alt Hacker NewsI don't know that I agree with this. The US is too large a market to ignore, and this is effectively raising the profit margin for local production. Foreign companies will either move some portion of manufacturing to the US (for the domestic market), or cede the market completely, and I don't know that they're prepared to do that (well, maybe Chinese ones are). Factories have a long lead time, so even if this is abolished at the end of his term, they'll be locked in with sunk capital costs. The main reasons not to do this are a) abandoning the market, as mentioned, or b) you think you can hold out long enough until the political landscape changes.
If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages. Pay enough, and someone will do the job. This is especially true for low-skilled work. There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
And even if these jobs aren't in running these factories, they've still got to be built. Money is a powerful motivator, so I have no doubt they will. Companies will bleed because of this, but there are clear benefits for the US working class even if they're paying more. The gamble is obviously that the benefits outweigh the negatives of higher prices overall. Modern economics says no, but modern economics also believes in service-based economies, and that countries should only produce what they're good at, which, eventually, becomes a repudiation of the nation state. No country wants to buy bullets from an enemy, even if they're cheaper, and the web of infrastructure and industry necessary to maintain a defense industry mandates that at some point, you abandon the theory. Which is to say: I don't know, but I'm also skeptical that economists do.
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> effectively raising the profit margin for local production
This is the sad thing for US consumers.
If there is now a tariff on Product X that means instead of costing 100 it will now cost 125, I will guarantee you that the price for a locally produced competitor item will be 124.99 The local producers are not going to leave 25% profit on the table.
No-one will move any manufacturing because people don't expect this to last long enough for it to make sense.
The congress can remove Trump's authority to determine tariffs at any point by declaring the crisis to be over. The Republicans have a knife-edge margin in the house and the most consistent two rules in American elections are that the party with the president loses some support in the midterms and that bad economic times means that the opposition party gains.
It would take years to move production, and next congress is 20 months away. There is no world in which this ends up good for the USA. Even if you believe that this is a situation where short-term pain leads to long-term gain, there is no way this will continue long enough for that gain to ever materialize.
> If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages
I don't know about this in the US. Sure, we're not at full employment, but I don't know how factory jobs are going to change that. My impression is that there is already a deficit in labor willing to work hard for good pay (construction, trucking, etc.,) and tightening immigration policies will make this even worse.
You say foreign companies will move manufacturing to the US or cede the market. You leave out the most likely option: everything will stay the same yet you pay more for your imports.
There probably isn't enough labour to onshore everything like you're implying.
The US currently consumes about half of its goods from domestic manufacturing. There are about 12 million people currently employed in manufacturing, and 7 million unemployed people. Matching the historical all-time low for unemployment rate would give around 4 million unemployed still.
> There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
I mean, by that logic there's never a shortage of any profession. But in practice, I've seen what happens with a shortage of cleaners in a popular tourist town (my wife used to run a cleaning business) - it becomes nearly impossible to hire cleaners because everyone's salary in the area is inflated and people would rather work at an easier job. You run into persistent performance issues with your remaining cleaners - they're dishonest, simply stop showing up to work without notice, etc. You can't hire anyone from outside the area because there's no housing available other than dingy, overpriced basements. Holes get blown in the budgets of schools, hospitals, etc. because they have to contend with cleaning rates that are effectively set by the competitive market for cleaning AirBnBs.
> If the people aren't there, wages will rise until they show up. [...] There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
While this might be in a theoretical and pedantic way true, sometimes you do not have the economic context to provide those larger wages, so there will technically be no "shortage" - but just because the jobs themselves will disappear.
If you look at poor countries or regions, there is garbage, dirt and dilapidation everywhere. Clearly there is - in a practical way - a need for cleaners, but by your definition there is no "shortage" - because they cannot afford to pay anything for those jobs.