Global mfg will never relocate
 

Lets get this straight:

The grand plan trying to reverse 40 years of product trade optimization is very, very risky, and most likely not going to happen. First reason is that the cost is very high and the time frame is very long. To effectively move $3 per hour (est foreign labor rate) human labor to a $15 per hour (living wage cost of living domestic labor rate) requires either the US domestic economy to be put into a depression, or the US consumer will need huge wages increases to buy the domestic products without huge government UBI.

Examples, Tariffing a country like Vietnam, whose labor rate is $3 per hour and whose US tariff rate is 2%, with a 30% tariff, and then have them remove their tariff, reduces their product sales to the US, and still doesn't allow Vietnam the increased cost of living to afford US exports, as no one is increasing their labor rates. If the US tariff is removed, that still doesn't change the current status enough to increase the Vietnam std of living enough to afford US products.

The US's current wealth lost by labor manufacturing, has been replaced by high tech creation, innovation and products, primarily software. The real problem with software is that it can replace human labor, and that problem has a different solution than mfg relocation.

A bakery and a flour-sugar distributor will always run a trade imbalance. The distributor will never buy an equal amount of bakery goods. Same concept applies to Vietnam. . . or any other low wage mfg trading partner.

Second: US mfg is now 10-15% of the US labor. . . to build new capacity will take several years, and Nutlick believes that AI/robots can perform the labor in these new factories. So if this happens, the US consumer wins, but there are no jobs being brought back to the domestic shores. Therefore, where are the labor gains? And if this path is chosen, and the president isn't reelected, or doesn't corrupt the Congress and Judiciary branch to give him unlimited time in office, all this investment can be for not with a new president

Therefore, corporations will just sit and wait it out, and will start cutting labor to survive. It didn't work in the 1930s, and it still won't work in the 2020's.

good luck

Time will tell if you are right but there are parts that can be made here that were outsourced to China.

Not going to be what it was but can see some additional factories here.

They will start to come back, but it will take time.

Better buy your new iPhone now before the possiblef 104% tariff materializes.
As they say, "its not over until the fat lady sings!"

In the mean time, here is how the business imports currently works:

A small business orders $100,000 of widgets from China.
The tariffs are 50%, easy math, the company owes $100,000 to the supplier, and 50,000 to US customs.
The business has to pay prior to getting the widgets released, or pay by owed date.
If they don't pay, most likely end of business, bankrupt.

Does the business all of a sudden have enough working capital to pay the US tariff?
The predominant answer is no, so needs an additional line of credit to pay the tariff.
OK, so the business gets one. . pays the tariff, and gets the widgets.

The next question is if the small business has enough product pricing power to pass that 50% increase on to customers?
Lets say gross margin is 20%, so prior to the tariff:

Pre Tariff Math = $125,000 Sales - S100,00 Cost of Goods Sold = $20,000 Gross margin to pay fixed overhead costs
Post Tariff Math = $175,000 Sales - $150,000 Cost of Goods Sold = $20,000 Gross Margin to pay fixed overhead costs.

175,000 / 120,000 - 1 = 40%

Now the cost of product is 50% higher, so in order to get the same margin dollars to pay for US overhead expenses,
the sales price must rise 40%. .

The only way for sales to remain at 40% higher, is for all competitors to raise prices 40%,
and for the demand being inelastic, meaning that people will buy the widget regardless of price.

However, demand being inelastic is highly improbable, so
1) the consumer will continue to buy with 40% product inflation?
2) reconsider the purchase and delay / not buy any more?

That is how the Great Depression happened.

Good Luck to us!

HEY! Who you callin' a lady? 🤨😡

Well any jobs coming back IMO NOT bad thing. Better than none or loosing more. According to some AI will replace humans anyway. I just hope AI don’t get smart enough to eliminate humans beings, AI may not have conscious? O wait….

Apple is already on their continent plan, so no worries. Then again diehard 🍎 will survive.
Our plan gives us a new iPhone every other year. So no worries on whatever up charge can be

There are also things that MUST be made here. Pharmaceuticals are the most pressing, but there are others.

I am old enough to remember how nice American products were.. clothing, shoes, Harley's, glass, cotton products, appliances, (so relieved Speed Queen is still in America), and so forth. Most stuff now is dime store cheap and crappy.

I think we need to bear in mind that employment in the USA is critical and I'll never be convinced this country is far better off with China holding our tab and taking our employment. Never.

China doesn't innovate, they copy

Robots work 24x7x365, China can't compete with that

The old globalism is gone. The new automation, AI and robotics is here and growing.

It will be fueled by high quality USA made products just like before.

Tariffs are simply a tax on the US public.

Most of the stuff imported from China can never be made here as cheaply, even with a 100% tariff. Even items that can will be manufactured in factories that are full of robots, not workers, so any benefits to employment numbers will be minimal.

Globalization is far from perfect, but it is preferable to isolationism.

Isolationism you mean like China?

How cheap would we need things to be here if ALL people had jobs and were paid a decent wage and benefits? How about ditching the stock market and companies remain private, how much could be passed on in lower pricing since you don't have to feed those who have contributed nothing? How much less would be siphoned off taxpayers if there were fewer people on welfare and Medicaid?

Working citizens make for a much healthier society and would help squelch the hopeless in inner cities. Idleness is the devils workshop.

True, but tariffs do NOT bring jobs back; they just make things more expensive for you and me.

All of the money raised from tariffs goes straight into the Government coffers.

robots don't increase human employment, they cannabalize human work, so who is going to fund your Social Security then?

The only answer for robotic automation is to tax capital as high as salaries were in the depression, and then provide back universal basic income, (UBI) . . otherwise, agricultural and industrial tax and spend policies won't have a chance.