Comment on Brooklyn electronics company Adafruit hit with surprise $36K tariff bill: "pay in one week"
sj_zero 2 days agoOne thing that you are absolutely mistaken about is that I don't understand how manufacturing works. I'm a pretty old guy, and I've spent my entire career in manufacturing and heavy industry. That's exactly why I think it's important to be trying to rebuild local supply chains.
During covid, and for quite a few years after, parts that claimed to be made in America couldn't be purchased without massive lead times because it turns out that they were heavily reliant on Chinese supply chains. It doesn't matter that you have a factory that can build a vfd for example if you can't get resistors. That matters a lot.
Now you can say that the factories don't exist, and that is absolutely true. The problem is that you need to stop thinking in terms of first order effects and start thinking about knock-on effects. This is been our problem for the past 50 years. We don't have the factories because they shut down because industrial policy was to globalize. And we thought we could get away with that, because for example we could sell our expertise to other countries. The problem is that all the people who had expertise are dying of old age. Their kids are growing up in a world where they never had to go to a factory, they don't know how to build a factory, they don't know how to build anything. This is a big problem, and it's always been a big problem. In the 1700s, Alexander Hamilton presented a report that suggested that tariffs would be useful in helping to produce big enough trade barriers to build the industry on this new continent of america, and there was a lot of trouble caused by such tariffs. At the time the global manufacturing hub was not China but england. England was able to produce materials cheaper and better then the Americans could. The tariffs were effectively keeping out higher quality, lower cost goods. Regardless, this was how the United States ended up with its industrial base that was hollowed out centuries later.
I'm not pretending that tariffs aren't going to cause pain. They caused tremendous pain back in the 1700s and 1800s, and in fact we're likely part of the kindling that helped spark the civil War. Extremely high tariffs with England resulted in England putting retaliatory tariffs on American cotton and other agricultural exports, and so the South tended to suffer while the north benefited. Eventually things came to a head and they ended up needing to come to a compromise of higher tariffs then you might expect, but much lower than what the north was originally implementing. All that being said however, this is long-term thinking. It's what long-term thinking looks like. It's not looking around and saying that factories don't exist today, it's asking how we can make sure that there are factories tomorrow. It isn't talking about how we are relatively peaceful with China today, it's about asking what could happen if we ended up in a war with China tomorrow. This sort of long-term thinking is actually what the West in general needs.
And I think it's important to note, I'm not saying this from the perspective of an American who's going to benefit from these tariffs. I'm saying it from the perspective of a citizen of a country who has been hit hard by US tariffs. It would be better for me if everything was tariffed at zero percent. On the other hand, just because something hurts me doesn't mean I don't understand why it's important.
markovs_gun@lemmy.world 2 days ago
I think you’re getting hung up on the idea that since the stated goal of the tariffs is to bring back American manufacturing, people who are against them must be against bringing back American manufacturing. That is not the case. Most people are pretty on board with that idea on its own. The issue is that tariffs don’t really do that and they sure as hell don’t do that given how they’ve been implemented. Here’s a case study - my company currently makes a product in the US and buys one of the feed materials from China. Due to tariffs, we have started buying the feed materials from Indonesia instead, and due to the retaliatory tariffs from China, we have started making the product in India instead of the US. So as a direct result of the tariffs, we have moved manufacturing outside of the US and haven’t bought any additional US products. The tariffs have reduced American manufacturing in this case in a very real way with no additional benefit whatsoever.
The Trump tariffs are especially stupid as economic policy. Being against them has nothing to do with being against bringing back manufacturing or even with being against trade protectionism. Imagine if you went to a dentist for a toothache and he brings out a hammer and says okay well we’re going to take out all your teeth. That’s a bad dentist right? A good dentist will suggest action targeted at the bad tooth to try to fix what’s wrong with it instead of just destroying everything because there’s a problem. Trump is doing the economic equivalent of the bad dentist.
sj_zero 2 days ago
I tend to think that even if Trump came up with the best policy on planet earth, nobody on lemmy would admit it, they'd just keep calling him stupid. It seems like things are pretty tribal and so even if something does have some thought behind it, it's required to just keep on the attack so everything is evil and stupid. You can say "no, we'd be honest", but just look at the economics community here -- virtually every post is about how stupid Trump is.
There weren't just tariffs against China, they were just particularly bad to that country because they are a major US strategic rival. Something being created in China being moved to India may not necessarily be the optimal outcome (or even something being "made in the USA" being made in India being the optimal outcome), but as I said in my long post about tariffs, there are multiple things going on with different time constants for each. Immediate consequences are going to look bad because none of the potentially good things can happen on short timespans -- as everyone else has pointed out (and as I pointed out in my post on tariffs), building a factory or moving supply to the US takes a really long time, whereas the immediate negative consequences of tariffs occur almost immediately. That doesn't mean eating short-term pain for long-term benefits is stupid, it just means the pain comes first.
Will Trump's tariffs work -- that's what would make them smart or stupid -- so what's the answer? I don't really know. Widespread tariffs like the tariffs of abomination did work to increase the US manufacturing output in the 1800s despite introducing massive amounts of pain including being a (though certainly not the primary) likely causal element of the civil war. However, we aren't living in the same world as America was in the 1800s. England was more or less self-sufficient back in the 1700s and 1800s, the world is more globalized today, so it might not be so simple to do the same thing again.
Is dramatic action required immediately? Yes. Full-stop.
The US national debt is at 36.8 Trillion dollars at the moment according to US national debt clock. The interest on the national debt is already larger than the US defense budget. The idea that globalization can exist as it does in 20 years without the Americans being able to defend maritime shipping lanes with their absurd army is nearly 0. Moreover, as I mentioned, if war with China occurs and it really looks like there's a chance they try in the next little while, then all the Chinese supply chains immediately shut down.
So the only option is to start taking major actions. Just look at the news feed, it's all filled with how we should have just kept with the status quo, but that's not wise at all. So are the tariffs a dumb idea? In the short term, definitely. Do nothing and you won't hurt anything. But if you've been living in the rust belt you know full well what we've already lost -- the post-war policies have decimated the entire region. And I'm not saying the rust belt can return, but if nobody does anything painful to try to get something somewhere to return, the post-globalization era will be much more painful than it has to be.
One of the biggest moments of globalization failing in history was the Bronze Age Collapse, and it destroyed every ancient civilization in the fertile crescent except Egypt. In the near future of that event entirely new civilizations lived in those regions and some, such as Crete, would be lost to history entirely until a mere 100 years ago due to some exceptional archeological work. That collapse in part caused global supply chains feeding the bronze age to end, and that was a less integrated economy than today.
It isn't just peacetime vs. wartime. It's about good times vs. hard times. The current economic consensus was built in the post-war period where the US was the only country whose manufacturing capacity hadn't been blown to smithereens over two world wars. It made sense at that time because it was a move without a downside -- utilize multilateral free trade and everyone had to buy from you anyway, and if you needed anything from your clients you could get them at low prices without any tariffs. The problem is it isn't 75 years ago anymore -- Europe has a manufacturing base of some design again (with Germany at its heart, ironically), Asia is a manufacturing superpower and not just China, and the US is still following a foreign economic policy that was designed when nobody else was making anything. The US was also funding protecting the planet's shipping lanes to make globalization practical and that worked because it was doing everything for the planet earth, but now it has as high a debt/gdp ratio as it did after the second world war, but it isn't the end of the second world war any longer.
My country is generally fairly left, and we have some massive tariffs against the United States, including over 100% on dairy products, and 45% tariffs on aluminium and steel. All of those tariffs predate Trump's political career. It seems like high protectionist tariffs only are complained against in one direction.
Here's my previous analysis of the tariffs: https://lemmy.world/post/28221500