| | | Tenchu's Thoughts - Trump's Tariffs Alone Won't Bring Back Manufacturing
Let me state the obvious: Trump's tariffs alone won't bring back manufacturing. Here are three reasons why:
They're actually not enough
It's ironic, but a lot of the advantages that foreign producers of goods have amount to much more than the 25% average tariff that Trump wanted to impose during lIbErAtIoN dAy. Labor costs are just too damned high here. Construction costs too. Electricity rates are also higher here than in other countries like Taiwan.
Trump would have to impose tariffs of 100% (perhaps gradually over 5-10 years) in order to make it economically viable for companies to build factories here. Of course, the 100% tariffs will have other negative effects, but hey, when it comes to government intervention on a complex system of global trade, nothing is easy.
U.S. politics change with the wind
It takes a minimum of 3-4 years to build a modern factory here, and another 10 years before said factory becomes profitable. Why should companies make decisions based on policy that may or may not remain four years from now?
That's also the reason why the way Trump implemented tariffs was the WRONG way. (See Tenchu's Thoughts - Wrong Policy, Wrong Data, Wrong Implementation by the Wrong Man.) He needed to implement them in a politically sustainable way, because there's not a snowball's chance in heck that Trump will get a third term. And it's unlikely that JD the couch-fukker will be able to carry on his legacy, nor does it look like Trump is trying to groom him that way.
In any case, if you're a CEO or a major investor, and you don't like the tariff policy, go elsewhere and wait four years.
Or if you're a CEO or a major investor, and you are building or investing in a new factory here, you better be sure as shit that the protectionism you are betting on will remain by the time the factory is online.
Who's Going to Work In These New Factories?
The U.S. economy is NOT suffering from a job shortage. Unemployment is still around the low 4% range.
Also, the U.S. economy is centered around services, NOT manufacturing.
Furthermore, current demographics simply cannot support a mass transition to domestic manufacturing. Young adults these days aren't looking to work in factories, period.
We would have to import factory workers, but guess what? Our country has become absolutely hostile to immigration. "Give me your tired, your poor" is now "woke."
"But but Tenchu! What about TSMC's increased investment in America? What about Apple's $500B investment in domestic manufacturing?"
Here's the thing. TSMC and Apple aren't investing in America because of how great the Orange Dear Leader is.
Instead, they're investing in America because the world is destabilizing.
TSMC in particular can no longer be reassured that the U.S. will defend Taiwan against China. Trump already proved to be a worthless ally, but it's also Brandon's fault, too. He couldn't muster enough soft power to convince China to stop being so belligerent toward Taiwan.
Apple also sees the writing on the wall. They can afford to invest in more expensive domestic factories for the purposes of a stable supply chain.
The U.S. "rules-based world order" is breaking down right before our eyes, and that decline is only being accelerated by Trump. Again, it's not just Trump's fault. It's also the fault of the free world for not having a viable strategy against threats such as PooTin and Xi. The world has become too reliant on American leadership, and we have already seen where that has led (e.g. the "War on Terrorism").
So how do Trump's tariffs really factor into the reshoring of manufacturing?
It's simple, really. As the world transitions to a post-America future, America will have no other choice but to start making things for ourselves.
Our trading partners already learned that America will now and forever always be one election away from electing a complete and utter dumbass. And there's no guarantee that the "other" political party will nominate someone better and more competent. One look at how incompetent Brandon was, and one look at how the current star of the Democratic Party, Alexandria Occasional-Cortex, should prove my point.
That's where Trump's tariffs fit into the big picture. They are convincing the world that they need to transition away from us.
Goodbye American hegemony.
Goodbye dominance of the U.S. dollar.
How we as Americans adapt to a post-America world really depends on how comfortable we are in a non-leadership role, and how we shift everything, from politics to the economy to culture, into a new reality where we are no longer setting the rules.
That's how the reshoring of manufacturing will take place, and that's how Trump's tariffs fit in. Trump may be hastening the inevitable, even if he's doing it in the worst way imaginable.
Tenchusatsu |
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