How does this help with reshoring manufacturing? Or making US produced widgets competitive in the world market?
Copper now costs way more in the U.S. than elsewhere. This could hit its economy hard
cnbc.com
When TMSC, Apple, INTC, etc., build a factory in the US, the costs of the factory include lots of copper (and steel and aluminum). While the US sits on enormous reserves of these metals - and produces alot of copper (e.g.) - it imports about 50% of its refined copper needs [getting about 36% from Canada and Mexico, the rest from Chile]. (Those sources are not strategically threatened - like [arguably] RE from China.)
It's possible to become self-sufficient in refined copper - but it would take decades and enormous capital investment. In the meanwhile (decades), increasing the costs for the high-tech factories just means that the widgets produced by those factories got more expensive - and less competitive with the same widgets produced in Taiwan. [To say nothing about the price of a starter home which uses copper (and steel and aluminum).]
A corollary of this is China (who we'd like to hamstring a bit) becomes the beneficiary of the tariff. Why? Because Chile doesnt give a crap who buys its copper; Chile just needs to sell its copper. And, because copper will be cheaper to Chinese buyers, than American buyers, the Chinese buyers will simply buy more, while American buyers buy less. Chile makes the same amount regardless of which market buys.
If you want to rapidly build out strategic high-tech factories, LOWER the cost of those inputs, not RAISE the cost of the inputs.
The lower Q's input costs, the more flexibility it has on prices; the more flexibility it has, the more competitive it is in the world markets; the more competitive it is, the more profits it makes, and the more profits it makes, the better it is for shareholders. |
