This is not about investment, it's about extortion. Bend the knee, or be destroyed. No US business sector can exist without foreign imports. It's a perfect lever to extract fealty from the corporate sector. They sell tariffs as all sort of things to different groups, sometimes out right lies (it's a tax on foreigners). But in the end it's only about control and power.
The USA is back to being a monarchy, after a 235 year run as a democracy (or 60 years[0], if you want the real experience of 20 million people at the time): everything depends on the mad king's decrees, and no one can rein him in.
No, what if the tariffs go away before you are done building your widget factory. Now you have widgets that are too expensive to sell to anyone.
If they want anyone to believe that the tariffs will remain in effect long enough to make a profit, they will need to pass a bill. Ideally, a bill that ratchets tariffs up over a long enough period of time to actually build the capacity in the US of the thing you want to tariff.
The tariffs hit domestic manufacturers harder than imports, so no?
If manufacturers move overseas, they (so far) get to compete for US business on a level playing field, and (in some alternate countries) can make planning decisions that assume due process exists and the law will be upheld. In the worst case, they can sell everywhere but the US.
If they move to the US, the cost of their inputs varies 100% week over week, and 2/3rds of their highly skilled factory workers are subject to random imprisonment.
Also, the president will use market manipulation and insider trading schemes to raid their capital reserves, then brag about it on video.
But then you risk tariff policy changing, and suddenly you're undercut by foreign factories again, and you lose all your investment in the American factory. It still needs certainty that the tariffs are staying.
The uncertainty only works to return manufacturing where America is cost-competitive without tariffs, and that's a tiny slice of manufacturing.
Manufacturing is extremely capital-intensive with a lead time of years. That's a huge gamble to make when policy will probably change by the time you're done and leave you manufacturing at a big loss.
No, because all your precursor components are also fluctuating massively every few days. How do you produce and price widgets when widget grease is $1 on Monday and $10 on Tuesday?
Manufacturing doesn't just happen magically. You need factories and a trained workforce, and various infrastructure. The point is that you may not be keen to invest now in building a factory that'll be usable in a couple of years if everything is constantly changing every week.
> When asked to clarify whether tariffs on iPhones might “come back on in a month or so”, Lutnick replied: “Correct. That’s right . . . We need our medicines and we need semiconductors and our electronics to be built in America.”
Good thing they didn't happen to, oh, completely shut down a prior administration policy designed specifically to fund the construction of the factories needed to make those semiconductors onshore. Oh wait...
- Feb 1 – Tariffs Imposed on Canada, Mexico, and China
- Feb 3 – Temporary Pause on Tariffs
- Mar 4 – Tariffs Reinstated
- Apr 2 – "Liberation Day" Tariff Announcement
- Apr 9 – Tariff Reversal
- Apr 12 – Trump Adds Tariff Exemptions
Using a moving average algorithm, adding a phi factor of 0.89 for corruption, and a beta factor of 0.67 for chaos, we predict the next tariff policy change to occur around April 26 (+/- 2 days margin error)
Using numerical analysis, can someone please plot the inevitable destruction of the American state? I'd like to make some plans to get the fuck out of here before this shit show sinks to the bottom of the sea.
Ask all the businessmen who praised and bankrolled this clown show, thinking he could be kept under control (like German businessmen thought they could rein in the little mustached man after he'd crushed the leftist)...
Readit News
How many times will the tariffs shift between Lutnick's comments here and 1 month from now?
Uncertainty does not encourage investment. So, we probably shouldn't believe them when they say that's why they're doing this.
[0] https://archive.is/mkJIi
Isn't that the point? If things are so unstable, you avoid the instability by manufacturing domestically.
If they want anyone to believe that the tariffs will remain in effect long enough to make a profit, they will need to pass a bill. Ideally, a bill that ratchets tariffs up over a long enough period of time to actually build the capacity in the US of the thing you want to tariff.
If manufacturers move overseas, they (so far) get to compete for US business on a level playing field, and (in some alternate countries) can make planning decisions that assume due process exists and the law will be upheld. In the worst case, they can sell everywhere but the US.
If they move to the US, the cost of their inputs varies 100% week over week, and 2/3rds of their highly skilled factory workers are subject to random imprisonment.
Also, the president will use market manipulation and insider trading schemes to raid their capital reserves, then brag about it on video.
The uncertainty only works to return manufacturing where America is cost-competitive without tariffs, and that's a tiny slice of manufacturing.
You don't. You just give up on that market.
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That’s not avoiding the instability, that’s suffering the full brunt of the instability. That’s completely backwards.
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They need their medecine. So much incertitude….
- someone, probably
Dead Comment
Like, how is anyone supposed to plan for anything with this kind of governance?
- Feb 1 – Tariffs Imposed on Canada, Mexico, and China
- Feb 3 – Temporary Pause on Tariffs
- Mar 4 – Tariffs Reinstated
- Apr 2 – "Liberation Day" Tariff Announcement
- Apr 9 – Tariff Reversal
- Apr 12 – Trump Adds Tariff Exemptions
Using a moving average algorithm, adding a phi factor of 0.89 for corruption, and a beta factor of 0.67 for chaos, we predict the next tariff policy change to occur around April 26 (+/- 2 days margin error)
- Apr 13 - Lutnick says exemptions going away "in the next month or two"