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Trump’s tariffs were meant to shrink the trade deficit—but the $106 billion gap just reached its widest since before ‘Liberation Day’ (finance.yahoo.com)
submitted 1 day ago by to c/economy@lemmy.world
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[–] -1 points 1 day ago (4 children)

And how do you propose that happens?

Usually, instead of tariffs currency fluctuations form natural tariffs. However the Chinese artificially lower the Yuan.

I think an alternative could actually be tariffs. Just not the way Trump implemented them. Do them slow and steady. Announce you will up them 1% each month for certain goods. Promise you will keep them for the long term, so get broad political backing for them.

Just doing them on a whim is not something that gives people or companies confidence to invest into expensive factories, training and resources.

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  • [–] 1 point 1 day ago (3 children)

    Low interest industrial financing, environmental recovery relief, and tax breaks and subsidies.

    Industry will go wherever it is profitable to go. Make it profitable to make things here and they will. Tax them with tariffs and the industry will just go away entirely.

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  • [–] 1 point 1 day ago

    This is actually not enough for most industries. Building up a plant, knowledge and company takes several years. Without guarantees that the subsidies will be around that long it's very risky to start a new manufactory.

    On top of that, production costs are much higher than the domestic (or international) markets will bear, and although access to capital is good meaning you could possibly automate away expensive labor, the cost prognosis of energy and materials is worse than many other places. Not to mention that subsidising a factory that doesn't provide employment or net tax revenue seems a dubious use of government funds.

    That way only makes sense if you want to strategically establish an industry long term, to build up to unique capabilities. Such as the green energy deal which could have made the US both energy self sufficient and an international leader in the emerging renewable energy market, or Silicon Valley for the then emerging IT market.

    Doing it for steel (a mature market) would almost certainly require regulatory pressures to guarantee demand, such as military contractors having to purchase domestic steel, while developing competitive capabilities (it's unlikely the US will be able to compete on cost of labor, materials or automation, so should leverage that low cost of capital on R&D)

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