With all the talk of tariffs, I’ve seen more or less this argument:
“Once the tariffs go in place, companies will start manufacturing in the USA and that’s good thing.”
However, when I think about being able to manufacture something like a laptop computer, or a car, these are both operations that require a lot of things:
- the input components to build the thing
- skilled labor that can manufacture the thing
- supply-chains that are in place from initial build all the way to retail
The premise seems to be: “OK, tariffs go in, someone INSTANTLY sets up a company that manufactures X, then USA wins”.
However, for someone to want to take the “bet” on setting up a really expensive factory, they’d have to believe that the tariff will be in place a long time, because if it is NOT… then they have made a terrible investment and the new factory will be instantly non-viable.
Am I crazy? Am I missing something? I understand that it would be great if we had domestic manufacturing but it seems like the people that are behind tariffs think you just snap your fingers and there is a factory cranking out laptops, when in my understanding this is a process that requires a huge amount of money and time.
My thinking is that the amount of people / companies in the USA that have enough capital to start up a manufacturing company like this want to make sure it’s a relatively safe bet before pulling the trigger, and if past tariff behavior from Mr. Trump is any indication, we can’t count on these tariffs being present for a long time.
Fun fact: the top 10% now account for approximately half of all consumer spending which equates to about 30-35% of US GDP. First time since we started tracking it and first time in a long long while that’s happened. Wealth inequality has indeed matched the guilded age. Maybe even surpassed it but it doesn’t quite seem like it yet. Just matched.
Also the stock crash isn’t about stocks. It’s about capital and labor investment. When things go bad, the small to medium sized businesses struggle the most which then Blackrock and the like swoop in to buy them all at steep steep discounts. That is ultimately a smarter long term play than buying “slightly” discounted stocks. IE the stock play is as you said. It’s mostly rich folks that own it but the rich don’t own all businesses yet. Recessions are a chance to do just that which from looking around we already seem to be in with the amount of layoffs and small to medium sized business struggling mightily. The internet omni-presence and ability to earn money sitting at home is too strong for a standard recessionary environment and indicators to show up to the same degree as before. Or at least that’s what I think.