That’s just complete bullshit. A company doesn’t need to spend millions of dollars in legal fees to figure out which tariffs apply today to understand that locally made products don’t have tariffs. They need to know for certain that it’ll be more expensive to import in the future than build a domestic factory. It takes years to build a factory, today’s costs don’t matter, the costs in 5 years do.
If the goal of the tariffs was to increase domestic production, they should have been phased in over time to give time for the factories to be built. The last month of chaotic tariffs meant that no company could figure out what production to move domestic. At some point in the chain, some things must be imported because they don’t exist in the United States. If a product contains rare earth elements, some portion of it will be imported from China since they process 95% of them in the world. So the question isn’t do we import it not, it’s what piece do we import. If companies knew exactly what the tariff rates are going to be, it still takes years to build a factory. That process won’t start until there’s a cost benefit analysis between paying tariffs and building a factory, and that analysis can’t start without knowing what the tariff rates are. With the tariffs being introduced, paused, resumed, cancelled within a month meant that no cost benefit analysis could be done because the costs might be wildly different tomorrow. Businesses won’t invest if they’re not certain the investment will pay off eventually, and with how chaotic tariff rates have been, no one can be certain, so no one is investing.
Tariffs can be used to spur domestic production, but the way they were used over the last couple of months is not going to. Just like any tool, they need to be used the correct way to achieve the desired results.
That’s just complete bullshit. A company doesn’t need to spend millions of dollars in legal fees to figure out which tariffs apply today to understand that locally made products don’t have tariffs. They need to know for certain that it’ll be more expensive to import in the future than build a domestic factory. It takes years to build a factory, today’s costs don’t matter, the costs in 5 years do.
If the goal of the tariffs was to increase domestic production, they should have been phased in over time to give time for the factories to be built. The last month of chaotic tariffs meant that no company could figure out what production to move domestic. At some point in the chain, some things must be imported because they don’t exist in the United States. If a product contains rare earth elements, some portion of it will be imported from China since they process 95% of them in the world. So the question isn’t do we import it not, it’s what piece do we import. If companies knew exactly what the tariff rates are going to be, it still takes years to build a factory. That process won’t start until there’s a cost benefit analysis between paying tariffs and building a factory, and that analysis can’t start without knowing what the tariff rates are. With the tariffs being introduced, paused, resumed, cancelled within a month meant that no cost benefit analysis could be done because the costs might be wildly different tomorrow. Businesses won’t invest if they’re not certain the investment will pay off eventually, and with how chaotic tariff rates have been, no one can be certain, so no one is investing.
Tariffs can be used to spur domestic production, but the way they were used over the last couple of months is not going to. Just like any tool, they need to be used the correct way to achieve the desired results.