After WWII, the other manufacturing centers of the world were rebuilding from the war, leaving the U.S. as a manufacturing superpower. Post-war Americans had pent up demand and bought lots of goods. This allowed U.S. manufacturing to flourish. Later, those countries rebuilt and third world countries developed manufacturing. Allowing low-value manufacturing to be done in places like China allowed the U.S. to invest the money made into high-value things. Now, manufacturing is highly automated, so if low-value manufacturing returned, it would make everything more expensive and not bring many jobs because manufacturing doesn’t require many laborers.
“economic development officials and lawmakers from several states say that the uncertainty fueled by Trump’s on-again, off-again trade wars is keeping many foreign businesses from pouring money into the U.S. market right now. And it signals the uneven impact the tariffs are having on reshoring American manufacturing — Trump’s stated goal for raising rates to the highest levels in a century.”
China’s electric car industry was built on a battery developed in the U.S., but the U.S. didn’t consistently support electric vehicles, and China did, so the Chinese built a massive industry off of it instead of the Americans.
“U.S. manufacturing output, even adjusted for inflation, is near all-time highs. While about 5 percent below its December 2007 peak, it’s up 177 percent compared with 1975, the year America last ran an annual trade surplus. Industrial production—manufacturing, mining, and utilities combined—is higher than ever. That’s hardly a collapse.
A principal source of confusion is the difference between jobs and output. Yes, the number of workers in manufacturing has declined dramatically—from around 19 million in 1980 to about 13 million today. But that didn’t happen because America stopped making things. It happened because we got incredibly good at making things.
Productivity in manufacturing has surged thanks to automation, technology, and global supply chains. Just as we now produce more food than ever with just over 1 percent of Americans working in agriculture (down from around 75 percent in 1800), we produce more manufactured goods with far fewer workers. That’s not economic decline; it’s progress.
Also fueling the perception of decline are regional factors. Shuttered factories in Detroit or Youngstown, Ohio, bring concentrated pain and struggle for affected workers. No one denies this. But manufacturing didn’t disappear; it relocated and upgraded.”
“On the campaign trail, Trump pledged to put a tariff of between 10 percent and 20 percent on all imports to the United States, along with a 60 percent tariff on Chinese goods and a 25 percent import surcharge on Canadian and Mexican wares — at least, until our neighbors choke off the flow of all migrants and drugs across America’s northern and southern borders.
This protectionist agenda is far more radical than anything Trump attempted during his first term. It threatens to hamper American tech companies by increasing the cost of semiconductors, depress stock valuations by reducing economic growth and fueling a global trade war, and disrupt the US auto industry, whose supply chains were built around the presumption of duty-free trade with Mexico.
Thus, American investors, executives, and entrepreneurs watched Trump’s first day in office with bated breath: Would his inaugural address and initial executive orders prioritize corporate America’s financial interest in relatively free global exchange — or his own ideological fixation on trade deficits?
Trump’s Day 1 actions did not fully clarify his priorities on this front. In his inaugural speech, the president reiterated his broad commitment to protectionism. Meanwhile, his administration prepared to launch federal investigations into America’s trade deficit in general, as well as the trade practices of China, Mexico, and Canada in particular.
Nevertheless, Trump did not actually establish any new tariffs on his first day in office, as his administration’s arch-protectionists had hoped that he would.
Investors interpreted Trump’s caution as a sign that he would be heeding his advisers’ push for a more limited and incremental tariff policy; stocks rose Monday while the US dollar fell (stiff tariffs would increase the value of America’s currency).
Wall Street’s relief may be premature. Trump appears as ideologically perturbed by America’s trade deficit as ever.”
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“Imposing even a 10 percent tariff on all imported goods would not only harm various business interests, but would also likely increase costs for consumers. Thus, such a duty would harm both Trump’s donors and voters.
If Trump’s first term is any guide, his universal tariff would not even redound to the benefit of American manufacturers, who would be vulnerable to higher costs and retaliatory tariffs from foreign nations. Generally speaking, presidents seek to avoid enacting policies that harm the bulk of their coalition, to the benefit of a narrow band of ideologues. And this is what implementing Trump’s grandest visions for trade policy would likely entail.
Second, the imposition of a universal tariff would roil stock markets. During Trump’s first term in office, he monitored the markets’ performance obsessively, tweeting about it incessantly and suggesting that stock values were a barometer of sound policy, warning in 2018, “If Democrats take over Congress, the stock market will plummet.”
Finally, Trump has recently shown some sensitivity to the interests of his newfound friends in tech, even when those interests conflict with the tenets of rightwing nationalism. Over the holidays, Elon Musk feuded with their co-partisans over the desirability of high-skill immigration and the H-1B visa, which help American tech companies to hire foreign talent. Trump ultimately expressed support for Musk’s position.”