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You can't tax your way to prosperity. If you want to make domestic manufacturing more competitive, you need to stop burdening it, not protect it -- protecting it just makes the manufacturing companies and unions rich at the expense of the customers. And if you tariff raw materials too, you don't even get that; you just have what amounts to a massive tax increase.
These tariffs are the biggest risk of such a collapse. The rest of it... well, lots of it has happened. We had a serious pandemic (and a disastrous government response) and the system survived. We've had major factories shut down due to natural disasters (e.g. floods in Thailand) and the system survived. Breaking down global trade makes the system less resilient, not more.
US companies are forced to comply with EPA, OSHA, ACA, ADA, Civil rights act, unions and minimum wage.
Tariffs could be used to make the playing field equal to account for those costs. And probably we don't want more pollution and work accidents. If US company has to buy filters for their chimney - make sure that all the factories that want to import goods into US also have filters. And if they don't tax them the cost of the filter. And that they pay their labor at least as what US do.
And if they do and make a better product - well it is US problem then.
I’m skeptical of this because heavily unionized euro countries with strict environmental protection and safety laws have been able to be manufacturing powerhouses.
European manufacturing is suffering. Also Europe is largely a lot cheaper than the US. Engineers in Milan made on average 35 000 Euro last year. French electricians make around 25000 Euros a year.
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The top producers in Europe look to be Germany, Italy, France, the UK, and Ireland. Per capita their output compared to the US is about +38%, -18%, -41%, -43%, ... and +379%??!?!?!
Okay, I was looking up numbers to make a joke about how Germany is carrying the EU, but forget what I was intending to say. What the heck is going on in Ireland? They barely made the European top 5 since they've got such a low population, but they're still outproducing Spain with like a tenth of the population. They're even outdoing Switzerland, which I would have thought would be the world leader in the low-population high-value-manufacture combo. Is this just on paper somehow, some remaining accounting artifact of how they used to be incredibly popular for multinational corporate tax avoidance? I suppose their stats office does say their output is 40% "basic pharmaceuticals", plus around 20% "food products" and 10% "chemicals", but there's still ~20% composed of metal/rubber/plastic/wood/silicon stuff that we might call "stereotypical" manufacturing, and it's not like US output is all steel burnished with blood and sweat either.
It's tax dodging. You want to arrange your EU supply chain and associated transfer pricing so that most of the value added shows up in Ireland and is taxed at Irish rates. So imports of intermediate goods into Ireland are underdeclared and exports of finished goods are overdeclared.
Ireland has the highest ratio of GDP to Actual Individual Consumption of any medium or large country in the world - the Irish people are not seeing this money.
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All your suggestions for the utility of tariffs directly attack the basis for international trade -- that some countries have some sort of advantage in producing some goods over others, which makes both sides of the trade better off if it happens compared to it not happening. Tariffing the advantage so instead of the parties getting it, the government gets it, probably means the trade simply doesn't happen.
Cheap labor is not an advantage. Better technology is.
There is nothing that prevents you from making better mixer than Hobart while playing by even stricter rules than USA as Electrolux professional series shows.
Cheap labor is certainly an advantage. If I can make something with 8 hours of $5 labor that takes you 8 hours of $50 labor, I've got an advantage in making things. Yes, if you can instead make 100 of them with 8 hours of $50 labor and better manufacturing technology, the advantage shifts again, but ceteris paribus, cheaper labor gives an advantage.
Neither one does a bit of good if I just want to make a frozen margarita now and then.
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That's the example I always use with libs.
An evil polluting capitalist owns a concrete factory on the US side of the Mexican border. He needs to sell concrete to pay for his real goal of killing as many cute dolphins as possible with pollution. Captain Planet forces Congress to pass a law banning pollution forever, and mandating that only nice green dolphin-safe concrete is made in the US.
But the evil capitalist just moves his factory to the Mexican side of the border, and keeps selling cheap concrete to the US to pay for his dolphin murdering pollution!
If only there was some sort of "trade policy" to restrict the sale of evil concrete from Mexico to stop the capitalist's evil plot!
It doesn't help obviously: they agree wholeheartedly and then just forget the next day. But it's funny to watch it happen.
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Agreed. And I’m all for some level of mercantilism, but to do that you have to actually control a manufacturing base — and the US doesn’t have much of one, especially in key sectors. I agree with criticisms of NAFTA and Chinese manufacturing, but that damage was already done, and it’s insane to try and fix it by applying taxes. You have to have the manufacturing base before you can protect it.
Trump’s gambit here is equivalent to setting up an automatic turret to protect your house, but the camera pans out and what you thought was a house is actually just the still-standing facade of a house that was shelled into ruins.
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