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Comment by chimprich | Hacker News Reader

> They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices

They won't be competitive prices though; they'll have to charge more because of the capital costs in setting up a whole new factory and supply chains, increased labour costs, and having to pay tariffs on importing parts.

I imagine that not being able to export cars from this factory due to reciprocal tarrifs will also drive up prices, due to things like lost flexibility, redundancy, and economies of scale.

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And it isn't like we have especially high unemployment right now. There isn't a labor force available to suddenly staff a bunch of factories even if they took zero time and capital to set up.

That's the entire point of it all. I think you are the only person in this thread who gets it. When there isn't a labour force available, you have to increase salaries to get workers. This means other industries and businesses have to increase salaries to keep their workers, giving a domino effect – meaning higher salaries for workers across the board. It might even mean that shit industries can't find any workers and have to close shop. For example the restaurant industry.

This also means higher prices across the board for consumer goods, but the worker still net benefits greatly.

Who does not benefit: The people who do not work. And that's fine. But it's also this class of people who make the entire political and media class, and hacker class apparently, so that's why we have this enormous resistance.

The tariffs aren't set at like 10,000%.

"Domestic production will replace imports" is conditioned on the cost of domestic production being lower than the cost of imports with the tariffs added. "Just spin up new factories with capital investment, raise wages substantially to get people to change careers from service industries, and train all these new people" isn't going to be a cheaper approach to building furniture than continuing to import it from Vietnam with a high tariff.

The effect will be minimal new domestic manufacturing and higher prices for large numbers of goods.

I think you fail to account for just how little a salary needs to be increased for it to be interesting to switch jobs for the people who are making the lowest wages. In Europe, people compare wages with single digit differences per hour when deciding for switches in jobs and careers.

And low paid workers in the service sector aren't low skilled and costly to get going. They're intelligent and honest, and would be fine workers in manufacturing if given the opportunity. They're working in the service sector because those jobs couldn't be off-shored.

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