production for many years now, and Chobani, AFAIK, has never had significant non-US facilities (and started in NYS—in fact, its first plant is less than 20 minutes' drive from where I work).

Given that, I question how many of these are actually caused by the tariffs.

> Given that, I question how many of these are actually caused by the tariffs.

For automotive and electronics, a lot of it was a result of CHIPS and IRA related subsidizes

That said, the tariffs do help incentivize domestic production instead of taking advantage of subsidizes from CHIPS+IRA and then comingling with SKUs from abroad.

Think of the Biden-era CHIPS+IRA as the carrot, and the Trump associated tariffs and export controls as the stick.

We’ve already seen what TSMC’s promises of investment are actually worth, in Wisconsin.

Hedge your bets on these…

For every failed attempt like Wisconsin, you have equally successful industrial policies like Arizona and Texas in semiconductors. They are also Republican states like WI, but had better managed industrial policy teams.

A lot of the investments listed by OP were also thanks to CHIPS and IRA, but the tariffs have acted as the stick to force the Capex realized from CHIPS and IRA remains in the US.

Even China has been leveraging a similar strategy to force it's own manufacturers like BYD and CATL or foreign manufacturers like Foxconn to keep bleeding edge manufacturing within China by using a mix of export controls and revoking passports of Chinese nationals abroad.

> TSMC’s

That was Foxconn, not TSMC.

Also, Foxconn is an assembler, not a high value manufacturer.

You incentivize domestic industrialization by actually doing that (but it's hard and takes planning). In fact uncertainty about tariffs make investment less likely (and more expensive, because you have to buy equipment and steel, and copper at 50% tariffs).

So no, you don't get re-industrialization, you get stagflation. It's idiocracy.

No assuming that there is no next step is idiocracy... And also the weakness of 4yr political planning in the west.

The next step is to work around tariffs where you can and need to which forces innovation and jobs on both sides of the border.

An N95 mask made in China costs $0.30. One made in the USA costs $1.00. A 25% tariff was enacted by executive fiat. The made in China mask is still cheaper than the USA made one. Few hospitals buy American. PPE manufacturers in Malaysia win.

It's clear that a 25% tariff isn't enough in this example.

It's very basic though. Americans have to follow laws, including regulations from EPA, OSHA, building codes, routine inspections (e.g. health inspections), and taxes and permits.

External companies don't face as many of these hurdles. Mexico doesn't have to report to the EPA or OSHA, so if implementing better work environments or cleaner air is important, tariffs act as a tax to instead manufacture in America and, in effect, follow those regulations.

Yes off-shore manufacturers have lower labor and environmental standards. Wealthy countries indirectly benefit from exploitation.

You'd have to somehow convince or force hospitals to pay more for disposable medical supplies. They're not going to pick the USA made mask when they can get a Malaysian one. Domestic manufacturers are only going to build new plants and hire with a long term policy shift.

Americans would be pissed once everything triples in price.

and China is therefore punished in the context of treating US imports to China in an unfair way; this was one of the goals, so you're saying "policy win"?

Very telling that you think "punishing" China is a win for us. We are mostly just fucking ourselves, proving that we can't be trusted as a global trading partner, and driving other countries straight into China's arms.

> China is therefore punished

If we only tariffed China, yes. They would be. Because while their 37.5¢ mask remains 63% cheaper than the American one, it might be 20% more expensive than one made in Mexico or India or Vietnam. But we didn't do that. We raised the prices for everyone. So those orders are, more likely than not, still going to go to China. There will just be some middle men taking a cut along the way.

With the planet-smashing asteroid sized caveat that all these businesses are way harder to start when trying to procure machines and materials and other CapEx is all faces massive tariffs.

Maybe those folks can be competitive within the US given the absurd tariffs. But will they be competitive on any global scale, with those additional headwinds? And if TACO or years pass and tariffs get rescinded, having that massive extra overhead on CapEx is not a good position to be in.

Tariff rates have changed how many times in the past six months? Businesses need certainty if they are going to make long term investments.

have you followed the news? it's been reported that after the period of changing tariffs, agreements have been reached for more US manufacturing, said agreements providing the certainty you are seeking.

> agreements have been reached for more US manufacturing

Simple answer is we won't know for another year or two. These [1] are analogous to bookings. They could be bona fide. Or they could be DOGE figures. (We already know the project at the top of the list is being massively scaled back [2].)

Taking a step back, there is currently zero signal in FDI [3][4].

[1] https://www.whitehouse.gov/articles/2025/06/trump-effect-a-r...

[2] https://www.wsj.com/tech/ai/softbank-openai-a3dc57b4?st=7eCi...

[3] https://fred.stlouisfed.org/series/ROWFDIQ027S

[4] https://fred.stlouisfed.org/series/ROWFDNQ027S

If you believe that any agreements with Trump provide certainty, I have a bridge to sell.

The rest of the world now knows that any promise made by the US government is not worth the paper it's signed on, and is planning accordingly.

the rest of the world is complaining bitterly. they would not be doing that if their solution was as simple and painless as you like to think

They said "planning accordingly", not "will have an easy painless time"?

When my flight home from Stansted to Berlin was cancelled, and the replacement, and the airline's next free seat wasn't for another week, I definitely both planned accordingly *and* complained hard.

Most manufacturers rely on a global supply chain. Therefore tariffs raise costs for US manufacturers, actually making them less competitive internationally.

But don't worry, the falling dollar will compensate.

I'm not willing to believe this was the plan while the tariffs also apply to crops we can't reasonably grow in the US, like cocoa and coffee. And the tariffs are also single across-the-board numbers for each country. And were originally based on trade deficits with the countries (unless we had a trade surplus with a country, in which case it was 10% anyway).

tariffs that apply to crops we don't grow in the US still discourage purchase of those crops, making the sellers unhappy. if the seller country has been putting tariffs on US goods, the seller country is now incented to bargain on the tariffs in both directions. I'm not saying this is a good idea, but explaining something you have not accounted as a reason.

These unilaterally, and likely illegally, imposed tariffs under the excuse of bogus "emergencies" by the executive are like to expire along with the power to impose them.

Further there seems to be no coherent tariff strategy that would enact the changes people are fantasizing about. Instead we see special interest, lobbyist, and perhaps even personal quid pro quo carve outs based on who has access to one man while the rest of us are told 15% taxes on foreign goods is a "great deal!".

For any of this policy to be long term it must go through Congress. For it to be effective and not the worst openly corrupt politics we ought to WANT it to come from Congress.

I don't see how anything that's happened with tariffs is evidence of ""the federal government" looking long term".

Tariffs alone are unlikely to have any effect on re-industrialization. In fact if not properly implemented it will have a negative effect.

North Africa had high tariffs on cars for decades. That didn’t create a car industry. But when, a few years ago, Morocco decided to get serious they made changes that last year they manufactured almost as much as Italy.

> tariffs also function to incentivize domestic reindustrialization

The problem is nobody in D.C. has a strategy for tariffs.

Either America is facing unfair international competitive barriers, in which case the tariffs are punitive and to be negotiated away. Or America is erecting permanent trade barriers, in which case there aren't trade negotiations because that would compromise the long-term investment thesis for re-shoring projects.

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