Tlum
14 hrs ago
Off-Topic / USA News and Poland - part 14 [510]
So Trump's goal with 25% tariffs is to bring auto production to the US. Ok, let's assume Germans build new Volkswagen factories in two or three years (hopefully Trump is not gone by then). Then they have to hire US workers that charge 200-300% more than the same workers in Mexico. The end result - VW car is made in the US, but it will cost 25% more to buy than today.
1. Would US customers buy a car that costs 25% more than today? How can they afford it; would Trump pay them the collected tariffs?
2. Would Germans risk building a factory knowing that buyers cannot afford their new prices?
At best, it is a net-zero game. The government gets the tariffs, but the American people will be forced to pay more for the same.
In the meantime, US auto manufacturers would raise prices on their US-made cars because they may still be cheaper than foreign cars made in the US. Again, US consumers are forced to pay more for the same and have less choices.
To summarize, it is 30-40 years too late to think about bringing manufacturing back home. It is not going to work because the final cost of production in the US will always be substantially more than overseas, which kills the purpose.
What's next - bringing back the cotton-growing industry to the US? A $40 US-made cotton T-shirt versus a $5 global price? Trump himself and his economic advisors are clueless about how the economy works today. It is not what used to be in the 1960's - it's a completely new / globalized animal.
So Trump's goal with 25% tariffs is to bring auto production to the US. Ok, let's assume Germans build new Volkswagen factories in two or three years (hopefully Trump is not gone by then). Then they have to hire US workers that charge 200-300% more than the same workers in Mexico. The end result - VW car is made in the US, but it will cost 25% more to buy than today.
1. Would US customers buy a car that costs 25% more than today? How can they afford it; would Trump pay them the collected tariffs?
2. Would Germans risk building a factory knowing that buyers cannot afford their new prices?
At best, it is a net-zero game. The government gets the tariffs, but the American people will be forced to pay more for the same.
In the meantime, US auto manufacturers would raise prices on their US-made cars because they may still be cheaper than foreign cars made in the US. Again, US consumers are forced to pay more for the same and have less choices.
To summarize, it is 30-40 years too late to think about bringing manufacturing back home. It is not going to work because the final cost of production in the US will always be substantially more than overseas, which kills the purpose.
What's next - bringing back the cotton-growing industry to the US? A $40 US-made cotton T-shirt versus a $5 global price? Trump himself and his economic advisors are clueless about how the economy works today. It is not what used to be in the 1960's - it's a completely new / globalized animal.