Comment by jonathanstrange
12 days ago
It's easy to bring manufacturing back, just give it a decade or two, but impossible to make it internationally competitive without large-scale market regulation such as tariffs or handing out government subsidies.
This view is too trivial. You could also stimulate manufacturing by promising tariffs increasing over the next X years, while not taxing the imported building materials and machines for longer. Or you could use tariffs to both break trade and make the environment too expensive and uncertain to invest in large construction - and delay the process by a few extra years.
I don't see how this is a reply to my point. Building up manufacturing takes a decade or longer (putting the problem aside that there aren't going to be enough workers). Tariffs are heavy market regulation. Even if manufacturing was brought back successfully, the production costs would be too high without such heavy market regulation.
You seem to assume that once manufacturing has been brought back it would somehow be internationally competitive. I don't see how that's possible.
Maybe I didn't get your point.
My problem with large-scale market regulation is that it also increases the price of inputs for companies who would otherwise be interested in building a factory in the US. Do you have a solution for that?
Inputs are cheaper (and thus have lower tariffs in an absolute sense) than outputs. I think the author underestimates the ability of the market to adapt to incentives.
They're still correct though that there are plenty of good reasons why we don't do manufacturing in the US right now, and tariffs do absolutely nothing to change that reality, they just artificially make the alternative worse at significant expense to consumers.
I feel misunderstood. I'm definitely not advocating for tariffs. The point is that even if this strategy worked for bringing manufacturing back (it won't in general and widespread because of labor shortage), it would result in products that are not going to be internationally competitive.
Why would you incentivize foreign companies to do that, when you want American companies to build factories in US?