Spaceman Spiff
Well-known member
As others pointed out it's hard to compete with the likes of companies in China, where they install safety nets to prevent workers from committing suicide so tariffs are just a way to level the playing field and make sure the inflows more equally match the outflows. And even if it's 100% automated in the USA, what about the companies who manufacture and maintain those robots? If they're also American based and owned it becomes the real life version of my baker/farmer example where they will go spend into the economy and pump up the velocity of money.
The key word in my argument which everyone seems that have ignored was additional job creation. If a company's sales increase because the chinese product becomes more expensive, the company will be able to increase production without having to hire a lot of new employees because most companies have unused production capacity.
So yes, the amount of money staying in the country for that product increases but you are forgetting that tariffs work both ways and China's tariffs have caused greater revenue losses for US farmers and manufacturers.
-So far, the US has paid $28 Billions in agricultural bailout to farmers hit by the trade war with China.
-40,000 beer industry workers have lost their jobs because of tariffs on aluminum.
-US auto makers are particularly vulnerable to cost increases from their suppliers and sales have already slowed down and they had to lay off thousand of employees.
-The US manufacturing sector is entering a recession.
Source for the $28B figure:
https://www.latimes.com/business/hiltzik/la-fi-hiltzik-trump-tariff-bailout-20190524-story.html
The days of integrated local supply chains have been over for decades. Manufacturers source materials and components from all over the world because it's a lot cheaper than buying and manufacturing everything locally. Tariffs cause more job losses than they create. You end up with products that are a lot more expensive and a domestic market with decreasing purchasing power due to the net job losses.