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1/It’s possible that tariffs might actually “work” in cases like Apple (tons of cash to repatriate & enough scale to run an automated US factory). But man, it’s going to devastate small business. Ex: avg auto parts brand does 7% EBITDA. 25% increase in COGS and you’re dead.
2/The price difference for fully-automated manufacturing in US vs China at large scale isn't that bad. But at low volume (say, 500-2000 units a year, which is actually 'high volume' for a small business), price difference can be 5-10x - if you can find someone to make it at all.
3/This means that small businesses just have to keep buying from China, but now the small business is paying a 25% tax. They can't absorb that (see #1), so they increase prices. Total consumer discretionary is ~fixed, so power just consolidates to fewer, larger firms.
4/The big concern here is that the high-profile cases (e.g. hypothetical Apple moving manufacturing back to US) are highly visible, but the consolidation of small businesses is almost invisible - leading to reduced dynamism and increased wealth inequality behind the scenes. (end)
You do realise that other countries will replace China as manufacturing hubs?
Sure, that'll happen in the long term. Short term will be extraordinarily painful for small businesses.
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