Six months into tariffs, businesses have no idea how to price anything
wsj.com
wsj.com
Higher cost of doing business from tariffs has frozen hiring. With a frozen job market, there’s less revenue coming in.
NYC is a leading indicator for the rest of the country.
[1] https://www.nytimes.com/2025/08/13/nyregion/nyc-jobs.html
It is rather interesting to see the difference in standards of accountability for different presidents. Some are responsible for the economy even if its behavior is not sure to their actions. Others are not responsible for poor economic performance even when taking actions universally agreed to harm the economy.
Before tariffs, in the post-pandemic recovery, we also didn't see hiring go back to pre-pandemic levels. There are other forces like AI adoption.
I don't have good intuition around the connection between tariffs and jobs. Yes, higher inflation may require cooling down the economy. But right now it looks like rates will be going down and anyways rates haven't really slowed down the economy that much. Inflation did come down. Inflation can have some benefits too for employers, it erodes the employee's salaries (and potentially other costs). If companies can raise prices and not pass that on to employees or to their suppliers (as they've seemingly done during this last inflation cycle) then it can be a win for them. A weaker dollar can also help US companies compete globally.
If companies are doing well and growing, and they seem to be, why aren't they hiring more? The largest US tech companies are sitting on piles of cash and making huge profits, for some time now. Is it just that they've become more productive and need less people? Maybe they don't have anywhere to put more people towards? Maybe they're hiring outside the US (this one is not a maybe- they are). Is the uncertainty related to progress in AI? to other macro factors?
That's true, but it didn't predate the election of a man who has made his understanding of tariffs and economics crystal clear in the months and years leading up to January 2025.
Also we need to remember that the guy responsible for the numbers was fired for allegedly political reason and that could have been political and no one will ever be sure. So how can one trust the numbers in that situation? It has been... Weird
https://www.cnbc.com/2025/04/22/trump-tariffs-replace-income...
Imagine trying to get a loan from a bank to make a USA manufacturing plant, pointing to the 150% Chinese tariff. A week later the tariff is 25%. Does your math still work? Probably not. Will that bank continue the loan? Nope. Will the bank even entertain a similar proposal from someone else right now? Nope.
If you want to grow USA manufacturing you need to subsidize it, or give private industry confidence it's not going to lose them money. If you can't do that, your relying on charity / non-profit / philanthropy... And I don't see many of those in manufacturing.
I don’t believe most if not all of us have experienced such an immature and erratic administration. We are taxing trade partners, flip flopping on rules and nobody knows what to make of it.
It’s going to be difficult to suss out a signal from employment data until October or November, by when we should have about half a year of post-tariff data [2] to compare with ‘24. (We may not know anything surely for a year.)
[1] https://www.nyc.gov/assets/omb/downloads/pdf/sa-methodology-...
[2] https://www.piie.com/research/piie-charts/2025/trumps-tariff...
[1] https://www.nyc.gov/assets/omb/downloads/pdf/sa-methodology-...
Source: Me trying to use it and encountering prior fraud. Light reading suggests many have experienced it.
Well run systems experience fraud. It's something you generally want to minimize, but like, it's not necessarily an indicator that the system is broken. Like... AWS has tons of fraud. AWS is still very much not a disaster. (Well, it kind of is a disaster, but mostly because it's a machine that chews up humans via oncall, which is unrelated to their fraud.)
"NY's COVID unemployment fraud topped $11B, partly due to system failures..."
https://www.yahoo.com/news/nys-covid-unemployment-fraud-topp...
It looks like fraud rate was typically 5-10%, which might be high, might be "fine". In 2020-21 and 21-22 fraud rate jumped way up to 20%, which is obviously way too high.
But in 2023-24 fraud rate is back down below 10%. We don't have 24-25 data yet, but it looks to me like we had a couple of unusual years during the pandemic, but audit controls seem to have reigned a lot of that back in.
I'd say, evaluate this year's data and then decide if this was a blip or not, then revise your mental model with data.
Edit: typo
One of the following is true:
- The numbers somewhat-accurately reflect the trend of employment
- Fraud levels were reduced 66x in one year
If it was the second one, that's a sufficiently massive reduction that news stories would be written about it. There would be stories about this great victory over fraud.
A quick search showed no particular anti-fraud measures or claims of effectiveness unique to that time period.
The president and his defenders are playing us when they appear to want a growing economy. They don’t.
When you look at GDP, it's coming from California, NYC, etc. Even in red states, like Texas, it's Dallas and Austin carrying everyone else.
If there’s demand for 5 million units and supply of 4 million, prices will go up and 1 million will move out of the city
In your second case they increase rent and people are forced into having roommates.
I don't think not doing tariffs would have had much of an effect.
(I am an immigrant myself (via the legal means) lest you take my observation as a xenophobic expression.)
Assuming someone speaking another language is both a “recent arrival” and working illegally is… something. Apparently it’s not xenophobic, but it’s not a good look.
https://en.m.wikipedia.org/wiki/Languages_of_the_United_Stat...
> Assuming someone speaking another language is both a “recent arrival” and working illegally is… something. Apparently it’s not xenophobic, but it’s not a good look.
I do not care if it is not a "good look" by some standard. What I care about is cultural and value system continuity and national cohesion.
Good news! We share the value of "be cool about it, we're all just trying our best"
Why is Spanish singled out? Why was "bilingualism" being promoted so heavily? Meaning no offense, wtf has the Spanish speaking community contributed to American history to get this special perch? So yeah, there are all sorts of little pockets here and there, and grandpas and grandmas of various flavor speaking the old country's tongue but only one was promoted.
The phenomena is obviously political in nature and to construe is as anything else, including "prejudice" or "xenophobia", is disengenuous.
Latino voters swung 20 points towards trump from 2020-2024 after being told that Trump would deport all of their illegal family members. A majority of latino men straight up voted for Trump and Latino women was like 47-53.
Legal immigrants hate illegal immigrants. Most legal immigrants are wealthy and well connected and have never had to do the shit jobs that their illegal brothers do. It's pretty hard to legally immigrate without lots of money/skills or at minimum beauty (i.e. for green card marriage). Illegals are usually dirt poor and will do anything for a better life.
I'm getting far more willing to defend making English the official language of the USA for this reason. You want to pretend like you're a WASP legal immigrants? Act like one then!
BTW - Americans don't see the distinction between "european latino" and "Mestizo". You're all Latinos and are treated the same way by WASPs.
You can't wave this away with "NYC is a leading indicator for the US economy". To the extent that it's true at all, you could say it about any large city in the US.
[1] Like, say: interest rates, the business cycle, AI, the slowdown in software hiring, or the minimum wage increase that NYC implemented on January 1, 2025.
> “Right now, we have zero bushels of soybeans on the books with China for this fall harvest that has begun in the Deep South,” Ragland said. “Normally by this time, close to 40% of our sales for the marketing year are on the books. And with zero on the books right now, it is alarming for American soybean farmers.”
https://www.farmprogress.com/soybean/us-soybean-exports-to-c...
The first time that Trump screwed over with tariffs, they got tons of bailout money that we all paid for.
Not all sectors of the economy are so lucky. The big man at the top must be paid with either bribes or allegiance or both.
“Ignore this data point, NYC is special.” Color me skeptical.
I'll put it this way: if I were ignoring it, I'd be ignoring one more data point than you are in cherry-picking a single example.
For example you can tariff bananas all you like, that won't spark widespread banana production in a climate that can't grow them.
Not arguing one way or another, but your reduction isn’t quite accurate with the affects tariffs can have
Unless you turned over all the islands exclusively to bananas, and forget about tourism, pineapples or anything else, you’re not even going to get close.
Also, shipping to continental US is limited by the Jones Act and the lack of capacity in US built, owned, and crewed shipping lines. Assuming a desire to produce things in the US, I don't think it's sensible to tarrif bananas to grow them in Hawaii, and then relax the Jones act so they can be shipped to the continental US on foreign carriers.
China has very high growth momentum that surpasses American living standards soon, and not long before it will surpass American security standards too. China's purchasing power is probably more comfortable than most western countries, with extensive housing and high speed rail and electric cars etc. When a country becomes rich, inevitably other countries ask for their help. That's why China's growth must be curbed, fast > tariff them to their death or so. But I really don't think it will work at all. And personally I don't even think it's a good idea at all to begin with.
Instead we should just have tariffs instead of actually making the lives of Americans better while FIGHTING affordable housing, high speed rail, and EVs.
We've got an entire team of goons who would rather rack up penalty minutes than score goals. These freaks think we are competing with China in an MMA fight instead of a Hockey game.
When you even mention building ourself, you are accused of being anti American simply because you point out a deficiency in our current development.
Before everyone jumps in with GDP per capital with PPP, what quality at that low price means is tofu dreg buildings, cancerous food items, waist high flooding every summer in cities, ghost buildings, and unsafe water (recently one of the most prosperous city, Hangzhou, had sewage seeped into the water for weeks, which the local government denied responsibility).
China’s ‘25 GDP per capita on a purchasing-power parity basis is $29k to America’s $90k [1]. American real GDP per capita grew at 1.7% a year from 2015 to 2025 [2]. (American PPP GDP/c grew 4.5% a year from 2014 to 2024 [3].)
From 2004 to 2024, Chinese PPP GDP/c grew 7.4% a year [4]. If China and America keep growing at their respective rates, we wouldn’t expect convergence for 20+ (40, using America’s PPP GDP/c) years. That’s too long for our if condition to be expected to hold.
There is not a strong argument for Chinese GDP/capita, PPP-adjusted or not, approaching America’s within a generation. There is a risk China’s economy becomes bigger than ours in aggregate.
> what quality at that low price means is tofu dreg buildings, cancerous food items, waist high flooding every summer in cities, ghost buildings, and unsafe water (recently one of the most prosperous city, Hangzhou, had sewage seeped into the water for weeks, which the local government denied responsibility)
Your comment loses credibility with this rant.
[1] https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(PP...
[2] https://fred.stlouisfed.org/series/A939RX0Q048SBEA/
[3] https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locat...
[4] https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locat...
That's unlikely to be true. They might buy less, but the numbers won't fall to zero.
It also overlooks the detail that the component parts of items "made in the usa" also come from other places. Clothing made in the US, doesn't necessarily use fabric made in the US.
In the short to medium term, the increased cash-flow requirements (tarrifs are paid before sales) will favor large importers with access to abundant cash over smaller importers.
Yes, the purchasing power of US consumers will go down as retail prices of goods go up. Yes global producers will seek out alternate markets.
The current uncertainty causes US purchasing to prefer not to commit to long-term orders. Global suppliers will prefer orders from stable customers, even at somewhat lower prices. Once those long-term contracts are in place, it may be hard to reenter the global marketplace, especially on the currently favorable terms.
In other words tarifs are doing long-term reputational damage that will not be easily undone in a few years time.
On the up side the world is about to observe, for the first time in a couple generations, the effects of an isolationist policy. It is a valuable lesson that needs to be reinforced from time to time.
Is the rest of the world suddenly going to start buying something they haven’t in the past? Why?
And the US consumer market is 2x the size of the next biggest (EU).
How exactly is the the rest of the world going to replace the demand of something several times its size?
U.S. per-capita income is roughly $80,000, while China’s is about $13,000. Adjusted for purchasing power it would take decades (at current trajectories, which may be slowing due to EU backlash etc.) to converge.
China leads in high-speed rail and EV adoption. These don’t automatically translate into higher overall living standards — healthcare, wages, pensions, and social safety nets matter more.
China’s lending practices have also led to accusations of “debt-trap diplomacy,” and some countries are now cautious about overreliance on Chinese help. This is why China negativity amongst all of their immediate neighbors is so high.
That said however, the US economy relies quite heavily on the international USD hegemony, and China being a bigger economy does threaten that quite directly. It would be surprising for them to drop the USD, but it is a significant risk.
China does not have “very high grow momentum”, in fact growth has been seriously slowing since Covid
I’m not sure sure what “growth momentum” is what it has to do with living standards.
China’s PPP is not more comfortable than the US because it’s still 1/4th that of the US.
China has very serious growth problems, a massive debt overhang from real estate (that is still slowing the economy), a supply planning model that is leaving it with an oversupply of things like cars and batteries.
Industrialization, like deindustrialization, is a continuous process. Every industry suffers from depreciation and decay which means that pace of industrialization per unit time matters.
You’re not “tariffing them to death”, you’re hurting yourself. This would only work if the USA was the main importer of goods from China, which it is not - only about 14%.
The most insane ending is that tarrifs are reverted but most of the price hike will stay for good.
The import tariff from Vietnam is 20% and Thailand is 19%.
That being said, the copper, steel, and aluminum tariffs announced recently are real and have been assigned import classification codes by US Customs (which is when new tariffs to become real).
> Retailers, including Lowe’s and Home Depot, buy Thompson Traders’ wares and set the retail price themselves. And they have been reluctant to pay Thompson Traders more.
It seems like this sort of scenario would benefit from some kind of risk protection, like insurance, or a futures market
https://www.wired.com/story/senators-probe-cantor-fitzgerald...
Is there a market need great enough for price stability to offset the risk? It seems tariff whiplash will be an ongoing problem
Why? Because policy was stable during Obama. Whatever the policy is, if it's predictable, businesses can work around that. This was a real problem during the Biden term when there was constant policy shifts.
We're seeing that now with the tariffs. The problem isn't the tariffs so much as it is the uncertainty. They change from day to day.
One might be tempted to think the administration is intentionally trying to crash the economy. No, they just have absolutely no idea what they're doing and there's a dementia patient in charge nobody can so no to.
Hmm, it's not that I couldn't believe it was Obama, but this is like a 2nd-hand appeal to authority. I would be interested in a bit more data to see why this is.
> Why? Because policy was stable during Obama.
Now of course we can see there was a record period of near all-time high high oil prices from 2011 to 2014 which corresponds to US employment boom in the sector. Was that the Obama good times that oil and gas experts would refer to? That started to crash in 2015 though, and petroleum industry employment with it. Was that crash due to Obama policy or just global drop in oil prices behind taht?
Some might argue the high oil prices of 2011-2014 years are related to Obama's presidency, but it would probably be less about stable trade policy and more like references to the Arab Spring, peak of ISIS, capitulation to Russia's annexation of Crimea.
Now the 2015 oil crash is something I could talk a lot about. I'll try not to turn this into a wall of text.
In Obama's last term he faced a hostile Congress and wanted to pass some wind and solar rebates [2]. The deal he made with the Republican controlled Congress was to lift the ban on exporting crude oil in exchange for the renewable subsidies. This happened in 2015.
So why were crude oil exports banned? This happened about 40 years earlier during the OPEC oil crisis. As an aside, net crude oil exports stand at about ~3M barrels per day. Pretty much all production increases since have been for the export market. US domestic oil consumption has remained relatively stable, despite population increases.
In 2015, OPEC in general and Saudi Arabia in particular crashed the oil market by ramping up production. You can see this here [3]. Saudi Arabia in particular increased production by ~1M bpd in a short period of time. A lot of people think this was to crush the fracking industry, which was heavily in debt. I personally don't buy this explanation because as soon as the price recovers, someone else will buy their assets out of bankruptcy and you're back when you started.
I think it was punishment for lifting the crude oil export ban.
A whole bunch of oil producers and services companies did file for bankruptcy [4] and this whole incident set the stage for what later happened in 2017-2018 and 2020 where Trump basically screwed the energy sector multiple times.
[1]: https://www.eia.gov/dnav/pet/hist/leafhandler.ashx?n=pet&s=m...
[2]: https://www.bbc.com/news/business-35136831
[3]: https://en.macromicro.me/charts/35226/opec-persian-gulf-regi...
[4]: https://graphics.wsj.com/oil-bankruptcies-tracker/?gaa_at=ea...
I know that manufacturing things here in Europe, there already used to be round trip by airplane and co to try to lower VAT paid on purchases to the maximum.
The invoicing system there is highly gamed and corrupt (not that anywhere isn’t).
All of this tariffing has created a lot of new opportunities for businesses who operate in grey areas.
You could try to raise tariffs on a whole country because one company in that country was falsifying country of origin… but it’s inevitable
The simplest explanation for higher stock prices is that the dollar has lost ~9% of its value this year (see: DXY)
https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-...
Also farmers can’t sell anything because retaliation has destroyed international demand (I’d say decimated but it’s way worse than reduction by a tenth)
If you threatened me with death if I didn't cut off my feet, I wouldn't consider that "reduction by 10%" even if mathematically it might be.
Not true. At least not yet.
Q2 agricultural exports were roughly flat to Q1 [1].
“Overall, export sales of this fall’s (U.S.) soybean crop are down 81% from the five-year average,” Brasher reported.
The american public asked for it loud and clear for it last november. We should respect that.
[1] https://www.nytimes.com/2025/08/27/climate/trump-internation...
https://www.nbcnews.com/politics/trump-administration/trump-...
https://www.nytimes.com/2025/08/30/us/politics/trump-modi-in...
On https://www.solarserver.de/photovoltaik-preis-pv-modul-preis... you can see that mainstream solar panels have returned to their all-time low price of €0.100 per peak watt from November, while low-cost solar panels have fallen to a new all-time low of €0.055 per peak watt, an all-time low first achieved last month, and a 21% decline from a year ago. The "mainstream" category price is down 17% from a year ago. This is driving down the prices of complementary products and enabling new low-cost installation methods that would have been unthinkable just a few years ago.
Because it's so astoundingly cheap, last year China installed 277 GW(p) of solar power generation capacity: https://www.eia.gov/todayinenergy/detail.php?id=65064. This compares to a total electrical generation capacity in the US of 1189 GW, albeit with a higher capacity factor: https://www.eia.gov/energyexplained/electricity/electricity-.... This year the projection is that China will have installed another 380 GW of solar capacity, giving it more solar electrical generation capacity than the US has total electrical generation capacity from all sources: https://www.pv-magazine.com/2025/07/10/china-on-track-to-dep...
Consequently we're seeing reports that, for Chinese AI startups, energy is a "solved problem", while US companies worry they'll be unable to get enough energy to compete: https://www.tomshardware.com/tech-industry/artificial-intell....
This is one of the most historically important things happening in the world today, but it's surprisingly little known even among people who are otherwise well informed.
Even if Trump could strong-arm other rich countries into imposing US-style prohibitive tariffs on Chinese solar panels, he certainly won't strong-arm China, so the cat is out of the bag; that would just make those countries economically uncompetitive with Chinese products produced with superabundant solar energy. And panels are already being mass-produced overseas with Chinese technology at prices fossil fuels can't compete with.
"Solar is cheaper than fossil" does not look at the whole picture, it completely ignores that solar is not scalable quickly enough to meet rising energy demands. It also is a dark laugh towards consumers, who do not see prices lowering, but exponentially rising, ironically while the so-called cheap power sources are being rolled out.
The country could get hit by a meteor tomorrow, and nobody else would notice.
Which is also very destructive because such instability is very bad for long-term business planning.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
You will never see Putin outsourcing civilian tasks to the military.
Odds are it hasn't been updated for 20+ years
OP might not be wrong, but let's at least follow SOP for disclosing security failures (30 days pre-disclosure)
Yeah, complicated, costly and always changing regulations are great for doing business... /s
The underlying issue is complete chaos and confusion caused by this situation, not just any specific actual Tariff or not.
Eschew flamebait. Avoid generic tangents. Omit internet tropes.
Please don't use Hacker News for political or ideological battle. It tramples curiosity.
https://news.ycombinator.com/newsguidelines.html
We detached this subthread from https://news.ycombinator.com/item?id=45079542 and marked it off topic.
Are there money games I am unaware of that means they are running brittle houses of cards and marginal percentage increases in taxes would topple their empires?
I just don't understand the fear or concern, but I am not ludicrously wealthy so I suppose I wouldn't.
If someone is truly strong then they have strength to spare for others. I guess I assume the same would be true of wealth, but perhaps you don't get ludicrously wealthy by being proportionally generous.
But if they do choose to leave, or at least stop expanding their businesses, you can’t deny the rational self interest
"If you tax the rich, they will leave" is a myth created by the rich so that you won't tax them.
In the middle of the 1900s, the tax rate on the wealthiest Americans was 91%.
Nobody is going to leave over Mamdani's extremely modest proposal.
We've done fine without them in the past, and we'd be better off without them now. At the end of the day, labor and its fruits are the primary origin of value in an economy, not the handful of individuals that have had the immense luck and/or dubious ethics required to capture that value for their personal gain.
1) That we're at the threshold for taxes that the wealthy will accept. I would bet many wealthy folks feel attached to their homes as their identity, and it would take some amount to price them out. Like, clearly a billionaire would leave if the cost to stay was a 100% of their wealth, but would probably stay if it was $10 more in taxes. So there's a very nebulous line somewhere in between. I suspect we are not close to that line.
2) That wealthy people living in an area are storing their wealth or declaring that area as their home. Plenty of ways to shield wealth from local taxes, and plenty of ways to claim a place as your home without being taxed by it.
3) That having wealthy people in your community is a net positive for the community. Wealthy people tend to use a lot more resources and distort local politics for their personal gain rather than the gain of the community. Maybe we'd be better off if they weren't around, and several families moved in to take their place. Wealthy people don't ride public transit, normal folks do. Wealthy people can push city council positions to reduce transit, normal folks don't have that influence. Maybe we need more normal folks around.
4) That businesses owned by the wealthy are a net positive compared to, e.g., workers co-ops. Maybe we could be a bit more collective in our approaches and a bit less lionizing towards the wealthy person who got lucky. Maybe we need more community oriented businesses run by members of the community they live in and fewer wealthy business owners racing to the bottom.
Oh good. Then we can ignore your baseless assertions / talking points / propaganda and outright [non-truths].
Also, on a purely pragmatic note, capital is mobile. If you penalize the rich, they just move, and then the new system will stop class mobility.
This is a myth created by the rich so that you won't tax them.
the US has the highest class mobility among western nations
>Individual studies have estimated absolute mobility rates for recent cohorts of roughly 50% in the US (Chetty et al. 2017), 53% in Canada (Ostrovsky 2017), 70% in Germany (Bönke, Harnack, and Luthen 2019; Stockhausen 2018), and 77% in Sweden (Liss, Korpi, and Wennberg 2019).
From https://www.ifau.se/globalassets/pdf/se/2020/wp-2020-11-tren...
What is the incremental value of having a rich person around? Increased yacht sales?
Notice your statement is a broad morale, and I'm presenting a consequence out here in the real world.
The math of booting wealthy people from the city doesn't play out well for the city.
It seems reasonable at first glance, but I’ve seen no proof of it. California, usually mentioned as having high taxes, still has a large percentage of the ultra-wealthy in the USA. Same with NYC. Sure some notable persons have changed their addresses, but overall, they are they hurting?
Is there any documented case of a rich-popular municipality increasing taxes on the ultra wealthy and seeing the tax levy go down?
No, you're making baseless assertions / talking points / propaganda.
EDIT: You had years of corporate stimulus and ZIRP expanding M2, but the inflation floodgates only opened after a paltry return of a small fraction of the real wage losses the middle class and lower sustained over that period? Live by the macro grift, die by the macro grift. And I wrote-in Bernie both times.
If you want companies to invest in your country, the tariff has to make doing so make financial sense, and for the long term.
A lot of these tariffs are going on things that would require a whole factory to be built in the USA which doesn’t currently exist at all, and has no supporting infrastructure or workforce.
Companies can’t just decide right now, “oh shit there’s a tariff. Better but it in the USA right away!”
It’s great if you want to grant yourself the power to exempt those who please or pay you.
This is a Premier Cru Red Herring.
80% of economic activity imports nothing? 80% of economic activity doesn’t involve on oil, cars/trucks, or computers?
The effect will probably be similar to Covid / Remote Work - marginal idea until an externality made it essential. Does mean sh1t tons more unemployment though, so like I said, straws being clutched
Neither of which is true in the real world.
The assumptions are only bad if they prevent the simple models from being useful, and the existence of a scenario where a model's simplifying assumptions prevent it from being useful does not prove that the model is worthless.
This is incorrect. Lack of information is priced in as "risk".
This…is not true. What theory are you referring to?
Classical economic theory predicts literally the opposite. It predicts the prices will go up exactly as if the base materials became more expensive. Classical economic theory predicts that free market produces lowest possible prices and thus any tarif means price up.
In real world markets economics considers elasticity, arbitrage, and distribution of market information between producers, wholesalers, retailers, buyers etc. But very little of that finds its way into op-eds or blogs aimed at a non-academic audience.
... Wait, why on earth would businesses do that? "Yeah, we're in the business of buying X for a dollar and selling it for 90 cents". What economic theory are you referring to that makes that in any way plausible?
When input prices go up, output prices go up, and usually consumption falls.
The only businesses that are derailing with tariffs issues are those that import goods to sell. The argument against tariffs is that they make goods more expensive.
Of course, this argument is true. But that’s not the end of the story.
Because prices are higher for imported goods, demand for domestically produced goods increases. This increase in demand leads to increased demand for labor, which can increase wages. Additionally, the money multiplier effect is higher when money is kept domestically vs paid to offshore parties.
Finally, I think it’s ridiculous to expect that this nation can maintain its wealth without producing anything. We act as if the producers of food are fungible cogs that businesses can swap out. But I think we’ll find that management is the fungible part. Anyone can sell a quality good. Knowing how to make it is what’s important. I’m surprised that mindset doesn’t resonate more with software engineers.
Because of this, Boeing gets to make thousands of jetliners and sell them all across the world and America gets to be one of very few places that can do this.
I think you'll find that steel and aluminum are a lot more fungible than jetliner factories. Why are we kneecapping what we're good at for the sake of things that China will ALWAYS be better than us at?
> Finally, I think it’s ridiculous to expect that this nation can maintain its wealth without producing anything.
The total value of US exports has only ever gone up (see above).
I do get the argument for moving manufacturing expertise back onshore, I really do. But tariffs are not gonna lower the minimum wage and if manufacturing is gonna come back to the US, it'll come back in a highly automated form with a boatload of government support.
Comparative advantage is not innate. China was a rural country and didn't have a comparative advantage in manufacturing, they developed it and are now a powerhouse.
Nothing worth doing is easy. I don't know why Americans think that if its not easy, it's not worth doing. Americans 80 years ago would hate us for what we have become today.
The govt of India has already put one small order on hold and the word in aviation circles is to switch to Airbus as far as possible.
Military purchases now also won’t happen.
Peter Navarro in one of his rants inadvertently leaked this out on TV: his specific issue was a demand for mandatory tech transfer and manufacturing in India.
Plus, with the fickle and chaotic application of trumps tariffs, you’d be insane to invest in domestic production.
I think there are some categories of goods where protectionism makes sense for national security reasons, but for most goods, I don't really see the value of propping up less productive domestic production and causing increased prices for consumers. Do we need to make underwear in America? Or toys?
And of course tariffs are not one-sided, so retaliatory tariffs hurt the domestic industries where our exports are competitive, which tend to be high-value.
There is no meaningful path to restoring much of the US’s lost manufacturing capacity. The rent is too damn high, and the cost of goods is rising quickly as well. Labor is expensive and becoming moreso daily. Manufacturing in the US can never compete with SE asia even with 50% tariffs due to the gigantic disparity in the cost of labor.
It’s not going to increase wages, it may even result in even more offshoring due to the increases in cost for raw materials.
So if the idea is to be more self sustaining: we cannot.
Also, read this: https://www.molsonhart.com/blog/america-underestimates-the-d...
Even with triple digit tarrifs Chinese goods would still be cheaper.
These thinly veiled pro-trump people are much too common the internet and I'm getting tired of it.