rowan wrote:In the best possible way - and sorry I'm not about to give a load of examples but "trade" is a heck of a lot more than a handful of well-known end-consumer products. Like any & everything that underpins & builds up to those items. Plus infrastructure, plus healthcare plus .. you name it.
Which works both ways, of course.
As there are plenty of "American" products that source their materials from, or just outright manufacture, outside the US and these will be hit with the tariffs.
For example, Tim Apple and his iPhones which, in reality, have "Made in China" stamped on their arse and Apple imports them into America, where it has a 57% market share for smartphones. Note that this is really an internal American operation - an American company selling into America - and Trump's just added a 54% tariff to that import transaction.
Of course, this is part of the stated aims. To bring manufacturing back to the US. But how quickly could Tim Apple bring iPhone manufacture into the US? Remembering that this would also include bringing the M-series ARM chips that Apple use as well, so he has to bring in the microchip manufacture as well as the handset manufacture to US soil.
And, as noted, there is a logical problem here. The tariffs only bring America "loads of money" while the manufacturing is not in the US, due to import tariffs. If Tim Apple does bring manufacturing back to the US, then there won't be any import tariffs, as he's importing nothing.
Hence the point that either the tariffs are going to make a lot of money for the US Treasury OR they're going to bring US manufacturing back, but not both at the same time. Though a transition is possible - it makes loads of money until Tim Apple brings it all back to America.
But a part of that calculation is that businesses will even want to. America is only 5% of the world's population. Bringing manufacturing back to the US will be expensive and take time.
Tim Apple will possibly bother as the iPhones market share in the US is over 50%. It's a big market for them.
But for other businesses, where most of their trade is actually outside the US, the calculation might simply be to fuck the American market and carry on. Like, just let it be more expensive in America and let the American consumer suffer the price hikes and there will be no accommodating it.
The arithmetic might simply not add up for plenty of businesses. Because bringing manufacturing back to America might just cost too much, when you have to pay American workers a reasonable wage and there are additional regulatory costs and so forth. If you're dealing with selling billions in the rest of the world, but only a hundred million or less in the US, then the arithmetic might simply say "fuck the American market". Let it cost more for those consumers and carry on.
Note that, so far, I'm only considering American companies trading with America itself. For non-American companies, the calculations and their "America vs. the world" markets are much more likely to lean in the "fuck America" direction.
rowan wrote:On the other side of the coin - there is no shortage of folk increasingly worried at how hooked we've all become on cheap manufacture from China
Myself included. Because I've long advocated for self-sufficiency, decentralisation and "localism".
To be clear, I'm not cheering on China to win. I'm just acknowledging the fact that China is going to win from this. Because while America insists on this self-inflicted wound, that makes trading with them so much harder, all China needs to do is nothing.
Countries are looking for alternatives to America - Canada has already been courting Europe, looking for alternative suppliers to American goods (which disturbed Trump enough for him to suggest that if countries help Canada avoid becoming "the 51st state" then their tariffs might get worse to bully away the loophole that he only just realised was there) - and China already supplies almost everything to the world. All it has to do is nothing, but point out that going to China is just continuing "business as usual" with no tariffs.
The American tariffs affect trading with America or through America, but the rest of the world trading with the rest of the world carries on as it did before "Liberation day".
These tariffs very much depend on the idea that you can't just cut America out of global trade. And that's what I was really getting at.
Because I think cutting America out of global trade, as it's requesting, might be a far easier action to take than the time and cost - and massive uncertainty - of shifting operations into America to deal with the American market.
Heck, even if you do, at great expense, build factories in America and, at greater expense, hire American workers, if there's any aspect of your business that has to be imported from elsewhere, it won't really work. This calculation could so easily add up to "fuck America" for innumerable businesses - like, nothing to do with "patriotism" or any shit like that, but just the arithmetic doesn't add up. Even if they want to, they can't afford it.
(Made even worse if America likely slips into a recession from this upheaval. Because then all that expense is against low consumer spending, as Americans tighten their belts, from the economic downturn of it all. Like, spending all that money to build factories and hire American workers and make your American operation home-grown... only to find the American consumer can't afford your products anymore, because the American economy is in a ditch right now. Even if this could possibly work out overall, businesses loathe uncertainty. If they don't know it'll be a winning formula for them, then they're likely to be "risk averse" from making such massive investments and just write America off instead. If the gamble doesn't look sure fire, many simply won't roll the dice.)
We'll see. But I feel that the "just source it from China instead" / "let it cost more in America and let the American consumer bear all the additional costs" is the far easier route for businesses, and there is the law of "the path of least resistance".
"Words ought to be a little wild - for they are assaults of thought on the unthinking."
- John Maynard Keynes
