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.
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:
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.
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.