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by toomuchtodo
145 days ago
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China has a third of global manufacturing capacity (and have to run flat out to avoid deflation due to domestic consumption that will never grow to meet domestic production capacity). Only the unsophisticated could believe the US is going to increase domestic manufacturing capacity at the levels needed to make domestic sourcing superior in some manner. That’s why these tariffs are not grounded in reality. In three years at the most, these tariffs are done. Cheaper to eat the premium in the short term versus suboptimally invest capital in long duration investments (ie local factories and equipment to fill them). Manufacturing jobs continue to decline, as they have since the election. US factory headcount falling despite Trump's promised manufacturing boom - https://news.ycombinator.com/item?id=46638269 - January 2026 U.S. Among Top 3 Markets Manufacturers Are Leaving - https://www.manufacturing.net/supply-chain/news/22950252/us-... - September 16th, 2025 https://fred.stlouisfed.org/series/TLMFGCONS |
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This sounds like the case that they'd end up paying more of the tariffs, because they can neither reduce production nor absorb the output domestically, which leaves lowering prices to try to sustain the same volume.
> In three years at the most, these tariffs are done.
That's not happened the last time. Trump was out for four years and Biden kept a lot of the tariffs.
> Manufacturing jobs continue to decline, as they have since the election.
"Manufacturing jobs" are a talking point but were never really going to happen. The only way the US is actually going to compete is by increasing automation, which doesn't do much for "manufacturing jobs". But it does get the manufacturing into the same timezone as the people designing the products to prevent those jobs from going next, keep the knowhow of production active domestically, reduce dependence on China, etc.
> https://fred.stlouisfed.org/series/TLMFGCONS
This is a graph showing that construction spending on manufacturing in the US is more than double what it was a decade ago and trending only slightly down from the all-time high in the period trailing when the COVID money ran out and the Fed started to raise interest rates.