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The Tariffs Are Not the Real Problem: The Lack of Systematic Thinking Is. [1]

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Date: 2025-04-08

Yeah, not the pithiest headline. Somewhere, a growth hacker just lost his wings.

As we all know, Trump has imposed massive tariffs on just about everywhere up to and including islands whose only inhabitants are penguins. (No, really.). The purported reasons are twofold: first, they want to get rid of the income tax and second, they want to bring manufacturing back to the United States. The first goal is just a cutout for ending public wealth — i.e. government services. So, you know, fuck that noise. The second is arguably, at least in some areas, a good thing. But these tariffs will never bring that goal about, because you need to think about things systematically and not wish that One Neat Trick will get you what you want.

A moment, before we get too deep into this discussion, to praise manufacturing. A lot of very smug people are completely certain that there is no value in manufacturing jobs. That is nonsense. First, globalization might be a wealth creator, but it undermines wealth sharing. Most of the benefits of globalization go to the people in control, the owners and financiers. While they can help pull some areas of a nation out of abject poverty, there is a ceiling on how far that can work when capital can move in an instant and labor cannot. Already, factories are moving out of China and into poorer countries to keep labor costs down, and I doubt anyone would claim that China has achieved its economic goals across the income spectrums. A world with more protections for key industries might be a little bit poorer, but it would benefit a lot more people. Distribution matters.

Second, it really does matter that a nation cannot build things for itself. The pandemic proved that, and the hollowing out of communities around lost manufacturing capability reinforces it (the counties most likely to go for Trump in 2106 were the ones most directly affected by China joining the WTO). Medical staff in the pandemic wore plastic bags instead of real protective gear in part because the US could not manufacture that gear. Military equipment, medical equipment, infrastructure material — all of those are sectors that we largely do not control internally. You also do not want your energy transition to be entirely at the mercy of other nations, as it will be absent changes. Plus, you cannot keep design completely isolated from production. Without an understanding of how things are made, you eventually lose your edge in deciding how to design the things that are made. The idea that you can keep high paying “thought” jobs in a country that produces nothing it thinks up is, to say the least, not yet proven.

Most importantly, these can be good jobs. Having worked in both service jobs and warehouses and factories, I can tell you I much prefer the latter. Service jobs are filled to the brim with people who mistreat you and yet you must be nice to them. No amount of good labor laws or union strength will change that simple fact. It is soul deadening to have to be talked down to by someone because of your job. And, at the end of the day, it is nowhere near as satisfying as having helped build something. As hard as the warehouse and factory jobs can be, at the end of the day I still felt a sense of accomplishment that I never felt working a service job. This is not a brief against service jobs. Many people find joy and fulfillment in them, and I am grateful to, for example, the nurses and technicians that literally twice saved my life last year. But it is to remind people to not be so damn smug about what is and is not a good job, and what people do and do not want out of their working lives. Your personal opinion is not the word of God, and you should maybe have enough humility to understand that how you think is not how everyone thinks.

With that little rant out of the way, even if you do think onshoring manufacturing is a good idea, there is more chance that those penguins will build the next ship to mars than these tariffs will bring a single manufacturing job to the United States. Tariffs are merely a tax. Sometimes they are a good tax, sometimes, like now, they are a terrible tax. Taxes are one of many tools in the industrial policy and they all need to work together if you actually want to achieve your goals.

Factories take a long time to build, and they are expensive (partly because modern manufacturing is more automated than ever. Which is another thing you need to be aware of when crafting your industrial policy: manufacturing will bring in fewer jobs per plant than even in the recent past). No one builds them to avoid a tax, not really. By putting huge tariffs on items, and then making noises about negotiating them away, there is little incentive to build factories in the United States. Even if the tariffs remain, it is likely simpler and more profitable to merely raises prices where you can and abandon markets where you cannot. The US cannot dictate world markets — no one economic block can. If you want to onshore manufacturing, you need to look at the whole system.

You need to incentivize people to invest long term. That means a long-term combination of carrots, sticks, and regulations designed to help make it make sense to build in the United States. It means providing an educated workforce, ready to the kinds of modern manufacturing that is most likely to come to the United States. (Something that gutting colleges and the Department of Education is not going to help) It means using the power of the government purse and rules to encourage sectors to onshore and then build from that base. It means tweaking the rules of globalization to stop putting domestic manufacturing at a disadvantage. It means looking at working the entire system, not just blindly pulling on the tariff lever and expecting factories to appear like mushrooms after a hard rain.

The saddest part about all of this is that we have a working model for how to solve the issues with American manufacturing: Biden’s Chip Act. The Chips Act used a combination of incentives, regulations, and taxes to encourage companies to bring manufacturing back to the US. And it was a rousing success. Even the American Enterprise Institute, and organization so far to the right it has trouble seeing reality with the Hubble, admits that the policy has been “surprisingly successful”. Of course, the Trump Administration tried to short circuit and dismantle the success, because they are too dumb, too arrogant, too caught up in owning the libs to build on someone else’s successes. But their folly proves the point.

By treating the problem systematically, the Biden administration brought some manufacturing back to the US without damaging the world or domestic economies. The Trump Administration, on the other hand, refused to treat the problem as a part of a system and kept punching the only button their benighted leader could understand. As a result, they have trashed the world economic system and their own economy. Tariffs are a tool — they can be used well, or they can be used poorly. Unfortunately for us, the Trump Administration is collectively too stupid to understand that and now we are all paying the price.

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[1] Url: https://www.dailykos.com/stories/2025/4/8/2314984/-The-Tariffs-Are-Not-the-Real-Problem-The-Lack-of-Systematic-Thinking-Is?pm_campaign=front_page&pm_source=more_community&pm_medium=web

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