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Comment by bcheung | Hacker News Reader

If it was feasible for companies to manufacture in the US they would. Effectively blocking China without a concomitant investment in US manufacturing is a lose/lose situation.

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Of course it’s feasible. It’s just marginally more expensive. A combination of tighter labor, environment, and safety regulations, and a higher cost of living.

The tariffs are exactly what will spur the investment in US manufacturing, and the marginal benefit of manufacturing in China and then shipping the end product halfway around the world eroded away.

For certain definitions of “marginally,” I suppose. And keep in mind many of the more complex things manufactured in China are done so from components themselves manufactured in China or elsewhere in east Asia, so either those would also have to be manufactured here, or they’d have to be imported, and we’re back where we started. And so on all the way down to the raw materials.

Marginal cost is an economic term. I’m not using the term colloquially to mean small or insignificant.

Of course manufacturing is an ecosystem which builds up over time, with positive feedback loops where investment drives further efficiency throughout the supply chain.

All the more reason to raise tariffs now, and hope that they stay high for enough years to stop the ongoing atrophy in the US ecosystem.

It’s not just because China’s an unfair competitor from a labor rights and environmental impact perspective. It’s also a massive national security issue.

>For certain definitions of “marginally,” I suppose.

The choice isn't just "manufacture in China" or "manufacture in the US". According to Peter Zeihan's The Accidental Superpower (2014), manufacturing in China has gone from being one quarter as expensive as in Mexico to 25% more expensive. He expects that the US shale and natural gas boom will further reduce costs in Mexico and the US.

Also see "[Why China should follow Trump’s example and cut taxes](http://www.scmp.com/week-asia/opinion/article/2056874/why-ch.... Quote: "As far as manufacturing is concerned, according to Cao, everything is cheaper in America apart from manpower."

> The choice isn't just "manufacture in China" or "manufacture in the US".

Well, yeah. But the problem is that China has such a huge head start in all this that all the stuff I said about moving manufacturing to America would apply to Mexico too in terms of having to import components and/or raw materials from China, at least at first.

That said, in terms of national security concerns and such, yes, it would be in America's interest for Mexico to be a manufacturing powerhouse at or near China's level, and I'm sure Trump and his fans would appreciate that a booming Mexico would probably mean less illegal immigration to the US.

More likely the tariffs (and currency manipulation by the Chinese) will just result in other Asian nations ramping up their factory creation. I know my company (we make toys and games) will be looking at Vietnam and a few other South East Asian nations before looking at home. I think you're greatly underplaying things when you say "marginal" benefit here. There's no way my company could employ as many office workers if we had to employ American factory workers instead of Chinese factory labor.

This isn't an A or B only choice. There's so many other options than US or China. And it's not just labor/safety, it's building an actual factory (which takes huge time and money commitments) which might be less viable in about 17 months if Trump and his protectionist policy aren't still in office.

Moving your Factory out of China to another Asian nation is a national security win, for starters.

But once you’ve started considering that process, maybe you run the numbers and find the marginal cost (an economic term, not to be confused with “small”) of producing locally isn’t as high as you think.

Every company importing from China is doing this analysis. For some percentage of those companies, the numbers will make sense to move into the US. Whether they are building a new local factory or contracting for space on an existing US line.

And it’s not purely “is the US marginally cheaper today,” but the bigger question of; is it less risky overall to produce in the US based on what might happen in the future?

China and the US are not allies, and US companies should see some degree of risk in keeping their production in China.

And I even forgot to mention the rampant intellectual property theft and counterfeiting.

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