People are waking up, and to be fair, Tesla really led the way in the US for the last few years because they had no choice(no one would take them seriously). The question is can the West turn the ship around before its too late?
Depends if we keep the CHIPS act and the IRA. https://www.atlanticcouncil.org/blogs/econographics/the-ira-...
And immigration. China will have severe demographic issues in 10-20 years, but the West doesn't have to because everyone wants to come here, and we still have a culture accepting of immigrants. This century we could have China's working age population halve while America's population grows to 500 million or more. America will win in this scenario, and China will fall off like Japan fell off.
IMO the US really needs to do some house cleaning before anything real gets done. You can't expect the hand to cut itself out. I'm not sure if Trump could do that, TBH. He didn't have a lot of support in Military-Intelligence.
too many people on the entire political spectrum think that the government exists to create/artificially protect jobs instead of doing government things
When Trump ups everything from China by 100% I guess US would be able to make something with profit?
I doubt it. It's much easier to either launder or manufacture the goods in a third country, that benefits from most of the same incentives that made Chinese manufacturing go through the roof.
Americans will be buying Chinese goods with "made in Vietnam" or "made in Mexico" stamped on it. The American profit will be in setting up those laundering schemes
If the Trump tariffs are based on country of final assembly, then yes, final assembly will just occur somewhere else, but it will take a couple of years to setup, and the inflation shock by that time will have done a lot of damage to the economy (recession likely, depression possible). It makes sense that it took Trump forever to find a treasury secretary willing to go along with this.
You can bribe officials in Vietnam/Mexico. So they'll be your country of "final assembly".
I doubt the Americans will let them do that so easily.
They already are. Just one tiny well-explained example, although it's utterly rampant:
https://www.npr.org/2024/08/23/1197961495/the-trade-fraud-de...
No bribery required though, at least in most cases.
They tried stockpiling aluminum in Mexico during the Trump ban and that was shutdown quickly. I guess they just have to be more convoluted about it. I wonder if Trump will do something like “tariff China and any country that doesn’t tariff China itself (transitive)”, but it feels like it might be futile to do that.
So they will have to bribe officials in Vietnam or Mexico and bribe officials in the US.
A quick google search of "BYD Mexico" tells me it is already starting.
BYD can build cars in Mexico, they already build buses in SoCal, that’s not an issue. The question is if tariffs are going to apply just to final assembly and will they be easy to avoid by assembling elsewhere.
Couple of years for a western enterprise maybe, but in the east, things move fast. Really fast.
It depends if Trump tariffs just China or everyone. He promised high tariffs for China, but tariffs on all imports besides.
The last time he did tariffs against China, he put a tariff on raw materials but not stuff made with that raw material.
It was cheaper to build your excavator outside the country than pay the tariffs on importing the materials to build the excavator here.
It was an objective failure. It also resulted in very smartly targeted payback that caused serious financial distress to a bunch of blue collar American food producers who sell a lot to China because the American market is literally not big enough (my state sells millions of pounds of lobster to China, those lobstermen still vote for Trump).
This is because Trump is objectively a fucking moron, and if you tell him "No, your idea is wrong because you don't know what you are talking about", he gives you the same "You're fired" speech from his damn television show, replaces you with a sycophant, and then does the stupid thing.
Any prediction that starts with "Trump will do the Tariffs in the way that requires second order thinking" is doomed to failure.
The Trump tariffs will turn the entire world to China. America may no longer be interested in free trade and go full isolationism but many smaller countries can not. A painful truth is that for Europe the millions of containers with goods from Asia are a lifeline.
It doesn't matter much if your shitbox is made in US or made in China when it cost 50k and nobody has the money for it
That is not remotely how tariffs work.
Doesn't a tariff drive up prices? (or at least intended for that)
Tariffs are a surcharge on imports added and demanded by the government, paid by the people or entities importing.
As an example, if an American buys a Chinese coffee maker priced at $100 and there is a 50% tariff, there is a $50 tariff that is paid by the importing American to the American government.
The total cost to the importing American is $150. Now, if this price is equal to or higher than an American coffee maker then the importing American is incentivized to purchase the American coffee maker instead.
As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss.
Essentially, tariffs are a way to ensure that the pricing floor of the domestic market is not driven down unreasonably by international markets at the cost of the importers.
EDIT: Fixed some math. :V
> As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss.
Doesn't that mean that American will have to pay $50 000 for a car that is worth $25 000? While people in other countries will be able to buy cars cheaper, buy more of them and maybe it somehow improves their life quality.
The purpose is to prop up local companies.
Which is not always a bad idea, having a local supply and innovation of something can be rather important, local money is less "Gone" than foreign money, think of how healthy small towns are when all of the shops are local vs when they are not.
The problem comes when there is no realistic local competition. If you don't make something locally at all, an import tariff is just a stupid tax.
It means exactly that. It also means the American company will feel less pressure to improve cost or quality.
Yes. Tariffs are bad for consumers. The supposed benefit is to manufacturers, since in that scenario Tesla will be able to sell its cars at a higher price and profit.
Right, the coffee maker company in China has some options:
* Figures out how to make it even cheaper (unlikely)
* Figure out how to avoid the tariff legally: Maybe move the manufacture or assembly to Mexico for the US market.
* Claim the product is something else, just enough to avoid the tariff(i.e. claim it's a tea maker, not a coffee maker)
* Stop selling in the US since they won't get any sales
* etc.
Also the other issue: the first thing the American company does is ensure it sells coffee-makers for $149 and not a penny less.
In fact depending on your tarriff regime, this can incentivize a bunch industries to actually raise prices if the new import cost is higher then they would currently sell at.
The incentive to raise prices is pressured down by customers' desire to not spend more money than they have to. If businesses can get away with raising prices that means the price was too low to begin with, tariffs or no tariffs.
That's dependent on the market actually being efficient.
If a consumer walks into a store and sees coffeemakers by ten different brands, but seven are all actually owned by one giant manufacturer and the other three by some American almost-as-giant manufacturer, then a tariff on the former will drive up the price of seven of them and the American manufacturer will almost certainly raise the prices on the remaining three. Otherwise, it's just bad business.
Oops, in "actually owned by one giant manufacturer", I meant to say "actually owned by one giant Chinese manufacturer".