[varispeed]

I know one US business that used to make niche electronic product. Most components they used were from China. Got hit by the tariffs that wiped all the operating profit. Guy also had to sell his home and is now couchsurfing. Business is unlikely going to recover.

Of course he considered making chips and other components in the US, but he was few billions short to start the fab.

[epistasis]

Good thing that the US cancelled collection of unemployment stats just as all these sorts of negative business effects were happening. If a job is lost in the forest and no one is there to hear it, does it make a sound?

[Gibbon1]

Reminds me of a comment I think by Nancy Teeters the first female Federal Reserve board member. She said the other board members thought they could savage the US manufacturing industry to kill wage inflation and break the unions and it would come right back once they stopped. And it didn't.

[inopinatus]

From the other side of the Atlantic this sounds like straight Thatcherism, in which Chicago-school monetarism was an ideological anti-union weapon, and the Thatcher cabinet was not coy about it. However I think the US went that way first even if Reaganomics came later.

[scrps]

I think a lot of that in the US got spun up with Nixon, Reagan brought a lot of it to the mainstream though. Both of them hated unions with a passion that is for sure.

[johnebgd]

Unions are the best of all the bad solutions we’ve come up with so far for labor to compete with capital. The worst of course is collectivism through government, though that’s being tried again…

[AnthonyMouse]

The best solution is antitrust enforcement and removal of anti-competitive laws/rules lobbied for by incumbents. When companies have to compete with each other for labor and customers, wages go up and prices go down. Whey they consolidate they can charge monopoly rents.

Unions often even make this worse because they'll latch on to a monopolistic employer and then lobby with them to retain the monopoly at the expense of all the workers who are their customers rather than their employees.

[varispeed]

> removal of anti-competitive laws/rules lobbied for by incumbents.

If even if there are such ideas in new government, they quickly disappear over wine and steak dinners with the lobbyists.

Unfortunately this is not seen as bypass of democratic process. Nobody voted for having less rights and any bargaining power stripped and yet here we are.

That's where security services should come in (in many countries protection of democracy is their main statutory duty) - but they are not doing their job tax payers pay them to do.

[lazide]

Why would Capital want competition?

[thepryz]

Where is collectivism being tried again?

Sure there are a number of Democratic Socialists and other progressives winning elections and driving changes but everything I’ve seen policy-wise has been directly targeted areas where unchecked capitalism has clearly failed their constituents. Even in those cases, there’s no dramatic shift towards government ownership.

[rootusrootus]

> there’s no dramatic shift towards government ownership

Interesting that you mention this. It's not exactly the same thing, but someone in another thread here on HN pointed out that the feds have been acquiring non-trivial stakes in a number of companies. More than just the one or two that I had seen in headlines.

It's funny, because it's a bigger overt push in the direction of actual socialism than the dems have ever tried, by the group of people who most love to use socialism as a boogeyman.

But the argument in favor of it seemed compelling on it's face, at least worthy of debate.

[frankharv]

Unchecked capitalism?

The new NY city mayor wants to convert parks into low income housing.

https://abc7ny.com/post/mayor-adams-makes-elizabeth-street-g...

[trashface]

FWIW Teeters was apparently one of the more dovish from that era and didn't think the high rates were a great idea: “You are pulling the financial fabric of this country so tight that it’s going to rip...once you tear a piece of fabric, it’s very difficult, almost impossible, to put it back together again.” An analogy which she also said none of the men understood because they had never sewn anything

[seg_lol]

Sociopaths. It breaks me to see the Fed use interest rates to cause unemployment as the lever against inflation. It all seems so cruel.

[zahlman]

They use interest rates to protect against inflationary (and deflationary) spirals, which are known to be devastating. The effect on the unemployment rate is a known, and predictable, side effect. But formal unemployment is small compared to labour force dropout anyway, and the latter is not necessarily so sensitive to economic conditions anyway. Besides which, the unemployment rate can't really keep going down forever.

Zoom out; recent levels are actually quite impressive in the USA. Yes, they've climbed since 2023, but they're only just reaching the pre-GFC minimum (https://www.bls.gov/charts/employment-situation/civilian-une...).

Zoom out further: https://fred.stlouisfed.org/series/UNRATE/

Had it not been for COVID you'd be at more than 16 years without a(n NBER-determined) recession, long enough to suggest a fundamental shift vs. how things worked in the several decades before that.

[clcaev]

Yet the average household seems weaker now than 16 years ago. Perhaps policy guided by this metric could use rethinking.

[dragonwriter]

Your observation is about distributional characteristics of the economy which, in terms of policy, are addressed by fiscal policy and not monetary policy; the former remains in the hands of Congress and the President without delegation to the Federal Reserve, which has been given only a narrow set of tools adapted to and a mission related to broad aggregate performance.

[ls612]

The median household income is higher today in real terms than it was in 2008.

[rcxdude]

Unemployement is a necessary part of the economy, what is cruel is making unemployment unlivable.

[ericd]

Have you ever read about people burning piles of German currency because it was better than using it to buy firewood with? Not to say we would get there, but allowing inflation to run is not kinder.

[wqaatwt]

Inflation like that doesn’t just happen. It can only be the outcome of explicit government policy. Like in post WW1 Germany they wanted to wipe the value of all domestic government debt they accumulated during the war.

[ericd]

Eh my understanding was more that they had to cover fiscal deficits with printing, because they had heavy WW1 war reps (only payable in gold, so they couldn’t inflate it away).

There are times when it’s politically infeasible to defend the currency, even if they technically could. See the response in France to trying to raise the retirement age a bit, because their budget is in trouble.

[wqaatwt]

Supposedly Germany was spending around 80% of its tax revenue on interest payments alone. They pretty much had to finance the war through domestic bonds.

So yes, pretty they didn’t have any money to spend on anything else. Of course bonds became worthless well before the peak in inflation.

[inferiorhuman]

I think these days folks typically use Zimbabwe or Argentina as examples.

[brobdingnagians]

Those are more recent examples, but I think Germany is still a more visceral example for a lot of Western nations because Germany was a high tech, educated industrial nation that was hit with such massive problems from government policy. It's closer to home. Other countries are (wrongfully) easier to dismiss as being just too different from our wealthy and enlightened selves.

[ericd]

Also, Germany was a great power seriously challenging the greatest power of the time, the British Empire. They fell a lot further than those other examples.

[Gibbon1]

People get confused the hyper inflation in Germany was right after the end of WWI when Germany's economy was collapsing. Turns out you can't fix that with monetary policy.

A point. Economists like people to believe that hyper inflation lead to Hitler. When it was austerity policies at the start of the great depression 10 years later that lead to the Nazi's winning in 33. Same austerity policies in the US lead to FDR and the Democrats winning.

[inferiorhuman]

Unfortunately we're looking more like Hogan's Heroes than Germany. Both Zimbabwe and Argentina (and, quite frankly, Venezuela) were well developed before they went down the road of disastrous policies.

[badc0ffee]

Have you ever tried to start a fire with a bunch of paper? It doesn't work great, and what a mess.

[phil21]

Done it plenty of times.

Works great until you run out of paper.

[badc0ffee]

It burns too quickly, and leaves a ton of ash behind that flies everywhere.

Of course it works in a pinch.

[ericd]

Yes, and it was fine, but sure, I typically burn wood.

[JKCalhoun]

I stopped buying vintage cameras from Japan on eBay.

Well, there's always the next administration…

[esalman]

I'm sure JD Vance administration will be more vintage-camera-friendly.

[inferiorhuman]

Nah I'm sure the veep's administration is far more focused on couches than cameras.

[inferiorhuman]

Nah, I'm sure he's more focused on vintage furniture.

[CursedSilicon]

Likes the creak of some old wood

[a2tech]

With the amount of time he spends with Trump and Peter Thiel..probably

[AniseAbyss]

I am imagining Mexican cartels smuggling hardware into the US...

(But seriously I do not know how good US Customs is but in my country every day millions of packages from Asia arrive and they are checking not even a percent).

[yatopifo]

Canadian cartels smuggling those parts together with fentanyl in barrels of maple syrup. At least that’s what the average republican voter is told.

[iancmceachern]

This kind of happens. There are all sorts of cases of counterfit ICs. Some even making it into military hardware

[wildzzz]

Counterfeits don't happen when you buy parts from reputable distributors (digikey, mouser, Newark, TTI, arrow, etc) that are not "marketplace" items. These parts often come right from the manufacturer or from a domestic distributor for the manufacturer. You get counterfeits when you buy from brokers.

Often with older electronics designs, the parts the engineers originally picked are no longer made. It's not the end of the world, there are solutions. Sometimes the vendor changes the part number due to a process change or the part design is sold to another company and goes under a new number. You can also sometimes find drop in compatible parts (common for the 7400/5400 series chips), these may be in a different package so you might have to design an interposer or deadbug it. The worst option is finding old stock using a broker. There are legit brokers that will source old stock and "refurbish" them for you (called re-lifeing). But there are also shady brokers that will buy counterfeits (or get tricked into buying them) that may or may not actually work. Sometimes the counterfeits are relabeled parts that are compatible but the new label gets a higher price because they aren't being made any more. Sometimes the counterfeit is actually a totally different design that is shoehorned into its desired purpose (like a new microcontroller masquerading as an old processor or ASIC). Other times it's just some random junk pulled from e-waste that's been relabelled. Other times you'll get a counterfeit that comes from a stolen design. Even when the counterfeit functions, it may not perform to the same spec as the original part (very important for military spec parts) or will have other characteristics that make it incompatible with the rest of the design (like drawing too much or too little current). When it comes to engineering in ISO9001, traceability is a huge thing and brokers just can't provide that.

At my job, we have an "absolutely no brokers" rule. They simply cannot guarantee that what they provide is genuine. If a legitimate distributor doesn't have stock of a discontinued part, they'll never have stock of it. Brokers will tell you what you want to hear while they go out and try to make it happen. I'm not saying all brokers are shady but if you are considering buying from a broker, you should be instead considering how you can replace that part.

[vachina]

Don’t buy your ICs from aliexpress.

[inferiorhuman]

Well they're less perishable than avocados.

[calvinmorrison]

a purported niche/low-volume electronics, but the profit is somehow dependent on BOM price? a tariff bump on a small BOM doesn’t take you from profitable to homeless.

if that happened, the business already had seriously bad margins, bad cash flow, over-leverage, or maybe he was just doing it out of love getting paid maybe back for his time or not.

tariffs might’ve hurt, but they don’t collapse a healthy niche hardware company where buyers are presumably also into the niche.

seems weird i dont get it. can you explain further?

[herdymerzbow]

gamers nexus did a great (and very long) video on the impact of tariffs on US computer businesses. Some of the manufacturers went into quite a bit of detail breaking down their costs and how tariffs would render some products so unprofitable that they would cease to serve the US market. Not sure if it necessarily applies to a niche/low volume business, but the impacts on a larger business were eye opening:

https://www.youtube.com/watch?v=1W_mSOS1Qts

tariffs have chopped and changed so much since this video that the specific tariff amounts mentioned are likely not accurate.

[iancmceachern]

Hardware companies often operate on a relatively thin margin, especially as compared to say, software companies.

Let's say a companies margin was 40%. The cost of their constituent parts doubles due to tariffs, they are no longer making money as a result.

I hope this helps explain it for you.

[WalterBright]

It's more complicated than that.

For example, the company can raise its prices. How well that works depends on whether there is competition for the company's product. If the competition is also hit by the tariffs, then they're on an even playing field. If the competition is using native parts, then the competitor gets the business.

[iancmceachern]

This is one of the great misconceptions.

There are often no "native" alternatives.

Even the machines that make the chips are nearly all made in one country and then shipped around the world.

The amazing, modern nature of our modern world is built on the collective effort and knowledge of humankind globally.

Globally.

[WalterBright]

There's concern that if all our chips come from one country, they could cut the supply off and make demands. That's called an "embargo".

It's also done to protect local industries, hence the term "protectionism". For example, Canada's large tariffs on American milk are there to protect the local Canadian milk producers.

AFAIK, Trump's tariffs are meant to serve the following purposes:

1. so critical supplies, like chips, will be produced domestically

2. to raise money for the treasury

3. to convince countries that have high tariffs to lower them in exchange for the US to reciprocate in lowering ours

4. to incentivize foreign manufacturers to invest in factories in the US

5. to use them as a negotiating tool for other terms favorable to US interests

These are not crazy things. We'll see how things play out.

[Teever]

What leads you to believe that the implementation of tariffs under this administration was done for the purposes that you have enumerated?

It seems that you're operating under the normally reasonable assumption that these policies were implemented after careful consideration with specific goals in mind. I don't think it's reasonable to assume that the people involved in this are doing what they're doing for well-thought out reasons or ones that are meant to benefit America.

[rootusrootus]

> 2. to raise money for the treasury

And admitting that is why SCOTUS will kill them. Raising money for the treasury is Congress' job, not the executive's.

[simonh]

They’re not crazy goals, but the way these tariffs are being implemented does not further most of them.

3 and 5 are undermined by the fact that even nations with positive trade surpluses with the US, and countries like Japan with Trump first term negotiated trade treaties (which for Japan included major concessions already) are being hit with these tariffs.

1 and 4 are a problem because many of the inputs into building out US manufacturing capacity come from abroad and are hit by tariffs. Secondly many of the manufacturing inputs into making products in these factories would come from abroad and be tariffed, unless those supplies are bootstrapped domestically first but there is no policy to ensure this. Thirdly as soon as the tariffs go away, these factories would become uneconomical, so they are a gamble on that not happening in the lifetime of the factories.

Finally, who’s going to build and operate this huge new manufacturing sector? Infrastructure construction relies heavily on immigrant labour that’s being driven out, so does actual manufacturing, and there are no hordes of unemployed Americans lining up for manufacturing jobs. It’s addressing a problem that largely doesn’t exist, to build out less efficient more expensive ways to make stuff, in a way that can’t work anyway.

Manufacturing investment surged in the last few years with the introduction of the CHIPS and Inflation Reduction acts. It’s going to be hard to disentangle the continuing effects of that from the effects of the Tariffs, but it’s hard to see how the Tariffs can have a positive effect.

[realo]

I am Canadian. Since the USA started their economic war with Canada, I changed some habits, like my other fellow canadians.

1) Stopped buying USA wine totally

2) Canceled our plans for vacations in the USA

3) Stopped buying USA orange (or any citrus) juice

4) Carefully check the provenance of any fruit or vegetable in the supermarket and actively avoid anything that comes from the USA

... and the list goes on.

I am not alone!

How do those immediate and tangible consequences serve the interests of the USA producers and companies affected, exactly?

[iancmceachern]

There is no way Taiwan would ever embargo the US re:chips.

Making and shipping chips all over the world is what keeps Taiwan safe. They would never jeopardize that.

[AnthonyMouse]

> If the competition is also hit by the tariffs, then they're on an even playing field.

That assumes the customers are price insensitive. If you're making vintage parts for hobbyists and archivists, maybe they're not; maybe they don't get a raise just because the price went up and your thing is the thing they cut out of the budget when it all won't fit anymore.

[esalman]

Do you run a business with good margin, good cash flow, optimally leveraged and for profit? If yes, please tell us more about how tariffs have helped you.

[WalterBright]

If you've been making the products locally, the tariffs on foreign products help you.

[scheme271]

Are your materials and supplies also locally made? The same for each of those suppliers. Very few things are entirely made in the US. How about your equipment? Are the motors, tools, electronics, etc also made in the US? Even companies making stuff in the US are being hit. Very few companies have their entire supply change within the US.

[SturgeonsLaw]

Depends on your supply chain's exposure to foreign markets

[esalman]

You cannot truly make anything locally these days. We had decades of free trade. It will take decades to roll back. And you will lose all the benefit that came with it.

Even if we pretend the policies are well-intentioned, it takes decades of investment to make the infrastructure and workforce ready to produce things locally at scale. With policies like the dismantling of department of education, I do not see any initiative being taken to prepare the workforce for the future.

Let's face it, tariffs are a disaster. The increased prices, hurt American businesses, caused job loss, and increased waste and bloat. The administration created a problem (tariff induced inflation), now they are selling the solution by rolling back tariffs to bring prices down. Anybody older than 8 years know this was the same playbook in previous administration. And they know their base is gullible eough to fall for it. It's just unfortunate that hacker news audience in included in there as well.

[WalterBright]

> With policies like the dismantling of department of education, I do not see any initiative being taken to prepare the workforce for the future.

The DOE was created by Carter, and there is no evidence in the last 45 years of it having any positive effect on education in the US.

[esalman]

Your argument is so baseless that even a template AI response can refute it.

Yes, the DoE has been planting decade-scale workforce seeds since the Carter years—mostly via STEM/CTE programs that outlive administrations. Core idea: build adaptable skills (problem-solving, digital literacy, work-based learning) so kids & adults can pivot when AI/climate/whatever nukes today’s jobs.

*Carter-era kickoff* - 1979: Science and Engineering Education Act (Carter signs) → first federal push for pre-college STEM pipelines. NSF/DoE joint grants still fund teacher training 45 yrs later.

*Reagan/Bush I* - 1983 A Nation at Risk → DoE launches magnet schools & AP incentives. Many still running.

*Clinton* - 1994 School-to-Work Opportunities Act → seed money for apprenticeships. morphed into Perkins.

*Bush II* - 2006 Perkins IV → “programs of study” with stackable credentials. Still the backbone of high-school CTE.

*Obama* - 2010 Race to the Top → $4B for state STEM/CTE alignment. - 2014 Computer Science for All → CS now in 70% of HS nationwide.

*Biden* - 2022 YOU Belong in STEM + 2025 DOL/DoE joint admin of WIOA/Perkins → less red tape, more training $.

*Impact numbers* - Perkins V: 8M HS students/yr in CTE; 1.3M postsecondary. - WIOA adult ed: 1.5M/yr gain credentials. - Meta-analyses show STEM exposure → +0.2σ critical thinking, +15% lifetime earnings.

*Caveats* - Funding is ~$16B/yr total—peanuts vs GDP. - 2025 DoE staff cuts (≈50%) threaten oversight. - Europe still laps us on apprenticeships (3-yr paid tracks vs US 6-month internships).

Bottom line: DoE’s been playing the long game since disco. The programs work, but they’re chronically underpowered and politically fragile.

[samtheprogram]

Indeed, it's directly contributed to burgeoning administrative costs in universities through the Federal Student Loan program, and related the devaluing of college degrees.

It's probably helped in some aspects too, but the student debt crisis was created by the DOE. And most everyone can agree that college costs have ballooned in the US while the value of the degrees have decreased.

It's a perfect example of the worst of both worlds of government guarantees in a capitalist society, like Amtrak and US health care. It eliminates many aspects of competition and blurs incentives while remaining in a economy where decisions are profit-driven.