The Trump administrationās tariff scheme appears less and less likely to bring manufacturing jobs back to U.S. shores.
Businesses across the country are crunching the numbers and realizing that, despite Donald Trumpās insistence, they canāt balance out his tariff hikes across the supply chain.
āSome manufacturers who had plans to open factories in the country say the new duties are only adding to the significant obstacles they already faced,ā Bloomberg reported Friday.
Thatās because the supply chain to produce those goods in the United States simply isnāt there, requiring companies to import raw materials and factory equipmentāwhich Trumpās tariffs have made unaffordableāfrom abroad.
But you mean your company isnāt willing to make a years long investment in on-shore manufacturing capacity when the scales that make it advantageous to the company can change in any direction, at any point, for any made-up reason, by any amount? Donāt they love investing in America?
/s+++
Itās not even that entirely
You canāt build X here unless every component is also producedā¦ here. The component factories canāt be built here here until thereās factories building the subcomponents for them, AND a buyer for them here.
A button up shirt needs cotton -> chemical treatment -> dyes -> fabric, base chemicals > plastic pellets -> buttons, AND the machines to do all of those processes. Itās like 7 or 8 different factories just to produce a shirt with buttons on it. Imagine how many factories it is for anything more complex.
Then in comes your point of needing commitment when itās not even certain for more than a week, nobody is going to build out entire supply chains in that scenario.
Gamers Nexus just talked to some PC manufacturers about this.
āWe assemble PCs, made in America from these partsā
(motherboard, CPU, graphics card, PSU, ā¦)
So what if, for example, the motherboard manufacturer moved to the US?
Well thatās an assembly of a hundred or so other Chinese components. And the equipment needed to manufacture it would need to be imported.
Ok, but what if all those hundreds of factories were built in the US?
Well, they all use imported aluminium and steel and plastic, etc., and require their own imported machines to produceā¦
āIs any part of your PC entirely made in the US?ā
āThe shipping labels? And maybe some packagingā
That is a very good point that I hadnāt considered, thanks for your response.
To your point, that just makes it even more of a ridiculous proposition.
Another example would be Trump saying that US farmers now have unprecedented access to the UK market for sales but the US uses growth hormone which is banned in the UK and Europe. Itās very unlikely theyāre going to designate a non growth hormone section of their farm just to ship beef overseas.
Which would only be financially sound if for some reason there is significant demand for American beef in the UK whichā¦ Why would there be?
The beef issue is actually older and a bit more complicated than the hormone question. When the hormone ban went into effect, the only product banned that wasnāt before was edible organ meats.
North America is an agricultural powerhouse and the US in particular. A lot of countries have deep and legitimate concerns about US agricultural exports purely based on the low cost and high volumes, which can threaten domestic food production: An unacceptable condition based purely on national security concerns. Itās part of why the US exacerbates the situation by subsidizing agriculture. We may produce a stupid quantity of food, but it must always be, on the whole, economically viable to produce food domestically.
While the concerns of the EU citizens are real, the readiness with which they were acted upon is in part due to the convenience of protecting the agricultural sector of more powerful European countries.
While correcting artificially low prices is actually a valid use of tariffs, using them for protectionist purposes like offsetting actual competitive advantages creates a lot of trade agreement drama.
Canāt retaliate against food safety restrictions. Hence the wto court cases that have been flying around for decades.
The reason there would be a demand for US beef is the same reason as Japan has such a high demand for US beef: itās cheap and available. Even the high quality import is often price competitive with average or low quality domestic.
Also, thereās already a fair number of US producers of beef that didnāt get hormone treatment. Nothing mandates they get it, and we even already have inspection programs to facilitate it: https://www.ams.usda.gov/services/imports-exports/nhtc
If course, thatās all the center of the current wave of wto disputes, since the EU restricts beef imports to a quota, and no one can agree on certification requirements.
soybean, pork was heavily exported to asia, now with the tariffs, asia will find other countries to do it for them. brazil is willing to destroy the amazon for cattle farming. and Alfalfa which is mostly for the ME market. in the usa, outside of limited consumption of health food store, and research universities involving botany.