> The problem is that factories take years to build
Nobody's even building them right now. CAPEX and industrial investment have declined in recent months. (!!) They may even drop further. So it seems that if the aim is to revitalize America's industrial base, the present strategy isn't working, but is having an opposite effect.
Which is funny because US industrial investment was on a tear pre-tariff as companies near/on-shored at historic rates. Not only were tariff's not needed, they've effectively shut down their intended goal.
This chart is a pretty astounding look at how successful Bidenomics was at achieving this and how catastrophic Trumponomics is already turning out to be:
Credit to prior on-shoring should go to Covid 19 and the Chinese government's heavy handed response to it, not any US policy or administration.
Talk to anyone in industry and they'll say "we on/near shored because Covid supply chain problems taught us a lesson" or something along those lines. Those investments were just starting to bear fruit in the past few years.
Edit: And before anyone tries to put words in my mouth, this is neither an endorsement of "Trumpenomics" nor a dispute of the prior commenter's statement about them.
The difference between on- and near-shoring is pretty important, and I'm going to bet the trillion dollars in incentives played a far, far bigger role than the delta in people's resilience estimations between putting a factory in Mexico vs the United States.
Credit should go to all factors, but sorry it's foolish to think orchestration of a trillion dollars into exactly these sectors wouldn't play a huge role.
>The difference between on- and near-shoring is pretty important,
Of course. I don't think many saw coming that we wouldn't be on friendly trade terms with Mexico and Canada.
> and I'm going to bet the trillion dollars in incentives played a far, far bigger role than the delta in people's resilience estimations
Which have you seen companies respond more swiftly to, opportunities to make money, or disruptions in their existing ways of making money? Which gets the CEO on the phone faster, a potential business deal or a prod outage?
Just about everyone experienced the latter during Covid. "Yeah we'd love to do all the electrical for your covid construction boom fueled McMansion development but switchgear is back ordered 18mo, sorry", and so on and so on across many industries. And they're all real salty about it.
I'm sure the incentives added fuel to the fire, but the way the Chinese economy stayed disrupted for longer really pained a lot of people in the US who depend on stuff from there to make money here.
Depends on if the outage impacts the entire industry/sector or just his company. If the former, it's relatively fine because stock performance is going to be similar to competitors and investors won't be asking too many questions. Might be some wailing and gnashing of teeth but not too much action in the form of spending money on the problem.
I don't think many companies in my estimation took too many lessons from the COVID supply chain crises. If they did, the lesson was to simply outwait things. Everyone was having similar problems and you didn't be the single one of your sector to have re-shored production at triple the expense while your competitors simply spun back up once the Chinese factories got back on-line.
If it was such a compelling thing that was already happening we'd be seeing a lot more 'low value base component' manufacturing coming back, such as electronic components like resistors. So far from my basic understanding of the subject it's all the stuff quite high up the value chain instead. At best some things got near-sourced or moved around, with the raw inputs seemingly still coming from China in the end either way.
It would certainly be interesting to find some actual data here though.
The IRA added huge incentives towards factory construction in certain areas. Biden also maintained strategic tariffs on certain industries (as opposed to the blanket tariffs Trump is using.) I understand that people with specific political preferences would like to believe these incentives didn’t work, but there’s every reason to believe the simpler explanation: incentives like this do work. We should be learning from these results instead of denying them.
Companies started shifting plans as soon as the election result was decided in November. Many started stockpiling Chinese imports then. Additionally many have paused Capex due to the economic uncertainty:
The tariffs were not a surprise after the election. The President said he was going to enact crushing tariffs, so this was effectively predictable since early November.
> if the aim is to revitalize America's industrial base, the present strategy isn't working
The issue is that the aim clearly isn’t to revitalize the industrial base. If it were, then the tariffs wouldn’t be removed after negotiating with other countries. Since other countries can make deals to reduce the tariffs on their products, then it’s clear that the aim isn’t to get Americans to build things at home. The tariffs are clearly some kind of brinkmanship game to pressure other countries into making concessions.
> 10% for everyone tariffs were not paused, nor can they be negotiated away
But "everyone" doesn't mean everyone because everything on this list is exempt from the global 10% tariff and recriprocal tariffs (https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-...). Categories have been added to the list after influential people called the President. So even the 10% for "everyone" tariff can be negotiated away if you give the President something he values.
Which suggests it isn't just a way to get foreign countries to negotiate, but also a way to get domestic companies to negotiate with him, possibly in a way to increase his personal power.
There is no "aim". The tariffs are something Trump has been "wanting to do" for decades, and now that he has almost absolute power and is surrounded by sycophants, he gets to do whatever he wants. This is a flex. A way for him to "play hardball" with the rest of the world but without any clear notion of what the next step us. He's said that other countries will have to "pay a lot". What does it even mean? There is no plan. There is no ask. There is no endgame. His cronies are too afraid of him to tell him that this is a terrible idea, and now that he owns it, he'll sooner go down with the ship than admit he was wrong.
I think the aim of the tariffs changes depending on President Trump’s mood, what the market is doing, what the press is saying, and who he spoke to last.
If you believe certain business cycle theories, the way an economic downturn starts is when businesses no longer see the need for additional new capacity. So there's declining CAPEX. Then the 40% of the economy that is CAPEX-related takes a downturn. Even though the 60% that is consumer goods is still for the moment going at full capacity, the CAPEX-related part suffers layoffs. That in turn affects the consumer spending part of the economy.
So if CAPEX is declining, the downturn has already started. (I mean, I guess the article's headline already told us that...)
The strategy of the US has been Hegemony. Friendly foreign partners were intended to take over industries we did not want in our own backyards for political, diplomatic, economic, or environmental reasons. For a stint in college I was an International Relations major and this was 100 series education. At a basic level this is discussed as the “Pollution Haven Hypothesis.”
A political/diplomatic example is rebuilding the Japanese Steel industry after WWII so they could regain self sufficiency. Until we decide to shoot ourselves in the foot hard enough we’ve had a consistent trading partner in high quality steel ever since.
The current “strategy” is painful because it has the weight of the past 60-70 years working against it.
I dunno. This reads to me like an attempt to retroactively justify the effects of US policies that were aimed at a different purpose. I don't think I've ever seen an American politician say that they'd prefer for industry X or Y to be located in a different country.
I don't think either of these policies intended or caused other countries to "take over industries we did not want in our own backyards". In the 50s and 60s the US still ran consistent trade surpluses.
A lot of businesses now have to face that to survive, they need to increase their market share or profit margin by double-digit percentages when they probably don't have double-digit numbers there to begin with :\
And double-digit increases are what they have been working toward the whole time, they know how to do it, that's how they have managed to get by, even though they know it will takes years. These are great business operators, they know they'll make it if they persevere, they just don't know how many years.
And these were the businesses that were shrewdly operating successfully in the USA in difficult markets with slim margins, even if they were leaning to any extent on cheap foreign materials, labor, or even weighted more toward robust domestic commerce in general.
Prevailing in situations that "average" businessmen aren't quite up to.
How do you think the less-skilled operators are going to feel? They know who they are. Lots of times their businesses are totally dependent on the majority of Americans overall being "richer" than most. And in less than 100 days really, that's been brought into question more times than in any other previous decade. With things like over-taxing and currency exchange taking their toll at the same time commerce itself as a source of prosperity is receding, this is going to make them some of them the most nervous of all.
Trump has always been foolish with money, after his first term the US can no longer afford lots of things that were affordable under all previous presidents, you can't make this up.
When a recognized business-bozo-in-chief can remotely do more percentage damage in one day than a business owner can make up for in one year, might as well give up now, or at least take a sabbatical. Trump can't last forever, and anybody who replaces him may not be any wiser or less misguided, but at least would be more stable & trustworthy.
However, doing something like declaring election fraud, having Vance not certify the vote, and then in chaos, remaining in power, its totally doable, granted he has legal immunity.
The things is, they are doing so much illegal shit that they know if Dems get in power, people will go to prison. So everyone around him has as large incentive to go along.
We are both suppressing international trade of consumer goods and making it harder and more expensive to build out the infrastructure to build consumer goods in the US.
There's a chance the tariffs will be rejected by the Supreme Court within a year, a chance something political happens within the next two years (senators and representatives will turn on Trump as soon as he becomes a liability in the next election), and new management will be here in four years.
Too much is in flux to make an expensive decision that won't see value for years. There'd need to be grants to jump start construction.
That might be a good time for him to move to whatever his Reichstag fire will be and make sure he stays on. The argument could be that this sort of long term development requires a firm and constant leadership for a long time.
Part of Trump's genius tarriff plan was closing trade deficits.
Except trade deficit is just mostly a measure of how much countries choose to park the returns on their goods/services in your own country as investment in capex, domestic investments, etc. It is the foreigner choosing not to take the dollar or exchanged goods back to their own country, but to invest it in your own country.
You literally kill capex by killing the trade deficit.
Kinda, but domestic capex is overwhelmingly more important than foreign investment in almost every country, and the US is absolutely included on that set.
So, on practice, you won't find a correlation here.
Nobody's even building them right now. CAPEX and industrial investment have declined in recent months. (!!) They may even drop further. So it seems that if the aim is to revitalize America's industrial base, the present strategy isn't working, but is having an opposite effect.