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Comment by omilu | Hacker News Reader

People that favor tariffs, want to bring manufacturing capabilities back to the US, in the hopes of creating jobs, and increasing national security by minimizing dependence on foreign governments for critical capabilities. This is legitimate cost benefit analysis not bellyfeel. People are aware of the increased cost associated with it.

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Tariffs don't do this, though. If you want to do this, you just have to pass laws saying companies are required to manufacture x% of their goods domestically. Putting tariffs in place with no other controls will just see companies shift costs downstream, which is exactly what is happening.

Companies employ economists, lawyers, and legislators, all to ensure they can find workarounds for anything they don't like that's not 100% forced on them by a law (and will even flout the law if the cost/benefit works out).

All evidence is that tariffs have actually tanked jobs, precisely because companies are assuming a defensive fiscal posture in response to what they view as a hostile fiscal policy.

> If you want to do this, you just have to pass laws saying companies are required to manufacture x% of their goods domestically.

and if they go below <x> they pay a fine yea?

yea, thats what a tariff is. you have to manufacture x=100% domestically. otherwise 100-x non-domestic is taxed. that's a tariff.

You're not wrong but the fine can be significantly higher than the tariff.

Pay 300% tax if you don't manufacture 10% of your goods in the US. Furthermore, the penalties could escalate from repeat violations. It's a lot more flexible than a blanket tariff on an industry, country or specific good.

> and if they go below <x> they pay a fine yea?

Where did I say that? No, the point would be if you don't manufacture x% here, you can't sell here. That is the only surefire way to force domestic production.

Tariffs don't encourage re-shoring and domestic production, they just raise the barrier of entry on consumers.

Shifting costs downstream is the point. It imposes a cost on consumers for the externality they are creating by purchasing goods manufactured overseas.

The method you describe is way more easily gamed than a tarrif. What constitutes x% of their goods?

Tarrifs are more proportional to the externality we want to discourage.

It also opens the door to competition. Right now in many things we can't compete against places like e.g. China because everything is dramatically more affordable there, including regulatory compliance. Tariff's change this and make it such that domestic producers can produce things at a cost comparable, and ideally less, than other countries.

These tariffs should have been immediately deployed following changes in labor, environmental, and other laws anyhow - because otherwise all we do is just end up defacto outsourcing pollution and other externalities to the lowest foreign bidder, where the only person who really loses is the American worker.

> Tariff's change this and make it such that domestic producers can produce things at a cost comparable, and ideally less, than other countries.

It’s the opposite. It makes things from other countries more expensive. It doesn’t make things from the US cheaper.

> It’s the opposite. It makes things from other countries more expensive. It doesn’t make things from the US cheaper.

All prices are relative. If something is more expensive then de facto its alternatives are cheaper in comparison.

But price elasticity isn't infinite. A large part of the middle class would be priced out of most modern amenities if these would be produced domestically. Import substitution is one of these things that sounds nice in theory but tend to be highly damaging in practice.

> A large part of the middle class would be priced out of most modern amenities if these would be produced domestically.

Who said everybody would get to keep buying as much cheaply made foreign crap as before? From an environmental perspective that's arguably a win as well. Reducing both pollution from construction and transport.

That's a measurable qualify of life decrease as well for many people. Some things they just won't be able to buy anymore. Things they may require, but you claim its ok to go without because it helps the environment. Sounds dystopian.

This isn't necessarily true. A big factor when production comes back home is that so do the jobs that come along with it and that has a huge ripple effect on the economy that's difficult to evaluate, other than it being a very good thing.

Maybe regulators will have more jobs to regulate and regulators will profit.

> A large part of the middle class would be priced out of most modern amenities if these would be produced domestically.

Let's assume that this is indeed the case, consider why those amenities are so much more expensive to produce domestically? Mostly it's because of cost of labor - and that is expensive in US because labor has numerous rights and protections. So if we're not producing things here because they would be too expensive otherwise, it rather implies that those cheap modern amenities are subsidized by exploitation of cheap labor elsewhere. And we can do that because borders prevent free flow of labor from those places to here, while "free trade" allows for a free flow of manufactured goods. Which is already a very ethically questionable arrangement, but even leaving that aside, what happens when those other places catch up on labor rights (and cost)? We can't have an economy that indefinitely relies on having people impoverished elsewhere so that they can be hired for pennies to climb out of that poverty. Or, well, I suppose we can if we were willing to actively stymie those societies to ensure they don't catch up - which is even worse.

FWIW I don't think Trump's tariffs are a meaningful step to resolve this problem, and his motivations are certainly not concern for exploited workers. Nevertheless we can't just ignore the problem that he happened to highlight to his own ends.

If something (e.g. imported metal) is more expensive then alternatives (e.g. domestically refined metals) will get price increases too.

Personally, I think a better alternative to tariffs would be to require make regulatory requirements for labor, environmental concerns, etc. for the production of any goods sold in the US. Or maybe have tariffs, but companies can opt in to complying with regulations in order to avoid the tariffs.

The problem is that laws need to have precision, and that precision can be sidestepped. For the obvious example - most of all chocolate in America still uses labor involving not only child labor but defacto child slavery. [1] So they say some kind words and make an effort to use supplies who aren't using child labor. But all that involves is them asking the supplier 'Hey, you're not using child labor are you. No? Okay, great.' Of course they are and e.g. Nestle knows they are, but so long as they go through some superficial steps to give plausible deniability for both parties, they can then be 'my gosh, we had no idea.' This, btw, is the exact same way that NGO corruption works - shell companies that offer plausible deniability.

There's no real room to evade tariffs outside of misclassifying or misrepresenting imports, which is a straight forward criminal felony.

[1] - https://politicsofpoverty.oxfamamerica.org/chocolate-slave-l...

> There's no real room to evade tariffs outside of misclassifying or misrepresenting imports

There’s an entire field of “tariff engineering” that’s experienced an understandable boom in demand in the last 12 months. That’s technically about avoiding or reducing tariffs rather than evading them, but tomato/tomato…

> opens the door to competition. Tariff's change this and make it such that domestic producers can produce things at a cost comparable, and ideally less, than other countries.

Haha, Nope. It's more like closing a door. An actual economist says this:

"If you look at page 1 of the tariff handbook, it says: Don't tariff inputs. It's the simplest way to make it harder—more expensive—for Americans to do business. Any factory around the world can get the steel, copper, and aluminum it needs without paying a 50% upcharge, except an American factory. Think about what that will do to American competitiveness."

https://bsky.app/profile/justinwolfers.bsky.social/post/3lud...

Tariffs are gamed all the time.

They are notorious drivers of corruption, it's one of the reasons they're a disfavored policy. Trump himself visibly engages in it (e.g. Tim Cook giving him a gold statue, Apple tariffs get removed) but corruption will manifest at all levels of the chain.

Tariffs also cost more than the sticker price. Compliance is actually really difficult and expensive especially when everything is made so complex and unpredictable. Enforcement is also expensive and often arbitrary or based on who has or hasn't bribed the right people.

Believing that tariffs shift costs downstream means disregarding the idea of supply and demand. Companies are not altruistic actors they price goods at the maximum the market will bear. If they could just pass costs on to consumers then it means that they are already leaving profits on the table. There are in fact alternatives to the goods we import on which tariffs are imposed. Even if the alternative is buying fewer items and spending money on completely different things.

At the end of the day tariffs are a bit of plaque in the artery of the multi-national corporations and money flowing out of a country. It's challenging to argue all the negatives of tariffs for the US while ignoring that almost every other country has tariffs that benefit their domestic industries.

* Targeted tariffs and blanket tariffs are different beasts.

* In order for capitalism to undercut the tariffs, the tariffs need to be high enough to offset the costs of setting up the local industry and the higher costs of US labor (which, in turn, are pushed higher by blanket tariffs).

* The tariffs also have to be credibly long-term. If you start building and the tariffs are cancelled, you're screwed. The Trump tariffs don't have this credibility - they're toxic enough that they'll be gone as soon as Trump is, even if it's another Republican in the White House in 2028.

An aside on tariffs, it’s a tax (either literally depending on the upcoming SCOTUS ruling, or if not in name then in whatever language SCOTUS decides to call an additional fee consumers pay when buying goods. But a tax either way).

Relevant to the post, when supporters believe that “foreigners are swallowing 100% of the cost of the tariffs” they cheer them on. Those same supporters when they’re told the truth that consumers do end up with inflated prices because of them? Their support plummets.

I feel like that's how anyone feels about anything a politician says. They say great things (sometimes even lies) about whatever agenda they're pushing, like tariffs only affecting non US people, or deporting criminal illegals, and supporters buy it. But then when they find out they're paying the tariffs, or their innocent gardener is being deported, then suddenly they're like "wait I didn't vote for this" even though they literally did, just under a different frame.

These are people who vote according to their interests.

There are two economic systems in the US which are divided according to the parties, one is highly globalized and resides in the cities and includes most of the people here, and the other is local and is composed of older industries.

The local one was hit hard due to globalized policies and largely offshored, and these voters rightfully want to undo that, if that's possible is another case, but this is what Trump is doing.

Obviously this is against the interest and going to hurt anyone whose job is closer to Spotify, Stockholm than some Mining Town, Montana

They have a vague notion of wanting the quality of life back like they had In the past, everything else goes completely over their heads

People want to have union jobs but retain Walmart prices as a consumer. This is the problem.

European nations with heavy unionization and worker protections yet also have equivalent stores.

The implementation details matter a lot. How did they get a vastly different outcome than what this suggests?

You say it like it's one or the other.

> Walmart annual gross profit for 2025 was $169.232B, a 7.12% increase from 2024. Walmart annual gross profit for 2024 was $157.983B, a 7.06% increase from 2023. Walmart annual gross profit for 2023 was $147.568B, a 2.65% increase from 2022.

You're telling me poor walmart just HAVE to increase prices because they have to pay a living wage ? All thanks to those darn Unions ?

This false dichotomy.

https://www.macrotrends.net/stocks/charts/WMT/walmart/gross-...

It’s more that American consumers are addicted to cheap imported goods Walmart sells than whatever wage Walmart pays in stores.

Consumer goods have been low inflation (ex cars/food/housing) for decades because of overseas labor arbitrage and automation.

Far be it from me to defend Walmart, but… The relevant number here is not gross profit, but net income, which was more like $20B. And that’s on a gargantuan $680B of revenue, so the profit margin available for increasing wages is less than 3%.

I feel like my siblings are missing the point that Walmart is only so profitable because the goods it sells cost almost nothing, where if people demanded less, higher quality stuff, Walmart couldn't demand the margins that make Walmart rich

But consumers don't want what little union-made stuff they could afford, they want more and bigger and cheaper and don't care what labor is behind it

Nearly everyone we know has lived their entire lives in a world obsessed with reducing trade barriers, and grew up with a minimal general education on economics or geopolitics. So to assume anything more then a small subset of the population could talk coherently for 5 minutes on the topic of tariffs is, to me, absurd. Just look at how the general public responded to a surge in inflation after a couple decades of abnormally low rates. It's like asking someone if the Fed should raise or lower interest rates. It's not that people shouldn't have opinions on these things, just that most people don't care and among those who do, few have more than a TV-news level of understanding.

>It's like asking someone if the Fed should raise or lower interest rates.

The answer is they should lower them for me and raise them for you... God, I could get fabulously wealthy that way.

Right, like imagine if the Fed gave you some sort of preferential access and sweetheart low rates. Then you could borrow money from them at a low rate, lend it out at a higher rate, and profit from the difference. It would be like some sort of modern day alchemy: Creating money from thin air.

Of course, if you become very large and there are widespread delinquencies that threaten your solvency, your chums at the Fed will happily give you infinite liquidity for collateral at sweetheart valuations. Or maybe they'll just start buying up debt in market operations to put you in the black again.

Now, getting this kind of special treatment while mom and pop get foreclosed on their ARM and evicted seems a bit unfair. And, with the help of onerous zoning and permitting codes, it would tend to inflate house prices, with the perverse effect of forcing people to take your loans in order to own a home before your scheme inflates their prices even more--effectively becoming a private tax on home purchases.

That's why we've made this obviously corrupt business illegal.

>want >in the hopes of

But these are still bellyfeel words. What does more rigorous analysis of tariffs say about these things? Do they bring manufacturing back? Do they create jobs?

Should the US adopt the European model? Open an inquiry to explore an investigation that could become en exploratory committee? Sounds like a bad idea.

Well, ends are not bellyfeel. Bellyfeel here concerns the means. So, in this case, thinking that merely wanting an end somehow entails that the means employed are good and effective, because the intention is good.

But as they say, the road to hell is paved with good intentions. It's not enough to want something good. You have to also use means that are good.

What countries have fewer tariffs than the US? Yes tariffs have the ability to support domestic production, be that via bringing manufacturing back or creating jobs. 100%, these are actual results and why almost every country has them. The US has a weighted tariff average of around 3% which places them at the lowest of the list only above countries that have to import almost everything like New Zealand, Australia and Iceland, and around half of EU rates. So even with the random adjustments Trump has made the US would still need to effectively double tariff rates to be commiserate with the EU.

> What does more rigorous analysis of tariffs say about these things?

Basically that tariffs are benign to harmful and most countries should stop using them. They often hurt manufacturing in the long run. They invite retaliation and shrink your market.

Sure, some companies might eventually build some facilities here they otherwise wouldn't have, if they think the tariff regime will hold. But what ends up happening is that they just set up bespoke operations to serve this single market only and not for exporting. So instead of a factory to sell widgets to the whole world, we have a small factory to sell within the country only, where we all pay higher prices than the rest of the world.

Meanwhile their primary global operations where they enjoy free(er) trade are cordoned off from our market. It's a bit like you see with American companies that move into China.

Even ardent protectionists generally agree that tariffs can't bring jobs and manufacturing back by themselves. To work, they have to be accompanied by programs to nurture dead or failing domestic industries and rebuild them into something functional. Without that, you get results like the current state of US shipbuilding: pathetic, dysfunctional, and benefiting no one at all. Since there are no such programs, tariffs remain a cost with no benefit.

So if X% of the economy benefits directly you might say 100-X% of the people would benefit secondarily because the people who benefit would have more money to buy services, building, etc. Trouble is in the short term that X is probably less than 5% so that multiplier effect is not that big.

The industry that has the most intractable 'national security' issues in my mind is the drone industry. The problem there is that there are many American companies that would like to build expensive overpriced super-profitable drones for the military and other high-end consumers and none that want to build consumer-oriented drones at consumer-oriented prices. [1] Drones are transformational military because they are low cost and if you go to war with a handful of expensive overpriced drones against somebody who has an unlimited supply of cheap but deadly drones guess who ends up like the cavalry soldiers who faced tanks in WWI?

There is a case for industrial policy there and tariffs could be a tool but you should really look at: (1) what the Chinese did to get DJI established and (2) what the EU did to make Airbus into a competitor for Boeing. From that latter point of view maybe we need a "western" competitor to DJI and not necessarily an "American" competitor. There are a lot of things we would find difficult about Chinese-style industrial policy. If I had to point to once critical difference it's that people here thought Solyndra was a scandal and maybe it was but China had Solyndra over and over again in the process to dominate solar panels and sure it hurt but... they dominate solar panels.

[1] I think of how Microsoft decided each project in the games division had to be 30% profitable just because they have other hyperprofitable business lines, yet this is entirely delusional

> This is legitimate cost benefit analysis not bellyfeel. People are aware of the increased cost associated with it.

Are they? Because I would expect far less complaining about the economy if this were true.

You can't rebuild an industrial base overnight. Industrial supply chains and cultures of expertise take time to take root. That means not just some abstract incurred cost, but a very much felt burden on the average citizen. And with a weakened economy, it's difficult to see how this industrial base is supposed to materialize exactly.

Are you seriously telling me that Joe Lunchbox who supports tariffs truly understands what the cost increase is going to be for having a product manufactured in the USA, and is going to be willing to pay that increased cost? After decades of Walmart shoving out cheap Chinese goods driving prices down?

Also, there is a massive conflict of interest associated with trusting the opinions of companies actively engaged in labor and environmental arbitrage. Opinions of politicians and think-tanks downstream of them in terms of funding, too. Even if those opinions are legitimately more educated and better reasoned, they are on the opposite side of the bargaining table from most people and paying attention to them alone is "who needs defense attorneys when we have prosecutors" level of madness.

If anyone is looking for an expert opinion that breaks with the "free trade is good for everyone all of the time lah dee dah" consensus, Trade Wars are Class Wars by Klein & Pettis is a good read.

You can use tariffs as a stick but you should also use a carrot. Hard to argue that trump didn't do tariffs in the dumbest way possible.

> Hard to argue that trump didn't do tariffs in the dumbest way possible.

That is certainly one of my frustrations with Trump. He has this tendency to take things which aren't necessarily bad ideas, and pursue them in such stupid ways that he is poisoning public opinion of those concepts for a long time to come.

Take tariffs. I really want the US to have manufacturing again, in fact it seems to me that it is genuinely an issue of national security that we don't have the ability to manufacture things. So I'm ok with tariffs in the abstract, as part of a larger plan to build up industry in the US.

But of course that isn't what we got - we got something which is causing a lot of heartburn for (probably) no benefit to our manufacturing industry. So not only is Trump not effectively advancing the ends I would like, in the future when a politician suggests tariffs people will pattern match it to "that thing Trump did which really sucked" and reject the proposal out of hand even if the details are different. And it's like this for so many things Trump sets his mind to. It's really frustrating.

I think many or most tariff supporters aren't actually aware of the costs - because reasonable cost benefit analysis doesn't come out in their favor even a little. Among economists, this is basically a settled question.

Hell, many tariff supporters still think tariffs are paid by the importers. Many are unaware that tariffs are likely to cost manufacturing jobs in the long run rather than bring them back.

*paid by the exporters

Hahaha. No. They are innumerates who don't want numbers telling them how they feel is flat out wrong. They think manufacturing is cozy good paying jobs with absolutely zero additional pollution or problems. The same people who throw hissy fits over their electricity bill rising and act like data centers and AI are the antichrist.

If they were really serious about reindustrializing they would realize that the US has an immigration problem - it doesn't have enough immigrants for their plan! Tariffs alone are a deeply unserious way to reindustrialize.

Nah I think a lot of it is "own the libs" but this is a foreign perspective.

I don't know how that could make sense. Tariffs were on nobody's mind until Trump brought it up.

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