Comment by joshstrange
5 hours ago
No company can plan based on the tariffs. There is zero guarantee that then next government won't revoked them or that the current one won't flip-flop. Local manufacturing doesn't swing on a 2-4 (or 6 or 8) year timescale. There needs to be consistency.
The company that moves (or starts) manufacturing here today might get run out of business when/if tariffs are repealed and their competitor already has production lines in other countries ready to go. Heck, the factory might not even open before the winds shift.
No one can accurately plan with the uncertainty.
All the big names like Apple are just paying lip service to this. They are throwing, quite literally, pocket change or funds from the government (like CHIPS, which was less ham-fisted than the tariffs IMHO but still not something that's going to change the landscape overnight) at these endeavours to appease the current admin in favor of reduced/removed tariffs on _their_ products and good PR.
If congress wanted to actually do their jobs instead of both them and the judiciary abdicating their responsibility to the executive branch then _maybe_ we'd have a chance in hell. Until then you can look forward to more flip-flopping as the government changes and the smaller companies continuing to be ground under the heel of large corporations who can weather (or bribe) their way out of the tariffs.
Any company should definitely be planning for the inevitable decline or elimination of China as a production and/or trading partner.
If not caused by politics, then by demographic crash.
I'm curious why you think China will decline or be eliminated, I always thought that China was a reliable as a production/trading partner and that they planned for decades ahead with programs like Belt and Road Initiative unlike western politics that only looks as far as the next election. Very open to correction on this though, thinking about it not sure what formed my opinion on this.
China is not a good trading partner at all. They put up barriers for companies entering their market, mandatory China employee in your company, IP theft, they subsidize and flood the market killing competition, most everything they make is lowest quality possible, lots of fraud even within China.
It’s foolish to be completely dependent on anyone else, no matter how stable the CURRENT situation is. We’ve seen this with the gulf countries and Strait of Hormuz, China with rare earth metals, Ukraine with grains, etc. Once China goes to take Taiwan all bets are off…
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Their aging population will pose an extremely serious problem in the coming decades.
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The Belt and Road initiative is a nice try, but it's not a roaring success. The flaws of democracies are easy to see because of the openness, and whatever goes wrong usually do so over a long time. Dictatorships go wrong in more dramatic ways.
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That's already happening for the big players, or at least Apple anyway. A big chunk of iPhones are now made in India, Airpods, iPads, macbook assembly is now largely happening in Vietnam and Thailand.
Granted, I don't think continuing to shift to places with slave wages is a good thing overall, but we need complete factory automation to solve that problem (the problem of wanting cheap goods AND ethical labor). But the major players have seen the writing on the wall ever since covid lockdowns and have been slowly moving out of China since.
Labour is one part of the equation. China has really well-designed supply chains and economic zones, where getting access to related components just means walking/driving few minutes down the road. They have made huge strides in robotics as well, so the argument for demographic collapse is weak IMHO.
> inevitable decline or elimination of China as a production and/or trading partner
I don't think this will happen anytime soon, that companies will need short-term planning.
can you explain more on this "demographic crash" because I am not in the loop. Are you talking about population decline which I'm sure will have some effect but elimination?
Even if they mandated non-stop births from all capable females by law, it still wouldn't catch up to declines.
https://www.piie.com/research/piie-charts/2024/chinas-popula...
Massive immigration (on a scale never seen in human history) would be required. I don't see that happening with one of the most xenophobic cultures on Earth.
This isn't a problem confined to China, they just have the worst numbers. The entire "first world" is facing declines of varying degrees.
This coupled with climate change is why immigration policy is probably the single most important thing for most countries right now.
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Over what timescale? Is the presumption that China, the country of one child policy, will do nothing about the problem?
China has ALREADY transitioned from an "aging society" (7% of the population over 65) to an "aged society" (14% over 65).
There are roughly five working-age adults to support every retiree today. This is going to crater. United Nations projections show that by 2050, that ratio will more than double, climbing past 50%. At that point, China will have fewer than two working-age adults for every retiree. The west grew rich before growing old. China, Vietnam, Brazil are aging as middle income countries.
The one child policy was like doing speed, it temporarily freed up massive amounts of capital and labor. But China's work force peaked over a decade ago. The bill is now due, and all the those "single children" know that they are expected to support 2 parents and 4 grandparents.
Aside from the dubious wisdom of similar interventions, cruelly forcing abortions was a lot easier policy to enforce then it would be to try to shove pro-natalist policies on people increasingly overburdened with caregiving for elders because of earlier interventions.
https://www.piie.com/research/piie-charts/2024/chinas-popula...
they already have in 2016. https://www.cnn.com/2026/01/01/china/china-one-child-anniver...
> Is the presumption that China, the country of one child policy, will do nothing about the problem?
I don't think they're foolish enough to invite the entire third world into the country to bolster low birth rates like the west does. So that leaves doing it the old fashioned way, which is a slow ship to turn around.
That isn't 100% true, maybe 99% though. Anyone paying attention to politics for the last 40 years would have seen that there has always been an undercurrent of people unhappy with imports. This is the most power those people have had, but they have always been there and got significant political attention. There have thus been signs to be aware of, and those signs are things a smart company will take into consideration - they may or may not act, but they should know and consider them.
But that's the current dollar-based system. Like the gold-based system before it, today countries as a whole have to have long-term balanced trade, as measured in dollars. That's what a great many countries demanded to keep the system fair. If need be, some temporary imbalances can be forgiven by the world bank, but not much.
Outlawing or taxing imports (=tarriffs) of course helps with this.
However, if you look at economic history this always slowly lead to problems that only got resolved by fresh loans (that's what the move to dollar effectively did), hyperinflation or wars.
Apple invested 3x the Marshall Plan into China. Imagine if they'd spent that on the US instead.
Did you get that quote from Patrick McGee's book "Apple in China"?
Wiki says: https://en.wikipedia.org/wiki/Apple_in_China
I did a quick fact check. The Marshall Plan was originally 13.3B USD, or about 150B USD today.
You fail to understand that Apple investing in China is in their best interest - and then returned back to millions of shareholders. If investing in the USA would be a better ROI, there would be no need for any measures like this to force companies somewhere.
People in favour of tariffs make it seem like the best and wealthiest economy in the world is in a bad shape, and it is completely opposite, while failing to address the inequality issue with the wealth distribution.
You're conflating better for apple (and shareholders) with better for the country overall.
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Then all this 3x amount would have had no ROI, China would have outdid the US comparatively.
Why would they spend that on the US??? This is an investment and they want maximum gain which is definitely NOT in the US.
I distinctly remember Apple having produced a video showing off an automated assembly line for PCB production for the original Mac. It's not like they didn't try it.
It's a sad commentary on the modern world that state support (ie. tax avoidance, and ... shall we say "help" in labor relations) matters more than even the best people you can possibly hire working on your manufacturing.
Because that's the difference between China and the US. It's not that the US does nothing, just that China does way more. Some companies are apparently paying negative tax (meaning every products sold the state adds 15% to the price, such deals apparently exist)
But, yeah, less tax means less everything for everyone. Especially less social support and less healthcare. But I guess this is what some of the more constructive people mean when they say taxes are too high. As well as what socialists meant 30 years ago when they said that very high import tariffs are a necessity. They compensate for these huge differences. But at the cost of making any foreign product (ie. "your iPhone") a lot more expensive than it already is.
Probably not much. The US doesn’t have the capacity for high volume manufacturing. We cost too much.
>Apple invested 3x the Marshall Plan into China.
Apple invested 3x that because they got 30x in return from the savings versus US manufacturing.
>Imagine if they'd spent that on the US instead.
Then iPhones would either have to be 10x more exsolve to keep the same profit margins or Apple would be broke trying to compete with Chinese made goods using US manufacturing.
Easy to imagine - phones would be 1.5x more expensive than they are now, from get go. The cheap electronics (and goods in large part) have been hallmark of "quality of life in USA" for decades; I still get iPhone and Lenovo laptops 40% cheaper than family members living in Europe.
However, it seems that Americans are so tired of growing prices that they are getting used to paying them. Just yesterday there was an article that summarized oil price drop 40% from when the war cooled down, but prize at the pump went down only 12%. The big oil explains this that people will buy gas anyways, so why lowering the price? I think we will see the same happening with electronics - Apple breaking news on $500B factory spending in USA is mostly because they believe Apple owners will keep buying Apple regardless of the price. They may be right... will see.
Isn't this mostly explained by much higher sales tax (VAT) in most European countries? That doesn't seem to have anything to do with off-shoring the manuf'ing of these elctronic devices. That higher tax revenue can be used to fund excellent national healthcare (insurance) programmes, something that the US badly lacks.
>Just yesterday there was an article that summarized oil price drop 40% from when the war cooled down, but prize at the pump went down only 12%. The big oil explains this that people will buy gas anyways, so why lowering the price?
Because the gas station across the street will sell it for less. Because a different refinery will sell it to the gas station for less. Gas prices are the pump and oil prices in the commodities market don’t move in perfect unison. But they do move eventually.
Wild how some ragebait “article” can erase people’s memory of gas prices going down. Not to mention that gas at the pump has taxes/labor applied to it that can also change.
https://www.macrotrends.net/2501/crude-oil-vs-gasoline-price...
https://www.macrotrends.net/3591/us-gasoline-prices
> No company can plan based on the tariffs. There is zero guarantee that then next government won't revoked them or that the current one won't flip-flop. Local manufacturing doesn't swing on a 2-4 (or 6 or 8) year timescale. There needs to be consistency.
Indeed, but the role of a government is to steer/push private initiative in a certain direction.
Tariffs and stuff are steering private companies towards building stuff in-house (as in: "in the us").
Future initiative inconsistent with this directions will essentially be a sabotage of the US economy.
Tariff introduced by congress? Sure. Tariffs introduced by fiat? No.
The fact that a president can create them out of thin air means they can be removed just as easily. I'm not anti-tariff or anti-re-homing-production (where it makes sense) but the _way_ it was done is my problem. Additionally there was no ramp, it was 0->100 immediately. A bill passed by congress to slowly ratchet up tariffs or similar over a period of time would have a much larger impact IMHO. It would give companies the ability to plan instead of just react. The tariffs were enacted in a timespan that made it impossible to move production local before they went into effect. Additionally, tariffs being applied unequally is terrible, it just means whoever has the biggest bribes (solid gold plaque holders anyone?) or can pretend they are moving manufacturing back to the US gets an advantage.
The amount of power held in the executive branch is unacceptable. Just look at how they raided/repurposed the CHIPS act money to force Intel (which I have no real love for) to sell a stake to the government.
Authoritarian governments are bad for business.
> means they can be removed just as easily.
Some of them were removed. And then put back. Then increased, then decreased, or otherwise changed depending on what Trump was thinking at 3am while making social media posts
Well thought out strategic tariffs are ok. But this is knee jerk tariffs. Even in the best case scenario introduces a lot of uncertainty which freezes investing and decision making in general.
The American electorate seems quite happy to elect people who will sabotage the US economy, so that isn't any reassurance that it won't happen. Tariffs are currently going up and down based on a single man's whims.
Why would when when they can just bribe the current government to be exempt?
If tariffs were planned, steady increase on a long term we might see a good effect. Like tariffs were used before this trump admin.