They can invest in methods that will lower costs in a way that will outlast tariffs, like replacing/reducing domestic headcount with the more physical automation (for manufacturing work) and more AI-enhanced workflows (for white-collar work).
In the short term, it could help offset the cost of the tariffs. In the long term, it lowers the need for human labor.
Yes, but they will fire many workers in the interim to save costs, and put more load on those who remain. That's happening now across many industries, including tech. That doesn't require much capital, just a transfer of time/energy from (now fearful) workers to corporations.
We are already seeing billionaire execs extolling the virtues of 60 hr workweeks and the rise of "996" culture. Labor is getting squeezed.
But if wages continue to fall, due to the looming recession, your automation may be more expensive than headcount.
Either way, more automation is coming sooner than later, and manufacturing workers probably aren't going to get the return of jobs that they were promised.
The US administration's epileptic tariff policies are a serious but short term problem for corporations, teaching them how to be resilient against this sort of thing in the future (i.e. by thinning payroll).
Corporations are also winning rhetorically via the administration's hamfisted bungling of tariffs (by making them so broad), giving them fuel to argue against any future administration (esp. a left-leaning one) from using tariffs at all, even if used surgically.
Let's not forget that there are effective uses of tariffs - if narrow and paired with industrial policy to build domestic capacity for strategic industries.
Has the United States ever had an effective tariff policy though? All I’ve ever seen is a lengthy history of bumbling fuckups that make things worse for the consumer for no benefit. The Jones Act has not saved American shipbuilding from a moribund, barely-alive state; the chicken tax just makes people buy stupidly huge and overpriced trucks which can’t be exported and contribute to the international effectiveness of the US auto industry; sugar tariffs make us all unhealthier by giving bailouts to corn farmers to put HFCS in everything, and so on.
I can’t think of a single case of the United States surgically using tariffs to build a healthy domestic industry that benefits American citizens— I don’t think even competent adults could pull this off, never mind the clown circus we have now.
Maybe some better-run country could use tariffs well; when you have doofuses like ours it’s probably best to stick with the safe route of free trade and friendshoring.
The primary point of narrowly applied tariffs coupled with industrial policy is to help critical domestic industries become domestically and internationally competitive, not to to immediately reduce consumer costs.
An example of this is the Biden Administration's 100% tariff on Chinese EVS, coupled with the industrial policy that was part of the inflation reduction act.
The goal of that tariff and the IRA was to prevent domestic auto manufacturers from being pushed to bankruptcy by the clearly superior and more cost-effective EVs from China, while making the necessary investments in domestic supply chains and manufacturing efficiency to allow domestic industry to catch up to China.
With the new administration, the EV tariffs have stayed in place, but more have been levied against the supply chains for all cars, not just EVs, and the domestic investments have stopped, all but guaranteeing higher prices and lower quality for US consumers for all cars (ICE and EV), while also all but guaranteeing and uncompetitive US auto industry globally.
Thanks to this, the world is going to be buying BYDs, not Chevys.
The issue with politically-controlled tariffs is that politically sensitive industries (the ones that get tariffs in the first place) are happy to play chicken with politicians to keep them in place.
To wit, the Jones Act is a bit over 100 years old and the chicken (aka light truck) tax lasted for 30 years!
It'd make more sense to hand tariff policy to an independent entity.