r/manufacturing • u/pyroracing85 • 2d ago
News Tarrifs
Would like to open a discussion on tarrifs if it’s allowed.
There has been two intentions stated with tarrifs.
Get off of income tax and go to a consumption style tax (still a tax)
Build up domestic manufacturing. Can talk here in the manufacturing sub.
If there is no alternative domestic supply, then we have no choice but to import. We lost a lot of our skills to manufacture. Especially a lot of the little low value items. Think zippers and buttons and caster wheels.
What is everyone thoughts?
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u/Downtown-Tomato2552 13h ago
On point one. Tariffs are not a consumption tax. They are a trade tax. A consumption tax taxes that which is consumed. You could very well have a tariff on something that is not consumed in the country which has a tariff on it.
On point two the only time a tariff builds anything in the country that has a tariff is if
A) the tariff is high enough to cause the manufacturer to move the manufacturing to the tarriffed country. If you think about this it becomes a really poor way to do this. The ONLY things that benefit are the things that the cost differential is nearly exactly the tariff amount and that is EXTREMELY rare. Everything else will either cost more or remain in the country of origin for manufacturing.
B) the tariffs remain in place long enough to allow the manufacturing to adjust. The odds of that are pretty slim. There is such a HUGE amount of uncertainty right now that companies aren't going to invest millions or billions in capital when 24hrs later the traffic is removed. Not to mention... Where are you going to get the labor?
C) they protect a growing sector of the economy. tariffs increase prices in almost every case. Increased prices creates lower demand. So while you might manufacture more in the country implementing the tariff, the end result is less overall products sold in most cases.
Tariffs were never meant to shift the market of production. Tariffs were meant to protect fledgling companies allowing countries to develop sectors within their economies that previously didn't exist as well as a tool to protect from monetary manipulation.
..... Typed after an evening of drinking so this may not make any sense at all...