Tariffs were levied on countries such as China during Trumps first presidency and raked in the money causing consumer prices to fall. They also created competition between the nations meaning everything wasnāt imported from China, India for one were competing against China as were other countries. These tariffs caused many manufacturers to return to their original manufacturing base in the UNITED STATES š¤
Indeed, one of the reasons why tariffs on China are NOT likely to be as inflationary as otherwise would be the case is the fact that China has been losing manufacturing capacity to other countries in Southeast Asia for years, going back to before Trump's first term.
China reached its Lewis Inflection Point around 2012. That is the point where a country has employed all its surplus labor, and so from that point forward labor costs have no choice but to rise, as labor now becomes increasingly scarce.
As it turns out, Chinese labor was cheap but it was never all that productive, and without the cachet of being the manufacturer with the lowest labor cost, China's cachet as the world's manufacturer has proven unsustainable.
That process was only accelerated by the COVID lockdowns and the need to rethink and retool global supply chains post COVID.
With or without tariffs, China's days of manufacturing hegemony are numbered. By the end of the decade most imports to the US that used to come from China will come from somewhere else, or will have been reshored to US proper.
Tariffs are a subject so heavily propagandized now there's very little factual discussion about what has actually happened when they've been applied. And the reality is far more nuanced than the narratives.
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Tariffs were levied on countries such as China during Trumps first presidency and raked in the money causing consumer prices to fall. They also created competition between the nations meaning everything wasnāt imported from China, India for one were competing against China as were other countries. These tariffs caused many manufacturers to return to their original manufacturing base in the UNITED STATES š¤
Indeed, one of the reasons why tariffs on China are NOT likely to be as inflationary as otherwise would be the case is the fact that China has been losing manufacturing capacity to other countries in Southeast Asia for years, going back to before Trump's first term.
China reached its Lewis Inflection Point around 2012. That is the point where a country has employed all its surplus labor, and so from that point forward labor costs have no choice but to rise, as labor now becomes increasingly scarce.
As it turns out, Chinese labor was cheap but it was never all that productive, and without the cachet of being the manufacturer with the lowest labor cost, China's cachet as the world's manufacturer has proven unsustainable.
That process was only accelerated by the COVID lockdowns and the need to rethink and retool global supply chains post COVID.
With or without tariffs, China's days of manufacturing hegemony are numbered. By the end of the decade most imports to the US that used to come from China will come from somewhere else, or will have been reshored to US proper.
Iāve been searching for a discussion on tariffs, so thank you!
Thank you!
Tariffs are a subject so heavily propagandized now there's very little factual discussion about what has actually happened when they've been applied. And the reality is far more nuanced than the narratives.