The only way that a 10% tariff could bring jobs back would be if the difference between paying someone in the US to do it is less than 10% more than paying someone outside the US to do it. Otherwise it will still be profitable to do this outside the US, and this is just a tax hike on Americans, who don't generally seem to understand that tariffs are taxes.
Would IMO need significantly more tariffs to effect significant shifts (and, even more importantly, some certainty that those tariffs are going to stick for the next decades, which is hard to provide).
Chinese mean manufacturing wage is ~$25k/year (purchasing parity adjusted, $15k unadjusted, for an average 49h/week of work). If you want domestic products to be competitive, you basically need the difference paid by consumers/taxpayers in tariffs or subsidies.
I don't think current tariff level is going to move lots of manufacturing jobs into the US (and I would personally argue that most Americans don't even want those jobs as they are currently). Instead, I'd expect a slow shift towards countries with favorable local wage/tariff combination (India, Vietnam, etc.).
One thing we can do is to lower the cost of housing and other big bills. If we have universal basic income in the form of housing, food and clothing for everyone, a lot of people might just won't need to move into privately held properties (i.e. renting from private landlords).
Even if you had free housing/food/etc-- how many somewhat qualified people in the US are willing to work for 6-10$/hour? And those additional social services would need a big budget, which the current government is never gonna grant.
Higher tariffs won't do it alone. Time is needed, as well. The current tariffs are likely seen as temporary.
If you start a factory to produce on shore, you would have to recoup capital costs off the margin available due to undercutting offshore factories while tariffs are higher.
When the administration or whims change, the tariffs go away and your factory loses that margin and isn't as profitable.
And probably government support too? I'd wager a lot of the initial manufacturing capacity in China was jump-started by some amount of government support (cheap loans, tax incentives, etc.).
If you make $600 component + $200 laptop ($800) from outside the US cost say $8k through a 1000% tariff, you could assemble in the US for $1,000, buy the components for $6000, and sell for $7k.
That's what the american people seem to want to happen.
A lot of people do not understand economics, and think that tariffs are somehow fees charged to foreign countries rather than taxes levied against domestic consumers and businesses. I've had this exact discussion more than once, and have heard people change their tune once they understood what tariffs actually are.
Trump made it quite clear that he was going to dole out tariffs like Oprah giving away cars. This wasn't hidden, they specifically voted for higher prices.
A surprising number of Trump voters do not understand how tariffs work and believe the exporting country pays. They are intentionally ignorant, so they'll tell you inflation is not the outcome they wanted, even though it's an obvious first order effect of the policies they support (see mass deportation)
Bringing it all back to North America isn't going to help much, since its almost impossible to locally source every single component that goes into a modern computing device. There there is the cost of labor.
Tariffs have various long term effects that are useful. One is shifting where that manufacturing is done and in the longer term it could bring it back, depending on the cost of doing it in a different, non China, country. But another long term effect is geopolitical - China is in a more difficult economic position than the US and tariffs will make it difficult for them to keep building their military and difficult to envision war. It will also weaken their authoritarian government, which has an interest in annexing Taiwan and also in undermining the US, Europe, and other free societies. The other benefits of tariffs matter - it isn’t just about the short term effects (of inflating costs or whatever).
> One is shifting where that manufacturing is done and in the longer term it could bring it back, depending on the cost of doing it in a different, non China, country.
Unfortunately, the taxes in question are also targeting imports from Canada and Mexico, two countries that are firmly in the US sphere of influence, and the beneficiaries of these new taxes will be countries in SEA which are increasingly in China's sphere of influence. This is a geopolitical own-goal from an administration with no coherent strategy.
> Unfortunately, the taxes in question are also targeting imports from Canada and Mexico, two countries that are firmly in the US sphere of influence
It is a negotiation tactic with those two countries. It is meant to get changes on issues like border security, but also fairness given existing tariffs are often unbalanced. But also, there are a lot of imports from those countries that are basically Chinese tariff evasion.
> It is a negotiation tactic with those two countries.
It is an incoherent and amateur negotiation tactic. If the US can't secure the southern border on its own, what makes anyone think that Mexico is going to be able to do a better job at that? Naturally, we are ignoring for the moment that the majority of illegal immigration does not happen at the border in the first place. As for fairness, maybe Trump should have addressed that when he timidly rubber-stamped NAFTA 2 during his first term. And you're not going to beat "Chinese tax evasion" in this way without charging these taxes on every country on Earth.
These import taxes are performative posturing. Please stop trying to paint them as part of some brilliantly motivated campaign.
I think that bullying mostly works when you don't have a potential consumer base that's bigger than the bully. I know it's not going to last long, but over the night shift from "America good, China bad" to "well, China at least doesn't belittle us every minute, so screw the states" has been very interesting to watch up here in Canada.
Grabbing territories by force or economic coercion seems like a despotic thing to do, doesn't it. Even threatening to do so would probably make people trust you less and be less likely to cooperate, I would think.
Indeed, undermining elections in Europe and other free societies is bad too. Doing so might ruin any business and other longstanding relations you have with those countries!
If current American government cared about weakening authoritarian governments, it would be supporting them less. If it cared about not undermining Europe, Canada, and other free societies, it would not be attacking them.
It does not seem like Canada wants to be 51 state nor it seems like Europe feels empowered after Trump started to support Putins expansion.
> How much of a price hike can actually being more assembly jobs back to North America? Or are they already brought back?
And at what cost even if they did/do.
Washing machine tariffs resulted in a pass through cost greater than 100%. The employment effect (1800-2000 jobs) but the cost to the public of those jobs was $800,000+ each:
Looking at it from the "national security" perspective, they aren't exactly wrong:
> Democratic countries’ economies are mainly set up as free market economies with redistribution, because this is what maximizes living standards in peacetime. In a free market economy, if a foreign country wants to sell you cheap cars, you let them do it, and you allocate your own productive resources to something more profitable instead. If China is willing to sell you brand-new electric vehicles for $10,000, why should you turn them down? Just make B2B SaaS and advertising platforms and chat apps, sell them for a high profit margin, and drive a Chinese car.
> Except then a war comes, and suddenly you find that B2B SaaS and advertising platforms and chat apps aren’t very useful for defending your freedoms. Oops! The right time to worry about manufacturing would have been years before the war, except you weren’t able to anticipate and prepare for the future. Manufacturing doesn’t just support war — in a very real way, it’s a war in and of itself.
There's the old saying about WW2: The Allies won [against the Nazis] from British intelligence, Russian blood, and American steel. The silliness of the current situation is that American can't go it alone anymore, but allies are now being alienated.
So bringing back manufacturing jobs wouldn't be a bad thing, but what do you have to do to accomplish it? If China is designated as a 'country of concern' ("enemy"), perhaps target them, but why 'go after' your nominal friends?
As others here have said, an increase of only 10% or 20% will do nothing, not even motivate other countries to blink. They'll just reciprocate with tariffs of their own which will add inflation across even more products. To motivate structural change, you'd need tariffs of 100% to 500% -- forcing a new business model.
The real objective of Trump's mindless minions (e.g. Musk) is to create bragging points that will motivate bloviate-receptive voters to believe something was done by the administration to 'fix' problems, thereby increasing support for the party without actually doing anything useful.
What drove labour intensive assembly jobs away from the USA was wages that are a fraction of what the USA has, and correspondingly lower standing of living.
If sustained long enough tariffs will fix that. Costs will rise in the USA, exports will drop because the price of everything made in the USA will go up, the dollar will then drop, living standards will drop, and eventually comparative wages will start to approach those in Asia. Once that happens, assembly jobs will naturally migrate back to the USA.
The USA has avoided that outcome for years by manufacturing very high margin products. Think Intel, SpaceX, vaccines, and the software giants like Microsoft, Google and Meta. That came at the cost of bifurcation of the economy, with tech sector jobs paying outlandish wages compared to what someone manufacturing a car could get. It seems that pissed so many people off they elected Trump.
Trump probably thinks is the fix, but changing is coming no matter who is in power. As China, India in particular, now even those "high brain power" jobs are under price stress. Chip manufacturing has almost gone, the software companies are paying 1/4 or 1/10 the price of engineering talent by hiring overseas, India has become the pharmaceutical manufacturing powerhouse of the world.
So you don't need lower tariffs to fix it. The fix is coming regardless of who you vote for. All tariffs will do is accelerate the process. But if there is one process you didn't want accelerated, it's this one.
It's not all doom and gloom. Look to Canada, Australia and Europe to see what the final outcome will be like. It's not so bad, is it? You probably don't want to end up like the Britain, as that would mean a few rich with most of the USA ending up at the living standard of Mississippi.
