Comment by yibg
15 days ago
If corp two could have factories in the US and still sell them at competitive prices they would've done that already no? The fact that they haven't indicates it didn't make economic sense. So then doing so would mean their costs would go up, which would either mean they have to eat the extra cost and reduce profit or pass the extra cost to consumers.
They can only pass the extra costs if there is no competition and they can only eat the costs if their margin is big enough to absorb the cost and still remain profitable. If their us market share is important they will shift their production around to the us or somewhere that has a favorable trade agreement with the us.
The stated goal of tariffs is to force companies to shift production back to the US. But US production costs more, hence the outsourcing in the first place, so shifting production back to the US increases cost.
If costs goes up then either prices go up too or margins go down or a mix of both.