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Originally Posted by ernie
Putting tariffs on domestically based companies to import goods they made elsewhere in the long run is simply going to lead to an outflow of those head offices and businesses. Some that have to stick around will...like the US based car companies as the US market is their major market. But in all sort of other industries the established guys will just jettison the US market or take the hit and move elsewhere. Then you'll fill the vacuum with locally run companies that produce an inferior product. Soon the US will be filled with their version of the Lada for every consumer product.
Well probably not, but in the end government actively over-threatening companies with tariffs and sanctions rarely works out.
Put a tariff on goods made in Mexico and China the companies move production to Argentina and Brazil. Put a tariff on those countries and they move to the next (and likely) lower cost alternative. Etc etc etc. There will almost always be a place that can manufacture the could cheaper such that the tariff has little effect. It may work short term as companies take time to pivot but it won't work long term. Meanwhile domestic consumer see increased inflation because the company sure as hell is going to pass the tariff onto the customer.
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I think something a lot of people supporting these tariffs seem to forget is that these products aren't just made for US consumption. They think that simply by adding a tariff to US bound goods that companies will bring production back the US, but that doesn't necessarily make a whole lot of sense if you're selling to a world market. Just using the iPhone as an example, less than half of their sales are in the US. If they move production to the US to avoid a tariff, then their production costs for 100% of their phones increases quite a bit which means lower profits across the board.
On the other hand, if they simply pay the tariff on their US bound goods, raise the price in the US to compensate, and continue to make their phones in China they'll be able to maintain their profit margins for the rest of the world (which makes up the majority of their sales) without having to raise prices. The end result is that US consumers see a huge jump in price and no jobs come back.