The ironic thing is that tariffs are the right tool to reindustrialize America (over the period of ~a decade) but theyre being wielded with the skill and grace of a crack addled ferret by somebody who thinks it's a magic wand.
Like in Garrison Keillor’s Lake Woebegone, where all of the children are above average.
It all comes down to a lot of people in other parts of the world being willing to work for far less, for far longer hours, under far worse conditions, than Americans. Anything you can make in the USA will thus be more expensive, and until you’ve re-acquired all the domain knowledge lost to other nations, these quality will also be worse. As most people don’t want to buy something worse for more, you’ll need to force them to by making it unreasonable to import foreign goods (which is already happening), but that also means you limit the market to domestic. I fail to see how that is a viable strategy, unless you aim to wage war on the rest of the world and can’t trust anyone.
Why they don't do it now? One could easily replace 90% of consumed good with US made.
https://fred.stlouisfed.org/series/PRMFGCON
Biden was inaugurated in January 2021 and Trump won the election in November 2024.
Part of the problem is that it runs up against the corporate lobbies who would rather take a higher short term profit margin, let American industry hollow out and buy gold + a luxury bunker in New Zealand to prep for the worst case scenario.
Tax breaks, grants, physical infrastructure, creation of entire markets - those are better tools.
The issue with tariffs is non-competetive companies aren't required to become more competitive.
I mean consider it, a tariff is a tax on those buying a specific competitors goods. Even if tariffs were done surgically, still it seams like a tax benefit is a better tool
Yes they are. They are required to compete on a level playing field domestically and they still have to compete with marked up foreign goods.
This means domestic cars and many other goods will get a tariff markup on a large proportion of their parts anyway. In many cases it will be cheaper or roughly equivalent to pay a single tariff on a finished product from abroad.
In theory it should be possible to bring in staged tarrifs, and use tax breaks and subsidies on on-shore necessary domestic production over time to transition the industry, but that’s not happening and there’s no sign it will happen. The administration doesn’t seem to be aware this is even an option.
No, it's not. The US making not enough steel is not an immutable law of the universe. It is a result of the same kind of industrial decline which tariffs would reverse by making it more economic to produce steel locally.
It only wouldn't work on products which the US has no fundamental ability to make like bananas (which yes, Trump did...).
>This means domestic cars and many other goods will get a tariff markup
Yeah, that's kind of how tariffs work - there's always a markup.
>In many cases it will be cheaper or roughly equivalent to pay a single tariff on a finished product from abroad.
That depends entirely on how you structure your tariffs. If it is the case you've structured them incredibly poorly.
>In theory it should be possible to bring in staged tarrifs, and use tax breaks and subsidies on on-shore necessary domestic production over time to transition the industry, but that’s not happening
I believe I covered that when I said that the tariffs were "being wielded with the skill and grace of a crack addled ferret".
Well, nu-uh! The "level" playing field concept is flawed here. Second, if everyone else becomes less competitive, that does not mean you are 'more competitive'. In a relative sense yes, but in an absolute sense no. A tariff is like a track meet where your competitors get whacked in the knees.
Now, I did say "tend" to be the wrong tool. If another country is actually flooding your market with cheap products (at a loss), in order to drive you out of business, tariffs make sense there. So, tariffs can be good against government subsidized industries. Tariffs countering other tariffs is simplistic, there are other countries in the world and global markets are large and well.. global.