7d ago

Do people really think setting up domestic manufacturing in the USA is easy?

With all the talk of tariffs, I've seen more or less this argument:

"Once the tariffs go in place, companies will start manufacturing in the USA and that's good thing."

However, when I think about being able to manufacture something like a laptop computer, or a car, these are both operations that require a lot of things:

the input components to build the thing
skilled labor that can manufacture the thing
supply-chains that are in place from initial build all the way to retail

The premise seems to be: "OK, tariffs go in, someone INSTANTLY sets up a company that manufactures X, then USA wins".

However, for someone to want to take the "bet" on setting up a really expensive factory, they'd have to believe that the tariff will be in place a long time, because if it is NOT... then they have made a terrible investment and the new factory will be instantly non-viable.

Am I crazy? Am I missing something? I understand that it would be great if we had domestic manufacturing but it seems like the people that are behind tariffs think you just snap your fingers and there is a factory cranking out laptops, when in my understanding this is a process that requires a huge amount of money and time.

My thinking is that the amount of people / companies in the USA that have enough capital to start up a manufacturing company like this want to make sure it's a relatively safe bet before pulling the trigger, and if past tariff behavior from Mr. Trump is any indication, we can't count on these tariffs being present for a long time.

58 comments

IMO there is something more at work here. I believe he is collapsing the economy on purpose and evaporating everyone's savings, forcing them back into the labour force under any means. They want to go back to factory towns where workers have zero agency and are at the mercy of their employers. That is the end goal here, the rest of it is just the hand waving show to keep everyone distracted.
- It's not that complex or Machiavellian.
  Look at what rich people have done after every recession of the past 40 years and how what's happened to their wealth after the recovery. The economy crashes forcing middle-class people to sell off what scant assets they own. Even people on the lower end of upper-class tend to sell off assets when the stock market crashes. Super rich people who have enough money to weather the economic downturn buy the dip, gobbling up all those assets people are selling. Then when the economy recovers the rich people make out like bandits (which they are).
  That's all that's happening. He's tanking the economy so Musk and his other rich friends can buy the dip and increase their wealth even more when the economy improves.
  
  Time will tell. It's all about the layers, but if you look at the current situation at face value, it makes very little sense, ergo something more sinister is a foot 3-4 steps down the road.
  
  I don’t get it. Why would anyone be forced to sell their assets? Do they invest with money they actually need? They shouldn’t. Just wait out the storm.
- I find it increasingly hard to tell the difference between a mastermind playing 7D chess with the world, and someone just acting randomly and implementing all kinds of policies at a whim.
  
  Putin is doing the planning, Trump can't think
- I think you're right that he's collapsing on purpose, but I think it's because it's what's best for Russia and it's profitable for the wealthy long term, being able to buy back into the crashed market. But also the control thing too. Just a bunch of shitty things.
- You can make money on the stock market when it goes down
- It's the tech oligarchs. They're doing their own gilded age. Their empires exist in the tech domain. Mostly IT services. They're going after the whole pie. They want the entirety of American industry.
  What they have in mind exactly is anyone's guess. We're not going back to the times of railroad or oil barons. We're not necessarily going back steel and auto manufacturing. The future is in things like robotics, renewable energy, semiconductors, or whatever the future holds.
  I think crashing the economy just to buy stock is old news too. The saying has become rather mindlessly echoed. They have relatively little to gain from this. The rich hold 90% of stocks. There's little to extract from the remaining 10%. Plus I think people have believed too much in the idea that stocks are a shell game. It's not as much as people think. The markets are still based on tangibles meaning actual industry. That is what the oligarchs are after. What's better than owning stock in the industry is owning the industry itself. Complete total monopolies just like the gilded age and just like they've monopolized IT services sector.
  
  Fun fact: the top 10% now account for approximately half of all consumer spending which equates to about 30-35% of US GDP. First time since we started tracking it and first time in a long long while that's happened. Wealth inequality has indeed matched the guilded age. Maybe even surpassed it but it doesn't quite seem like it yet. Just matched.
  Also the stock crash isn't about stocks. It's about capital and labor investment. When things go bad, the small to medium sized businesses struggle the most which then Blackrock and the like swoop in to buy them all at steep steep discounts. That is ultimately a smarter long term play than buying "slightly" discounted stocks. IE the stock play is as you said. It's mostly rich folks that own it but the rich don't own all businesses yet. Recessions are a chance to do just that which from looking around we already seem to be in with the amount of layoffs and small to medium sized business struggling mightily. The internet omni-presence and ability to earn money sitting at home is too strong for a standard recessionary environment and indicators to show up to the same degree as before. Or at least that's what I think.

MAGA Morons are fantasizing that all these new high-paying manufacturing jobs will be coming back, but thats not the plan.
The new factories will be sweat shops without safety/ health/ environmental regulations, paying minimum wage (or less, if they can end it). They will primarily rely on teenage child labor, using young people who are desperate for jobs after all the fast food jobs have been automated.
Thats the Sociopathic Oligarchs' dream.

only the trumpers think so, and no its not, its actually more expensive, you have to build up your own factories, manufacturing plants which cost billions and years to build, and luring TALENt, is going to be very difficult
- We have a very difficult time recruiting workers to existing manufacturing plants that have very competitive salaries.

Trumpers are actually dumb enough to believe that factories and jobs pop from the ground overnight and without any costs.
- And without immigrant labour. Just good old obese workes who keep the gears spinning.

do people really think
Gonna stop you right there. No. The answer is that no, they don't think.

And we haven't even addressed the whole reason manufacturing left in the first place. It's so much cheaper to do it overseas, even accounting for shipping. It will cost America much more to produce items internally--and who is going to buy these extra-expensive items? America is a service economy and most people are working at Walmart or McDonald's. These people can barely afford the cheap Chinese version, much less the expensive American version.
So I guess they're hoping wages will increase more than the extra expensive incurred by making our own items? Not going to happen, not in a million years.
- That's where the child labor comes in. I wish I was kidding.
  Prison/slave labor as well.
- Consider:
  scenario today:
  labor cost for product is $3, which goes to a chinese worker. total product cost is $5.
  scenario "manufactured in the USA":
  labor cost is $6, which goes to american worker. total product cost is $10.
  the product gets more expensive, but the extra expenses partially go to an american worker, which again will spend the money in the US economy, so it doesn't really cost the national economy that much.
  however, the extra $4 in the "manufactured in the USA" scenario go to american middle-management and "investors" a.k.a skimmed by the owning class. that is why the people would still lose out. that is why "home-shoring" in itself is not enough; a wealth tax is also needed.
  
  Of course it works out if you throw any numbers in that you want. Minimum hourly wage in the US is 7.25-ish in Alabama and the rest of the decrepit South, to 16-ish in California. I googled minimum wage in China and its roughly 3.40-ish at its highest. At the worst, China is half as expensive, and I wouldn't be surprised if the disparity between the actual industrial areas of China and Califonia/Colorado for example might be 8x.
  Whats happening here is that the poorly educated South is wanting me to subsidize their lack of marketable job skills by making me pay extra for American goods instead of Chinese goods.
  And don't forget that the extra money these Americans earn will be partially consumed by the extra cost of living anyways. Not to mention the years or decades of investment it will take to get factories set here anyways, all for low-skill, physically demanding, and mentally unengaging employment.
  Manufacturing should be automated anyways because nobody should have to sit at a conveyor belt all day and toil their lives away assembling dumb trinkets.
- And we haven’t even addressed the whole reason manufacturing left in the first place. It’s so much cheaper to do it overseas, even accounting for shipping.
  Well, I think the idea is that with the tariffs this will no longer be true. There will be a Chinese widget that cost $5 from China with $90 of tariffs on it (making it $95 to the end user) and an American product that costs $55. That American one is only cheaper in a tariff'd world.
  
  The other problem is that the $55 American made one will mysteriously become $94 because doing anything else would be leaving money on the table and therefore unconscionable to American business owners.
  Tariffs have a nasty habit of making local goods increase in price accordingly too.
  
  But they're not going to increase wages to account for us having to spend 55 dollars on something that used to cost 5. So the end result is just that people end up with less overall. I'm cool with limiting consumerism, but this isn't the way to do it imo. And it's not going to make us "richer" as a nation.
  
  In both scenarios the profit margin is removed, or the customers are bearing the significant increase in cost. Hence the recession - the stock market plummets or inflation goes up. Or both.

I work in a Canadian manufacturing company that is owned by a large American conglomerate. When Trump started all these shenanigans, there were rumors floating around that head office was going to move the shop to the US to save money.
Apparently they did a cost/benefit analysis and determined that it would cost them far more than they stood to lose, by moving the operation South, and the returns wouldn't even begin to come in for at least a decade. They decided that raising their prices to absorb the tariffs, was by far the better option. Even the projected losses were manageable compared to the cost of disrupting their supply chains.
All these tariffs are going to do, is make everything.ore expensive. Nothing else is likely to change.
- Trump's notional plan is to replace income/gains tax (on the wealthy) with tariffs. I have not heard of any meaningful uses being reserved for other nation's retaliatory tariffs. Logically and morally they should be going to relieve the burden of the US tariffs, but I have never heard how that might be intended to be accomplished.
  
  The last time Trump did this in his first term his tariffs ended up causing businesses to move out of the United States.

Do people really think...
Imma stop u there

Why would you move to the u.s, and have to pay tariffs to every other country, except for just one?
- Also because these tariffs are so overreaching they also include component parts. So you can't build your laptop because all of the chips are built outside the US so by being in the US you actually increase your exposure to tariffs. Outside the US you can build your laptop without having to deal with tariffs on every single component, then let Walmart pay tariffs to import.

The problem is you appear to have an IQ greater than that of 6 and so you're probably not a MAGA supporter. Trying to apply logic to these idiots is a waste of time.

Not to mention any new factories will have drastically fewer jobs than the factories that left due to newer factories being highly automated. The cost of retrofitting existing factories has stopped many companies from upgrading to keep higher their quarterly profits for investors. If they are forced to build, they will invest in money saving long run cost savings like automation.
- Yeah, this is a great point. A fully automated car company in the USA is great for those who want to buy cars, but for those who want a job building cars, it does nothing. The observation that these NEW firms would be set up with massive automation makes perfect intuitive sense to me, because who'd invest in a brand new manufacturing firm and use last century technology to do so?

Assume that, for the first time in his life, Donald meant what he said. Pretend that he won't change his mind or panic, and assume that the same GOP which keeps missing Speaker of the House election layups won't break and let the Democrats take the tariff power away
The midterm congressional elections are always a swing to the other party. The Democrats are more likely to take at least one chamber of Congress than Trump is to say something dumb. But let's assume that for some reason they only take one, and you get gridlock enough to preserve the tarrifs until the next POTUS takes office in January 2029.
A factory would need to break even by that time to be worth a quick investment. And not just break even, but leave you with more wealth than if you just bought a bunch of crypto and stayed home until this all passes. And if you signed an deal today, your break even points might be as soon as only 45 months away.
You can't even get a car loan with a team that short.

If Nike shoes go from $200 to $300 from tariffs, there is a big opportunity for crossborder shopping in Canada or Mexico, where in Canada they would be $226. And then more opportunity to smuggle them with volume discounts for US ebay listings. A peer to peer smuggling network takes away from "backbone of retail economy", and then lowers value of US official market such that making $300 shoes inside the US costs a big investment, and still loses to smuggling.
Apparel industry jobs tend not to be as glamourous as Boeing, Catterpillar, Deere jobs which are pretty much only US manufacturing export sector than defense. Losing export markets from hatred of US, doesn't get replaced with good jobs in apparel, or exports of expensive US apparel.
There's also a good chance that competing global brands take massive market share from US aligned companies, and less scale will mean less marketing budget.

I’m smart enough to understand that setting up domestic manufacturing is much more complicated and expensive than I could guess. I also know that getting a project like this from concept to steady, reliable, marketable production takes years.
I also know that the people who think this is quick and easy will proudly wear their MAGA hats today.

It is a simple solution to a complicated problem. For a segment of society, it sounds good enough.

Shawn Fain is the president of the United Auto Workers union. He successfully negotiated higher wages and better benefits for his member in 2023 after calling for and receiving authorization for a strike. He continues his efforts to unionize more shops and floated the idea that other unions have their contract expire in 2028 when the UAW contract expires.
He was on Meet the Nation this past week and when asked "Let's start very simply on the question of tariffs on autos and auto parts. Fundamentally, and quite simply, why do you believe those are helpful for your membership?" This is what he said:
[A]ll you have to do is look at the history of the United States, especially in auto manufacturing in the last 30 years, with the inception of NAFTA and unfair trade laws. We've seen over 90,000 manufacturing facilities leave the United States. We've seen- in the Big Three alone, in the last 20 plus years, 65 plants have closed. You know- And so look, tariffs aren't the total solution. Tariffs are a tool in the toolbox to get these companies to do the right thing, and- and the intent behind it is to bring jobs back here. And, you know, invest in the American workers. The American working class people have been left behind for decades, and they're sick of it. You know, it's a massive struggle. People are struggling just to get- to survive right now, to get by. And so, you know- you know- you know, there's two parts to the tariffs though. I mean, the tariffs are a motivator. We have to fix the broken trade laws. And the other thing to me is, you know, these can't just be just, you know, as with the Biden administration, when they did the stuff for battery work and EV work, we had to come in and say, no, these can't just be union jobs or- or jobs. They got to be good paying union jobs that set standards. So the big part of this that gets left out a lot of times is, if they're going to bring jobs back here, you know, they need to be life sustaining jobs where people can make a good wage, a living wage, have adequate health care and have a retirement security and not have to work seven days a week or multiple jobs, just a scrape to get by, paycheck to paycheck.
He goes on to agree with "Peter Navarro, a top adviser to the president on trade, says currently, automobile manufacturing plants are at about 60% capacity. He argues that there's lots of untapped capacity, meaning jobs could be created relatively easy, and you didn't have to need- you wouldn't need to spend two or three or maybe five years building new factories."
So I'm glad to hear that the UAW and their membership may be well positioned, but the increase in prices will result in inflation and that's bad for all people including his members. Guess what we don't buy when we aren't sure how much groceries or everyday items will be ... Cars? Yep. Cars.
- He goes on to agree with “Peter Navarro, a top adviser to the president on trade, says currently, automobile manufacturing plants are at about 60% capacity. He argues that there’s lots of untapped capacity, meaning jobs could be created relatively easy, and you didn’t have to need- you wouldn’t need to spend two or three or maybe five years building new factories.”
  This is an interesting tidbit. That means they could "turn up" any of these existing facilities without building anything new, yet they have not. Lack of demand? Noncompetitive price? It would be interesting to know. To me, if we have plants sitting at less than full capacity we should solve that before meddling with any new industries that would require greater investments.

"But you just like... screw stuff together, right? Cut the basic materials to make the parts, put it together, box it up, ship it out, right?"
Someone I legitimately spoke to once. We were talking about assembling TVs.
I find that people who've never assembled anything more complex than Ikea furniture or something more technical than changed a pipe or switch in their home, tend to think production exists in exactly two levels: Low-tech, hand-tools-at-most labor which can be easily spun up because "anyone can do it", and ultra-high-tech stuff like computer chips which need highly specialized factories, but where a few factories can mostly satisfy nationwide demand.

Creating a single permanent job costs about 100k in investment. Any potential profits will only hold as long as the tariffs are in place, and as the tariffs are as volatile as Trump, nobody is going to spend that amount of money on an idiots folly.
- I see a lot of people saying "someone will build factories" and a lot less people saying "I will pay to build that factory"

They don’t “think” in general. Abstract concepts and long-term consequences do not trouble their minds.

You can solve our issues with investment, like Democrats do. Our economy does better under Democrats than Republicans.
Republicans seem to think this is how things work and that may explain the consistent economic downturns you see under most Republican admin's.
Until the American people figure this out, things will suck.
Democrats may not be your cup of tea, but it's undeniable the country does better when Republicans are not in charge over the past century or so.

I think the supply-chain issue is often forgotten about. Sure, we can open manufacturing businesses here to make whatever, but where do people think the materials will come from? Do they think we've had all the materials we need to manufacture goods here in America all along and we just haven't been because everything is cheaper to make overseas? Just look at this list of major exports by country. Does the US have SOME of this stuff? Sure, but enough to make enough goods for US consumers on a regular, as-needed basis? No way. We will need raw materials, and there won't be enough to go around.

Maybe dumb people who bought the Trump line on tariffs think that, but most people know it's not true.
All the talk about bringing back manufacturing is just a smoke screen to cover the fact they're intentionally tanking the economy so the oligarchs can buy the dip and get even richer when the economy recovers. That's all it is.

I agree, this is bad logic. That said, that's not what I hear from the current regime when I hear them talking about tariffs. What I hear is them thinking this will force countries to lower barriers to Americans doing business abroad. Once those barriers are lowered, tariffs are reduced or go away altogether. For the record, I do not think this is good policy, but the intent of the policy (at lease as I read it) isn't to suddenly move all manufacturing back to the United States.

58 comments