
New US Tariffs are Anti-Maker and Will Encourage Offshoring - Taniwha
https://www.bunniestudios.com/blog/?p=5349
======
digitalzombie
I really hate the new tariff.

There is no need to be going into a trade war against not only traditionally
our rivals but also our allies now too.

The economy is recovering and I believe it may now be heading toward a
recession.

Here's the quick data on job created in raw number without the quality of the
job to show that it is recovering since the 2008 recession:

[https://www.washingtonpost.com/news/fact-
checker/wp/2017/12/...](https://www.washingtonpost.com/news/fact-
checker/wp/2017/12/14/comparing-the-trump-economy-to-the-obama-
economy/?utm_term=.2eed815c4901)

So the question is why do we need this tradewar? It only introduce instability
and fear in our market and we have never really recover from 2008 recession
yet. The quality of job suck by the way.

It's protectionism and it does not make our country competitive at all.

~~~
frockington
So why not free trade? I hate the idea of tariffs, but when your "allies" have
had non reciprocal tariffs something needs to be done. I think all of this
would go away if all tariffs against US products were removed

~~~
ska
So you believe that the US is a victim of protectionism in these countries
without having protectionism of it's own? That's a pretty hard position to
back with evidence.

For example US farm subsidies are significant and supply management is common
in many areas, but the rhetoric around Canadian dairy supply management
recently has been amplified far beyond even it's wildest possible impact. And
this with a country with extraordinarily balanced trade, if anything probably
a deficit. The history of trade between the two countries is littered with
spats about US protecting this, Canada protecting that, but on the whole very
balanced. Pretending otherwise may make for good politics (i guess that
remains to be seen) but it isn't based on evidence or good policy work.

~~~
frockington
I believe nobody should have tariffs. Understanding that is never going to
happen, it should at least be a starting ppoint

~~~
cdumler
I'm glad that you believe it, but it's not a reasonable position. The primary
reason for some U.S. tariffs is the legitimate reason of national security. We
provide tariffs on certain foods, mineral resources, and military products
because we want to guarantee that we do not loose production ability. Should
we suddenly find ourselves in a world war, we would not be creating these
production lines from scratch. Therefore, tariffs are always a balancing act
between being nice to our friends and ensuring we keep some level of
production available.

~~~
mikk14
Well, frankly I don't think it's a disadvantage. It's difficult to move out
from the equilibrium of countries mistrusting each other, but I think what you
describe is actually an utopia. If we manage to destroy all tariffs and make
countries lose parts of their production abilities, we'd make war unthinkable,
which is a net good. The US would never start an all-out war because it would
starve, and whomever specialized in the agricultural products supplanting the
US productive capability would never start a war because they cannot build
weapons.

Of course there are huge problems with this -- what happens if whomever makes
your food goes tits up, involuntarily (natural disasters, coups, ...) or
voluntarily (maliciously attacking)? Who guarantees the system? How? Etc...
--, if there weren't I wouldn't call it utopia. But I think raising the costs
of war beyond the unreasonable is a net gain.

Note: I'm fully aware that this is an extremist and probably next to
impossible position, no one has to remind me that. I just contest the fact
that the objection "but then we could not go around and kill people" isn't a
particularly good counter-argument for no trade barriers.

~~~
Symbiote
The European Union is an attempt at this utopia.

There are no tariffs on food, steel or similar between the member states. All
states subsidise food production, but not steel.

~~~
king_phil
You did not mention that since the founding of the EU, there has not been a
single war between member states. Compare that to european history and you see
the most important thing about the EU. I can live with all the things there
are rightfully to be criticized about the EU, in exchange for peace in
continental europe.

------
dalbasal
Out of all possible trade barriers, I think tariffs are generally the better
option.

The alternative is subsidies, quotas or "unofficial" barriers like product
safety rules or other burry-you-in-bureaucracy setups. Tariffs bring in taxes
(as opposed to costing the public) They're easier to understand. This one
makes Chinese microwaves x% more expensive. It's clearer who is paying for it
(consumers) and who benefits, as opposed to pretending a policy is intended to
protect consumers. Importantly, they are easier to change. Politicians can
make a decision and do it. With other options, it's harder to implement
patches or predict the results of any change.

Basically, they're simpler, more explicit and more honest than any other
approach. ..if you've already decided to have trade barriers.

~~~
digitalzombie
I disagree.

Wavepool, Maytag, etc.. Americans washer and dryer cloth machines pushed for
Tariff from the Obama administration to fight against Samsung and other. The
tariff target machine coming out from specific countries so Samsung and other
moved to other South Eastern companies such as Vietnam.

So the American companies pushed for tariff for all incoming washing machine
that aren't American. Trump administration gave that to them. The result is
Samsung and other moved to America for manufacturing. But these companies got
HUGE tax breaks incentive to move their company to their states while the
American companies aren't getting anything.

This is on top of the prices of metal going up. There is a $100 extra on top
of washing/drying machines now.

I'm not a libertarian but The Wealth of Nations by Adam Smith states that all
country will have certain expertise they are just good at. Wether it is
because the geography that enable them to be better than other or other
things, because they're good at certain thing, countries should play to their
strength and trade for what they need.

Samsung and other non USA companies are just better than US manufacturer in
building washing/drying machine. That's just a fact and this tariff thing is
only costing the consumer. The consumers are the losers.

These are the sources before the effect of the tariffs:

[https://www.assemblymag.com/articles/94166-washing-
machine-t...](https://www.assemblymag.com/articles/94166-washing-machine-
tariffs-deliver-a-mixed-bag)

[https://www.nytimes.com/2018/01/22/business/trump-tariffs-
wa...](https://www.nytimes.com/2018/01/22/business/trump-tariffs-washing-
machines-solar-panels.html)

I don't recall where I got the sources of LG and Samsung moving to USA but it
could be PBSnews.

~~~
js8
"I'm not a libertarian but The Wealth of Nations by Adam Smith states that all
country will have certain expertise they are just good at. Whether it is
because the geography that enable them to be better than other or other
things, because they're good at certain thing, countries should play to their
strength and trade for what they need."

And I am not against free trade (well, with reservations), but I think this
idea has been proven wrong historically. I think countries that try to do a
bit of everything, be self-sufficient, and perhaps specialize only in some
very specific areas are generally more successful.

Just look at the U.S. as an example - if they followed Smith's advice, they
would still continue to trade cotton. This advice will never let countries to
build up an industrial base. (Or funny you mentioned LG - they were originally
a textile corporation but the government forced them into electric industry.)

In my view, a country should have as many diverse industries as much it can
keep all the specialists busy (the same is true for companies, by the way).
That means to try to produce locally everything that is sufficiently consumed
locally.

The reason why is that there are strong network effects in diversification.
It's great if you e.g. produce agricultural machinery and you can talk
directly to the farmer, who is going to use it. If you sell this machinery to
people on the other side of the planet, with a cultural barrier, this gets
much trickier.

~~~
stickfigure
_Just look at the U.S. as an example - if they followed Smith 's advice, they
would still continue to trade cotton._

The US is (still) the third largest cotton producer in the world.

[https://en.wikipedia.org/wiki/Cotton_production_in_the_Unite...](https://en.wikipedia.org/wiki/Cotton_production_in_the_United_States)
[https://www.npr.org/2013/12/02/248243399/technology-
subsidie...](https://www.npr.org/2013/12/02/248243399/technology-subsidies-
make-us-cotton-king)

------
hector_ka
I am a small electronic board manufacturer in US. I buy bare PCB boards from
China and populate them here. Usually the parts are bought from Digikey,
Mouser or other distributor. Adding a 25% tax will not incentivize any
American company to start produce parts here.It is way to little and to late.
If 10 boards are $2 in China, are maybe $30 in US , so even you put 100%
import tax, the China price is still competitive. The law is unfairly hitting
the small US companies. Sparkfun , Adafruit will be hit, but not Apple or HP
because they are finishing the product in China. The only ones winning from
this is the US government that is getting 25% of the money . This is
definitely not creating jobs.

~~~
Taniwha
I think it's creating manufacturing jobs in China. If Trump had instead put a
25%tax on assembled electronics and not components then Apple et al would have
an incentive to move manufacturing back to the US - and Adafruit and Sparkfun
would not be effected

On the other hand I'm a small open source hardware manufacturer in New
Zealand, I manufacture and ship from China - because I couldn't make a
competitive product is I built or shipped stuff from here, I live at the end
of the world's supply chain - NZ has almost no trade barriers, removed all
govt subsidies propping up industry decades ago - we do have free-trade
agreements with China - this new regime is good for me Trump's 25% trade
barrier let's me compete better against American competitors, driving up their
costs but not mine.

Remember you (in the US) have a higher standard of living than China - it's
why your labour costs more - frankly you can't compete (and as their standard
of living rises China can't compete with Vietnam .... we're already seeing
that) - this is how 3rd world countries become 1st world ones, it's how China
is building a middle class, which is a good thing, countries with large happy
middle classes have a lot to lose and don't like to go to war.

Long term this process will tend to drag the US and China's standards of
living to similar levels, if you can keep growth happening in the US at higher
rates than China then you may see no change, if you stifle jobs you'll see it
drop. Short term this is a problem, longer term looking at the bigger picture
it's probably a good thing, a safer world

------
rdlecler1
Reading the comments I think people are forgetting this is a cooercive and
retaliatory tariff on China, not a merchantislist policy. Is someone going to
change their whole supply chain if this gets resolved in 3-6 months? The US is
arguing that effectively China has been waging a trade war with the US and has
merchantialist and nationalistic economic policies that make it difficult for
US companies to compete.

~~~
scroogly
So why institute a tariff that makes it harder for US companies to compete, by
excusing finished products in order not to piss off consumers?

~~~
larrydag
To change trade policy between the competing governments. Whether it's an
effective policy we will have to wait and see.

------
pwaivers
> "The impact of this cost hike will be felt throughout the industry, but most
> sharply by educators, especially those serving under-funded school
> districts."

I am not sure what stance to take on the tariffs, but I'm pretty sure
manufacturing will feel the cost hike WAYYYY more than educators. Schools
probably buy, at max, tens of thousands of dollars worth. Manufacturing buys
millions of dollars. These are hyperbolic sentiments.

------
baybal2
A repost of my comment from few months ago:

When it comes to trade war topic these days, most Western commentators
completely miss that a trade war is what China was preparing for the last
three decades. They well expected somebody like Trump eventually coming, as
well as economic pressure on a scale even bigger than what the West puts on
North Korea and banana republics. They totally understood that the West will
not play nice with them forever, nor that the unprecedentedly long period of
good weather in the global economy will last forever.

There is zero questions about China's economic policy being very strategic,
and deliberate. Chinese state conglomerates may look to just littering around
the world with money, but analyze it more, and you see a pattern, one that is
very much like a game of Go - victory by limiting enemy moves.

They buy ally countries, strategically - they buy resource supplying
countries, often with major holds on markets of vital commodities.

Their tech purchases - mostly underappreciated market leaders with industry
wide influence. Kuka - the only company you can say to be Tier 1 in robotics,
all other competitors combined will not be an equivalent for it. I has almost
complete dominance over major heavy industries. Lattice Semi - the one and
only FPGA company that can threaten the Xilinx-Altera duopoly. And so on and
on and on.

Their domestic tech development - even more so. People talk about China
dominating consumer goods manufacturing without realisation that it has even
bigger hold of manufacturing machinery industry - manufacturing can't really
leave China with Chinese made manufacturing equipment being locked down.

The whole industry you can call "Manufacturing machinery 2.0" is a domestic
Chinese development. Biotech - China quietly ate the market for genetic
engineering reagents, as well as much for complex organic chemistry. There are
megatons of biotech startups in the West, but they all feel that they will
eventually have to move to China to have any chance to scale - effectively
they are already a Chinese property.

Military allies - well, there things are even more obvious.

Major trade agreements - same. Their idea is to bind any major developing
market niche to Chinese economy before the West even realizes its emergence.

Their idea - to make it so that if somebody wants to do anything any much big
being impossible without involving a Chinese company or state institution at
some part of the process - to make it "You can't do that without China"

~~~
frockington
The US tried to do that for a long time in the Middle East and South America.
China may be underestimating just how unstable these regions are. It's all fun
and strategy until the Taliban starts blowing up your infrastructure because
its haram

~~~
DomreiRoam
The difference is that outside China, Chinese leaders doesn't try to push for
a model. They don't push for things like Human Right, Intellectual Right,
Representative Democracy ...

~~~
frockington
I'm skeptical they'll be able to convince tribal Africa that cell phone towers
are not haram. Islamic terrorist in Africa made cell site construction a very
profitable business until they stopped all together in some areas

------
hugh4life
I'm neutral on the tariffs, I am(or was) actually excited about China getting
into the memory market to help keep the other memory makers honest... but it's
important to have an alternative source of those components in case there
would be trouble between the US and China. There needs to be a way to nudge
businesses to have a source of components out of China.

~~~
tonyedgecombe
Perhaps the US dependence on China for some products neutralises the chance of
trouble between the US and China.

~~~
imtringued
Considering that China immediately retaliates against the US by putting a
tariff on their own food supply I doubt they care about US dependence at all.
After all they are the ones with the big trade surplus that refuse to play
fair and they are using the surplus on strategic investments on critical
infrastructure to increase US dependence on China.

------
matt_the_bass
I think this is a great example of hampering technical manufacturing growth in
the US.

~~~
frockington
I think the win-win outcome is that China is forced to innovate more and the
US is force to manufacture more. Both countries have been too reliant on each
other for too long now

~~~
tanilama
It will be a good outcome that China opens its market more to the world, which
is actually to the interests of the Chinese consumers, they already want
foreign goods and now it is more affordable and would probably force their
domestic companies to up their own game finally to face the competition.

------
hsnewman
Tariffs are anti-competitive, a tax on the economy, and go against all sound
economic theories. I am out of the market, you should be too.

~~~
frgtpsswrdlame
Tariffs do not go against all sound economic theories lol.

~~~
tclancy
Just most of them. Certainly there are some edge cases where the other
country's tariffs are so egregious the damage to the home country's citizens/
economy is helped by the tariff and they can be used to prevent dumping, but
in anything close to ideal markets/ classical economics, tariffs are more
likely to impose a cost on the host country's consumers while giving most of
the benefit to a small group.

------
aussieguy1234
I don't support these tarrifs. I would, however, support tarrifs on
offshoring. Let's say a company replaces a team of onshore programmers with
offshore ones to "save money". They should have tarrifs/taxes imposed on them,
so that those savings evaporate into thin air. That would both prevent
exploitation of desperate workers overseas and protect jobs here.

------
alkonaut
Apart from some steep farm/dairy tariffs, what are the huge tariffs that other
countries impose on US exports?

I thought the gist of this whole debate was that the US administration somehow
thought VATs applied abroad somehow made US products less competitive and
therefore was in fact a tariff? I do realize this sounds too dumb even for the
current administration so I may be wrong.

~~~
greeneggs
I'm not sure quite what you are looking for, but you can browse tariff rates
at the WTO website [http://tariffdata.wto.org/](http://tariffdata.wto.org/) .
It would be nice to find a better source, though.

For example, China has a 65% tariff on cereals such as wheat and rice, a 50%
tariff on sugar, a 57% tariff on some tobacco products, and a 50% tariff on
some fertilizers. (This is for other WTO members, or "most favored nation
(MFN)".)

The United States has WTO MFN tariffs of 132-164% on some peanuts and peanut
products (e.g., peanut butter), and 350% on some tobacco products.

------
hippich
After reading a bit about the history of tax in the USA, I was surprised to
learn that in the very beginning federal government was mostly funded by
tariffs.

So.. Extra tariffs will bring extra tax revenue. Will federal government cut
income/corporate taxes to adjust for it? Or perhaps any paid tariff can be
written off of tax bill?

~~~
psergeant
> So.. Extra tariffs will bring extra tax revenue

In the short term. In the long term, that’s far from clear. The world economy
is rather different now than it was when America was a fledgling economy being
exploited by the Brits

~~~
passthefist
And I've seen some articles/papers suggesting that protectionist policies can
make sense for an emerging/developing economy to make sure that
established/developed economies don't usurp that growth by blocking them from
moving up the value chain.

So it may have been good policy back when America was a fledgling economy
being exploited by the Brits.

~~~
oldsklgdfth
I believe that is the way that S.Korea developed it's economy. Specifically,
they raise tariffs on automobiles to boast their own automotive industry.

I think this book explains that: [https://www.amazon.com/Bad-Samaritans-
Secret-History-Capital...](https://www.amazon.com/Bad-Samaritans-Secret-
History-Capitalism/dp/1596915986)

------
maxxxxx
My personal belief is that this can go either way. If the tariffs go hand in
hand with other policies they may bring business back to the US or it can go
the other way. It requires a well thought out strategy. I have my doubts that
the US has such a strategy but we'll have to see.

------
thisisit
Curious how will this affect the Chinese sellers (both fake and genuine goods)
on Amazon/Ebay?

~~~
oh-kumudo
Larger sellers would count the tariffs into the pricing, or you can test your
luck to see whether customs will pick your package or not.

~~~
paulie_a
Customs will rarely pick your package, I received a letter that some items
were confiscated 6 months after I was reshipped and received them.

------
yuhong
This reminds me of how Hynix was able to evade anti-dumping duties by both EU
and US in the mid-2000s by using the Eugene, Oregon and later Wuxi, China
fabs.

------
robbrit
Hmmm, I wonder what the long-term effects of this will be if the tariffs stay
in place for a while. 25% is a huge bump.

I can see two major effects:

1) Lots of the "last screw" manufacturing will move to other countries and
then imported into the US. Due to IP concerns it will probably move to
countries with good IP protections such as the EU, Canada, Australia, NZ, etc.
I can't say much for the other countries but it would be a boon to Canada
(longer term anyway, it will be painful in the short term) providing
diversification from the natural resource economy that Canada has too much of,
and an incentive for the top talent to stop coming down to the US for the most
interesting jobs.

2) Except in the case where US production is more than 25% more expensive than
offshore, the domestic US industry for these components and raw materials will
grow (this is probably Trump's goal). The "last screw" manufacturing that
stays within the US will be much more expensive due to the higher input costs.

Since I am inclined to believe that the quantity of talent/expertise for high-
tech manufacturing is higher outside the US than in, the effect of #1 will be
much larger than the effect of #2. But I could be wrong, the US has pretty
fantastic network effects and world-class talent, I wouldn't discount their
ability to innovate just yet.

------
jakeogh
A day later, Germany offers to scrap the 10% auto tariff. I bet there are more
to come.

------
kazinator
Wow; that Brazilian network card. It has three Z80 CPU's on it.

------
afpx
Anyone able and willing (and brave enough) to explain like I’m five why
Trump’s decisions could possibly be rational and helpful as opposed to just
reactionary and impulsive, as they appear to be?

~~~
mchannon
I don't think it's controversial to say the decisions are rational and
helpful, as long as you remember to include "to certain entities".

Winners:

•Manufacturers of Steel, Aluminum, Electronic Components in US.

•Consumers of goods under retaliatory tariffs (pork chops are now going to
cost Americans a little less because the Chinese aren't going to import as
many).

Losers:

•Consumers of Steel, etc., including manufacturers of assemblies, and retail
consumers.

•Producers of goods for export that are subject to retaliatory tariffs.

If you look under "chicken tax" you'll see these kinds of battles are neither
new, nor did they ever completely go away.

It's widely agreed that more Americans will lose their jobs from these
policies than will be hired, but if we're somehow at full employment, that
might not bear out. I don't see that happening, but if you believe in magic...

------
IanDrake
These new tariffs are posturing. Trump seems to understand how to negotiate
and is willing to take short term hardship for long term gain.

We need to have balanced trade agreements. Not balanced in the sense of trade
amount, but balanced in the sense of tariffs and subsidies.

Access to US consumers is a big bargaining chip. If China won’t deal, there
are other countries that will.

I think we all understood we had an unhealthy relationship with China.

~~~
detaro
> _Access to US consumers is a big bargaining chip_

Which is why finished consumer products are not part of the new tariffs, so
companies that make stuff in China and ship it to the US are better off than
companies buying parts in China and assembling in the US? Or was there a big
push of end-product tariffs before that didn't make headlines?

In most cases, buying all your parts locally is fairly impractical. (The
documentation of various "fair trade" electronics projects is often
interesting in that regard, since they often are willing to accept higher
prices from trustworthy local sources, and often find that only a few things
can be gotten locally at all, and often only in specialist variants, e.g.
high-precision parts, with matching prices). Maybe it'll be enough push to
restart some component industries, but I'm skeptical.

~~~
IanDrake
I think you’re making an assumption that the ongoing trade negotiations is
static. It’s not. Today it’s parts, tomorrow it could be fully assembled
goods.

If you’re going to negotiate, you don’t play all your cards at once.

I don’t think the end state of the negotiations is protectionist tariffs for
the US, it’s to get China to drop their protectionist tariffs. If we reach
that end goal, how is that a bad thing?

~~~
detaro
It just seems odd to put tariffs on things that'll hurt local industries and
make life harder for companies that have moved at least some production steps
into your country (after lots of talk to encourage companies to do that, and
apparently at least some successes doing that) over those that operate
entirely outside.

> _I don’t think the end state of the negotiations is protectionist tariffs
> for the US_

We'll see, at least some of the recent tariffs seem to be exactly that, e.g.
the steel and aluminium tariffs against the EU (which are now countered by the
EU with tariffs on american exports) to limit their exports to the US, all the
while complaining about Canada doing the same for agricultural products.

------
jeffreyrogers
There seems to be a lot of groupthink on HN. Pretty much every comment in this
thread that views tariffs remotely positively is being downvoted. I view them
slightly negatively, but protectionism (not necessarily tariffs) does help
struggling or new industries develop if coupled with good export policies (see
China, Taiwan, South Korea, and Japan for examples), so the idea that tariffs
have no arguments for them seems a little farfetched to me.

~~~
psergeant
Another word for “groupthink” is “consensus”

~~~
kevin_thibedeau
Consensus implies reasoned thought. Groupthink is mob rule.

------
mchannon
If the cost of food doubles, your cost of a meal out doesn't double, but
merely increases by a lesser amount.

This is a 25% bump, a portion of which will be borne by the manufacturer,
seller, shipper, and money handler.

I don't see how it's even close to possible for customs to intercept 50% of
the mail coming in from China to ensure they've paid the tariffs.

So, things will range from unenforceable and unenforced, to a minor price
increase, so small most of us would never notice. Akin to a minor currency
fluctuation that everybody who doesn't use or peg to the US dollar has to deal
with already.

If you can afford the time to be a maker, this will not impact anything at the
end of the day.

~~~
mtw
This is just wrong. If the cost of food doubles, then price of eating merely
increases by small amount ?? Where did you get that fact? Any studies??

~~~
megaman22
Your $25 steak dinner cost about $6 in foodstuffs. If a tariff raises the cost
of that raw material to $8, it would be absurd for that entire meal to now
cost $32. Much of the cost in restaurant prices is wages, and rent, and other
overhead, not the actual food.

~~~
danieltillett
You are correct, but most restaurants just multiple the food cost by 4 to set
the price. It is rather silly, but that is the way the industry works.

~~~
mchannon
I don't think it's silly to come up with a pricing method that is simple and
uniform to apply.

However, "4" can just as easily morph to "3" or "5" if the fundamental costs
change industrywide.

~~~
danieltillett
It is silly because food cost is only one part of the cost of providing a
meal. Really all of the costs should be dumped into a program which spits out
exactly what to charge for each menu item.

