[jfim]

> It's hard to argue that tariffs on goods from China don't make it less attractive to buy goods from China.

It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing.

A properly executed initiative to increase US-based manufacturing would address all of the factors necessary to restart manufacturing:

- Not only tax cuts, but subsidies and investment aimed at increasing manufacturing in specific industries

- A concerted program to identify labor and skills shortages, and address them

- A program to identify the missing parts of manufacturing ecosystems and address them. One reason why electronics are made in China is not only cheap labor, but access to a whole ecosystem of suppliers and other manufacturers. Need one million PCBs assembled, plastic casings made, half a million cardboard boxes printed, instruction manuals printed and bound, well, there's a whole ecosystem of partners ready to get all of these things done with the capacity to have a relatively short turnaround time.

- A clear bipartisan commitment that this is something that won't get deprioritized or axed one or two administrations later, but something that is of national interest and that both parties agree to push forward

- A national focus on a key differentiator from other countries' manufacturing. China has cheap, Japan, Switzerland, and Germany have good, the US has big and sturdy maybe?

- Tariffs to protect newly formed manufacturing businesses, but only in conjunction with all of the above

This is what a solid plan for restarting US manufacturing would look like.

[AnthonyMouse]

> It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing.

If you look at the actual outcome, it was that China devalued their currency or otherwise lowered prices to eat the tariffs, because their nightmare is manufacturing getting a foothold anywhere else, whether it's India or the US. Which is a win for the US because we have China paying us billions of dollars in tariffs without paying significantly higher prices for goods.

That doesn't help US manufacturing directly, but it gives the US a lot of leverage in trade negotiations because now China wants that situation to stop happening. And in the meantime the money can be used for tax cuts or subsidies to US businesses.

We could also just raise the tariffs more, for as long as China decides they want to keep paying them instead of letting them push manufacturing out of China.

> Not only tax cuts, but subsidies and investment aimed at increasing manufacturing in specific industries

Tax cuts and subsidies are equivalent. And it's not clear why targeting specific industries is useful rather than giving the same incentives across all industries.

> A concerted program to identify labor and skills shortages, and address them

Address them how? With more subsidies, which is really just equivalent to tax cuts again? This is the sort of thing markets are better at than governments.

> A program to identify the missing parts of manufacturing ecosystems and address them. One reason why electronics are made in China is not only cheap labor, but access to a whole ecosystem of suppliers and other manufacturers. Need one million PCBs assembled, plastic casings made, half a million cardboard boxes printed, instruction manuals printed and bound, well, there's a whole ecosystem of partners ready to get all of these things done with the capacity to have a relatively short turnaround time.

This is certainly a problem, but it seems to imply the opposite of your other proposed solutions. You would then not want to target specific segments but rather have broad incentives to engage in all different kinds of business activity, i.e. general tax cuts.

> A clear bipartisan commitment that this is something that won't get deprioritized or axed one or two administrations later, but something that is of national interest and that both parties agree to push forward

This seems like something you need Democrats to do rather than something you need Trump to do.

> A national focus on a key differentiator from other countries' manufacturing. China has cheap, Japan, Switzerland, and Germany have good, the US has big and sturdy maybe?

What does this even mean? Countries don't need to differentiate like this. How is it even differentiation when three of the four countries you listed are using the same one?

[oarsinsync]

> If you look at the actual outcome, it was that China devalued their currency or otherwise lowered prices to eat the tariffs, because their nightmare is manufacturing getting a foothold anywhere else, whether it's India or the US. Which is a win for the US because we have China paying us billions of dollars in tariffs without paying significantly higher prices for goods.

Can you tell my suppliers this so they stop passing on 50% of the cost of the tariffs onto me please? They don’t seem to have gotten your memo that the Chinese are paying the tariffs instead of the consumers.

I literally have “import tariffs” as a line item on all my invoices that relate to goods manufactured in China. Every single supplier appears to be colluding to increase their profits, if what you’re saying is true.

The alternative is that tariffs are actually driving up costs unnecessarily.

[jonathannat]

The environment/macro has already changed, and the tariffs are here to stay, even Biden and post-Biden. If you haven't yet adjusted to this, your business is in big trouble as your competitors already have moved from China to other SE countries, and you will most likely fail soon.

As an aside. Most US based businesses have already moved on. It seems that alot of European-run businesses are laggards

[sudosysgen]

Yeah, no. US trade deficit to China is still increasing.

[GcVmvNhBsU]

Tariffs don’t really seem to help anyone. Appliances are much more expensive than the last time I bought them in 2015. If we continue to raise tariffs, China will just stop buying corn, soybeans, and pork, and suddenly all of the revenue raised from tariffs are going to bail out farmers in Iowa.

[jfim]

> Tax cuts and subsidies are equivalent.

They're not. One can't cut taxes below zero, for starters. Some industries need more than just having negligible taxes to get started, especially in capital intensive businesses.

Furthermore, the idea that the only lever that the government has to induce people to do things is lowering taxes is completely absurd. Tax cuts didn't build the Hoover dam, the interstate highway system, nor send a man to the Moon.

The government can use targeted investments, messaging, procurement, tax cuts, and so on in order to move people towards certain outcomes.

The day that the US government announces that they'll buy 100 million masks a month for a strategic reserve or replace all of the mobile devices for all federal employees, as long as they're at at most a 50% premium over the cheapest option and are fully traceable from raw materials to finished product as being fully built in the US and allied countries, is the day that people will start investigating if it's possible to do so, and start trying to do so if it's possible.

> This seems like something you need Democrats to do rather than something you need Trump to do.

It takes two to tango. Many other countries are able to pass laws and make progress, even in complex multiparty negotiations during minority governments.

[User23]

> They're not. One can't cut taxes below zero, for starters.

This already exists, it's called a refundable tax credit.

[AnthonyMouse]

> They're not. One can't cut taxes below zero, for starters.

You might want to check with the IRS, since that's exactly what the EITC does. It's also the de facto result when a company takes a tax loss (e.g. from deducting more expenses than it had in revenue, common for startups) and can then sell the tax loss to another company to offset its tax burden.

> Tax cuts didn't build the Hoover dam, the interstate highway system, nor send a man to the Moon.

As opposed to Tesla's plant at Niagara Falls, or the various privately-owned rail networks in the world, or SpaceX?

> The day that the US government announces that they'll buy 100 million masks a month for a strategic reserve or replace all of the mobile devices for all federal employees, as long as they're at at most a 50% premium over the cheapest option and are fully traceable from raw materials to finished product as being fully built in the US and allied countries, is the day that people will start investigating if it's possible to do so, and start trying to do so if it's possible.

But that's actually more expensive, and less productive, than just making it more cost effective to manufacture things domestically than somewhere else, because domestic production has low taxes and efficient regulations and production in countries that engage in currency manipulation or have inadequate environmental protections are subject to tariffs.

> It takes two to tango.

That's the problem. It doesn't matter how willing one side is to negotiate if Democrats are too busy fabricating lies about Russia collusion to come to the table. Compromise requires both sides to be reasonable.

[jfim]

> that's exactly what the EITC does

The EITC is for individuals that have low incomes, AFAIK. Can you elaborate on how the EITC would increase the amount of US manufacturing?

> It's also the de facto result when a company takes a tax loss (e.g. from deducting more expenses than it had in revenue, common for startups) and can then sell the tax loss to another company to offset its tax burden.

Can the tax loss be sold separate from the legal entity itself?

> As opposed to Tesla's plant at Niagara Falls, or the various privately-owned rail networks in the world, or SpaceX?

Are you saying that without the TCJA, none of these would have been built?

> But that's actually more expensive, and less productive, than just making it more cost effective to manufacture things domestically than somewhere else

Making it "more cost effective" through tax cuts helps existing businesses, not starting new ones.

If a business needs $10 million in capital to buy the machinery necessary to make widget X, and has to compete with an existing factory that produces equivalent widgets and has paid off their existing machinery, how can they compete? The existing business already has relationships with suppliers, customers, and distributors, and if the new entrant looks like it will be trouble, they can just cut their profit margin such that the new entrant will be struggling to cover the extra expenses associated with building all of those relationships while paying off the loans to acquire the machinery.

Heck, both of those businesses could reduce their profit margins to zero, with both having an effective tax rate of zero, and only the established one would be able to effectively compete due to lower costs.

> That's the problem. It doesn't matter how willing one side is to negotiate if Democrats are too busy fabricating lies about Russia collusion to come to the table.

Or one could say that the Republicans are unwilling to play ball as well (eg. over COVID-19 related stimulus). The fact is, whether one party is at fault over the other, Americans and US businesses are paying the cost of the lack of bipartisan initiatives to improve the state of US manufacturing.

[AnthonyMouse]

> The EITC is for individuals that have low incomes, AFAIK. Can you elaborate on how the EITC would increase the amount of US manufacturing?

The EITC is an example of a "tax cut" that allows for negative tax rates.

> Can the tax loss be sold separate from the legal entity itself?

Actually selling the tax loss is generally only done for defunct companies, since a company expecting a future profit would just keep it in their pocket to use themselves later. Although you could probably still do it if you wanted to by splitting the company in two and then selling the one that "owns" the tax loss or something similar.

> Are you saying that without the TCJA, none of these would have been built?

I'm saying that private entities can build things like that.

> If a business needs $10 million in capital to buy the machinery necessary to make widget X, and has to compete with an existing factory that produces equivalent widgets and has paid off their existing machinery, how can they compete?

The real issue is that if you add a factory, you could be in a situation of overcapacity, and then you're locked in price competition and selling at thin margins, which nobody likes.

The secret is this. Factories have a finite lifetime, e.g. 30 years. So you have an incumbent that has paid off their factory. It's 28 years old. You pay $10M to build a new factory, today. They're going to drive prices below your cost for two years, but then they're going to have to build a new factory themselves... and bow out, because the alternative would mean being locked in unprofitable price competition with you for another 28 years. So you win the market and can go back to charging profitable margins. You just have to time your entry right, i.e. finish your construction just before they start on theirs.

Assuming you're even two different companies. Otherwise you just build your company's new factory in the new place whenever the old one in the old place is ready to be mothballed.

> The existing business already has relationships with suppliers, customers, and distributors, and if the new entrant looks like it will be trouble, they can just cut their profit margin such that the new entrant will be struggling to cover the extra expenses associated with building all of those relationships while paying off the loans to acquire the machinery.

To some extent this is also just a war of attrition. If a new entrant causes oversupply for any reason then it persists until somebody goes out of business. This has more to do with who has more money they're willing to set fire to in order to capture a given amount of market share than who was in the market first.

One way to help your people win is to ensure cheap access to capital (i.e. low interest rates), but that's already there in the US.

> Or one could say that the Republicans are unwilling to play ball as well (eg. over COVID-19 related stimulus).

It was your impression that the Republicans were the ones holding this up? They had every political incentive to accept any reasonable bill before the election, and even now to do it before the inauguration in order to take credit for it.

> The fact is, whether one party is at fault over the other, Americans and US businesses are paying the cost of the lack of bipartisan initiatives to improve the state of US manufacturing.

On this we agree.