Going to be watching closely - but cynically, a promise of investment (for avoidance of tariffs) only needs to last one news cycle until tariffs are no longer top of mind. Then it can be walked back without tariffs being imposed.
Maybe instead of saying the t-word tariff, US gov can charge Apple a special fee on each iPhone. They can call it something catchy, like say, a Core Technology Fee.
This should be the top comment. Apple are doing business the way business is done, just like last time. Results don’t matter, it’s economic policy via press release. Form over substance.
Results matter, it's not hard to imagine that Apple considers the real risk of its promise and market position of being the privacy option being undermined by their supply chain risks, and leverage being used against them by privacy unfriendly actors.
What's the added risk here? It's fine to "risk" almost the entire iPhone itself to be manufactured in China but the servers for some random AI features need to be pure?
Sounds more like technical marketing and the company will treat any decisions around it as a marketing exercise.
Apple's commented previously on why they build in China, and it's beyond just the pricing - the supply chain for every single part they use is in China and mostly in the same geographic region, so there's a level of flexibility there they couldn't get in the US. It wouldn't surprise me if it was genuinely a goal for Apple to manufacture more in the US - they're a notoriously privacy-focused (corporate, not end-user) company, and China's known for IP wandering its way off campus. They're not going to sacrifice the iPhone economics until the US option is actually viable, but I'm not surprised they keep kicking the tires on US manufacturing.
> "the supply chain for every single part they use is in China"
Not entirely true. Some of the highest value components in an iPhone, including the CPU/SoC, baseband, and the majority of OLED displays, are sourced from countries that are not mainland China.
> They're not going to sacrifice the iPhone economics until the US option is actually viable, but I'm not surprised they keep kicking the tires on US manufacturing.
Apple could, with its immense cash hoard and cash flow, _make_ the US viable, but it chooses not to because it'd rather take the easy way out and have China or India or $COUNTRY fund it and return money to shareholders. They've returned money to shareholders rather than invest it in US operations, by design.
This is a classic feint to protect Tim Cook's entire raison detre. He built his career on super high efficiency operations by outsourcing to cheap labor countries. It relies on the low-to-no tariff access to US consumer money.
And I don't care that it's better for their stock price; that's Apple's problem not mine as a US citizen. And even as an Apple investor I would rather the money be spent on US on-shore operations.
There is no way Apple as a public company could just burn cash getting everything made in the US, shareholders would revolt long before the money ran out.
> And I don't care that it's better for their stock price; that's Apple's problem not mine as a US citizen.
That is the shareholder’s problems. People like to think that their investments won’t go batsh*t insane overnight.
> And even as an Apple investor I would rather the money be spent on US on-shore operations.
Apple doesn’t even make all, or even most of its money in the states. Not all of its shareholders are American, if they went this route they could lose half of their revenue overnight (as other countries note the protectionism and tariff or simply forbid Apple products from being sold).
This is correct if you only care about Apple stock price. But consider that there are people who simply do not care about Apple's stock price. Like me, an Apple investor. I care more about the US's industrial base than I do about whether it goes up 5% or down 5% (or whatever, it's besides the point)
>Apple doesn’t even make all, or even most of its money in the states. Not all of its shareholders are American, if they went this route they could lose half of their revenue overnight (as other countries note the protectionism and tariff or simply forbid Apple products from being sold).
So? I don't care about their revenue, I care about the future of American industry. Having a bunch of cash hoarded by old people is irrelevant if it isn't reinvested in something I care about. And I don't care about your supercar or Nobu reservation, or if some fund returns an extra 2%. This is despite being a direct beneficiary.
Live by shareholder return, die by shareholder return; the US is not and shouldn't ever be geared to shareholder return over everything else. Apple and other companies have freeloaded off the US for far too long.
Again, Apple ceases to be much of a company at all if they go your route of being isolationist. It isn't even about the stock price: their revenue tanks, their ability to produce tanks, everything about the company is basically just decimated. You might as well say "I don't care if Apple exists or not". So blow Apple away and how does that help the future of American industry?
Juche doesn't work in North Korea, it isn't going to work in the USA.
It's mostly about cost and market access to China.
Most smartphone supply-chain for Samsung and Apple exist outside China -- primarily in Japan (camera, sensors), South Korea (DRAM/NAND, OLED), and the US (various ICs fabbed at TSMC in Taiwan). There are quite a few reliable estimates/teardowns showing that these three countries account for close to about 90% of iPhone BOM (bill of materials). That's one reason why Samsung's smartphone unit was able to pull out of China without much disruption back in 2019 -- ie, low dependence on China.
I feel that Apple has pushed this misleading narrative a bit too long to defend their massive China outsourcing.
They've actually been diversifying iPhone manufacturing away from China for a few years already. As of April 2024, 14% of all iPhones were already manufactured in India. That's around 30 million phones per year. And Apple plans to double their India manufacturing again by 2028.
Results don't matter as much as PR, this is time when this is unfortunately valid. Just look at US elections.
Measurable results affect rational aspects of our minds, PR attempts to attacks directly emotions bypassing the former, ie to induce impulsive shopping.
Also, what actual security? Apple is as vulnerable as cheap chinese phones against state actors using 0days. Apple devices are still being stolen for spare parts, Apple doesnt secure each component AFAIK and thieves know this (very recent case with friend of a friend, they even knew how to bypass that built in airtag tracking). I haven't seen anything but very well crafted PR statements on this topic. All money-accessing apps on absolutely any phone are a security risk.
> This should be the top comment. Apple are doing business the way business is done, just like last time. Results don’t matter, it’s economic policy via press release. Form over substance.
If the Trump administration has any competence, they will rub those old promises in Apple's face until Cook actually does something meaningful.
The whole Trump administration is all about form over substance, though. I would not expect Trump to do anything actually productive about it, as long as Tim Cook sings his praise (and pays his dues).
I am a free trader in principle. However you have a country (China) with an authoritarian government that makes favored industries subsidized.
Of course the standard economic argument is that China using its GDP to make goods cheaper for our own citizens to purchase is better for us - they are subsidizing our economy. However it ignores the strategic disadvantage by our country losing its manufacturing capabilities.
The graphs may show economic advantage. It’s hard to quantify the long term strategic and militaristic disadvantage to not being able to make anything yourself if a world war occurs.
> However you have a country (China) with an authoritarian government that makes favored industries subsidized.
This is overlooking the forest for one tree. The thing is, mean chinese manufacturing wages are $25k/year (purchasing parity adjusted! $15k unadjusted) for a 49h week.
That is the reason that so much manufacturing/industry has shifted there, not some nebulous "Chinese government subsidies" (not saying those are not a thing, just that they don't really matter all that much).
> It’s hard to quantify the long term strategic and militaristic disadvantage to not being able to make anything yourself if a world war occurs.
Certainly. But forcing low-skill industry to stay at a relevant size in a high-wage country is expensive business (compare agriculture, which is subsidized basically for exactly this reason) and not straightforward (see Jones act).
Presenting tariffs as a viable alternative to taxation is just beyond ridicule, but that has not stopped people so far either...
Salaries are just a small part of the reason industry works in China.
The bigger picture is that China invests in the development of an industrial chain. This has many aspects: infrastructure, education, training, housing, and of course tax incentives. The USA decided to stop investing in practically all of these. Even scientific research, the last area in which the US used to lead, is now in jeopardy from both sides: competition from China and internal cuts.
I'll concede that having a solid baseline of infrastructure, (political) stability and a motivated/educated workforce is necessary, and China did well in building this up.
But I strongly disagree with your conclusion.
Lets assume that the US did all of those perfectly:
- Brilliantly educated workers with the perfect ratio of industry specific knowledge/experience
- Cheap housing near industry hubs built by the state
- The best and cheapest to use ports, roads and railway networks on the planet
- No tax on manufacturing workers income
Some of those are ludicrous/unrealistic for the US to provide.
But even if you managed to do all this-- that still does not make US manufacturing industry competitive. Because those US workers will still want a locally competitive wage instead of <10$/hour.
The reason the US is not competitive is exactly because it doesn't spend the money needed for that. China did it. To be more concrete, if the government spends money to build housing, workers don't need to pay so much to have a home. If the gov spends money on public transportation, workers don't need to buy expensive cars just to get to the job. If it spends money on free health care, then workers don't need to pay for expensive insurance. If the US spent money on (near) free higher education, workers wouldn't need to pay high costs on student loans. These are all items that make the US uncompetitive with other nations.
> The reason the US is not competitive is exactly because it doesn't spend the money needed for that.
You are making some kind of logical jump here that I can not follow. I just listed basically the absolute best that the US could have ever done-- but even in that absolute dream scenario (tax free income for manufactoring workers? I mean in what world do you see something like that ever actually happening?), the US is still not competitive in a direct comparison, because US workers have just no reason to work manufacturing for 10€/hour (when they make ~30/hour right now).
You can stack all the incentives you want-- the gap in wages/standards is so large that apart from straight up paying the difference (in either tariffs or subsidies, and that is a lot of money), you are not going to make US manufacturing competitive in a head-on comparison.
What you forget is that is exactly these inefficiencies that inflate US salaries. You need to make more money just to survive in most US cities, which forces companies to increase salaries.
> What you forget is that is exactly these inefficiencies that inflate US salaries. You need to make more money just to survive in most US cities, which forces companies to increase salaries.
I think you are reversing cause and effect here. Wages are not rising because things are expensive-- things instead become expensive because people are "rich" and can afford them.
I suspect (not an accusation!) that you would intrinsically like to see the US run healthcare and education in a government controlled way, at-cost, instead of allowing excessive private profits there (which I think is a good idea!).
But advocating for such changes in the name of making US manufacturing competitive is dishonest in my opinion, because I absolutely do not see those shrinking the wage-gulf sufficiently for US factories to compete head-on with China.
Furthermore, I don't even think you want to be competitive with China in this regard. Having a significant percentage of Americans working in/for factories to produce simple goods for 10$/hour strikes me as a step back, even if you would bundle this with a bunch of positive progressive improvements.
Absolutely. You do need a minimum baseline for infrastructure, government stability and workforce.
Most of Africa is just starting to slowly get there, Bangladesh is already very relevant for textile production.
I would expect the same basic trend to repeat that we saw with electronics manufacturing in 90s Japan:
First cheap products move (very wage sensitive), then the local sector expands, wages rise with the whole local industry moving up the value chain, then at some point local wages become high enough for the whole process to repeat with the next low-wage country...
I think trying to block this trend off with tariffs is a futile waste of taxpayer money which american consumers are gonna pay for.
Spending tax money to keep some degree of self-sufficiency in critical industries (like with agriculture) can be a solid idea if done sparingly and cleverly, but that is not how the current US admin has approached this...
"The company responded by intensively lobbying the U.S. government to intervene and mounting a misinformation campaign to portray the Guatemalan government as communist.[18] In 1954, the U.S. Central Intelligence Agency armed, funded, and trained a military force that deposed the democratically elected government of Guatemala and installed a pro-business military dictatorship.[19]"
> The graphs may show economic advantage. It’s hard to quantify the long term strategic and militaristic disadvantage to not being able to make anything yourself if a world war occurs.
Is the United States at risk of not being able to make anything ourselves? We have the second largest manufacturing output in the world.
Sour grapes. Most economists were just happy with this situation until recently. What I mean is, the current situation arises by the desire of Western businesses of getting hid of productive investments and concentrating only on capital investments. It has nothing to do with trading with an authoritarian government or not, which almost everyone believed was Ok until recently.
Pricing in externalities (such as national defense impact) is a basic function of economic policy.
I searched 'economics 101 strategic industries' and found this[1] within 30s which includes an overview of 'national self-sufficiency'. It presents the standard argument, including the parts you claim the standard argument ignores.
I personally favor decentralized planning over markets, but I find it unnecessary to slander economics.
Charitably, tariffs exist so POTUS can either lower taxes or increase jobs in US, but both would take time to pan out assuming things go well. So if a company is willing to onshore money or jobs, its achieving its intended purpose in their eyes.
No I think Mexico/Canada were largely about stopping immigrants and fentanyl smuggling. But China was targeted for not doing enough to stop manufacturing of fentanyl precursors.
Sorry to say but that's already been walked back on after Canada committed $1 billion dollars for extra northern border security and it made no difference in the tariffs discussions.
- According to CIS, the number of Canadian crime groups producing synthetic drugs doubled between 2023 and 2024
- There's a lack of Canadian agents who are tasked at preventing this and current legislations make it very inefficient between federal and provincial law agents
- There's an upward trend in Fentanyl seizures in Canada the last 2 years
- Fentanyl is now being produced domestically in Canada
All of that is within the control of Canada with better policies.
Let’s put it into perspective, because those numbers don’t give a baseline for what the problem is. Also they don’t necessarily have anything to do with trafficking.
Last year there were 45 lbs of fentanyl intercepted crossing into the US from Canada. Thats a backpack. There’s 500x as much coming from Mexico.
It’s unrealistic to expect that zero fentanyl will come into the US from Canada, and until that happens we will tariff all trade with them.
Zero fentanyl is a fantasy and will never be achieved. That thing is way too small and can be carried around too easily*
Tariffs are just a lever to get things done on the international front.
Canada has been neglecting security for a long time, so it's a wake-up call, and it's not a bad thing to put this out publicly to change things.
CBSA only inspects about 4% (some sources say even 1%) of all containers that ship in Vancouver. Quebec-Vermont* border control has been a joke for years.
Sure, Trump is using all kind of tricks to put pressure against his trade partners to secure some wins that will solidify him as a change agent to boost America, which will appeal to his electoral base. At the same time, it may actually bring good results to the US economy, bringing major investments in the country and negotiating better trade deals.
You may not agree with the means to get there, but you can't deny there's an argument to be made about his "America first" policies and why it could benefit the average people in the long run.
So therefore that allows the President to go back on a trade agreement he personally signed in his last term? I'm not going to disagree Canada should do more about reducing Fentanyl, nor that Canada can't control it with better policies. I am not clear on why this allows the United States to go back on agreements and allows the President to threaten with tariffs that seem to change weekly.
Yes this is one reason tariffs are so valuable to a corrupt POTUS. They have essentially unilateral and very fine-grained control over them, down to exempting specific companies or products outright.
Congress needs to step up on this, honestly. The entire idea that the President can unilaterally implement trade policy is as plain a violation of separation of powers I can think of, and SCOTUS is a fan of non-delegation doctrine.
Legislators step up when enough of their voting constituencies make it clear that they value something as a non-negotiable (assuming votes still matter).
Which means those who care about this are back to not only contacting legislators but also persuading a lot fellow voters that separation of powers is crucial and worth prioritizing over familiar well-handled and loved heuristics.
Yes a million times. For all the rhetoric about authoritarians, the Democrats never seem to want regin in Executive power when they are they majority. It is like a game of chicken where America winds up with a populist dictator from either the left or right.
Yes because populism is a reaction to government being generally unresponsive to people’s needs.
Congress has become increasingly unproductive and unresponsive. There are many popular policies that Congress essentially ignores, and many problems that go unsolved. So trust in government dwindles and people crave strongman solutions.
I’m not sure there is a solution. There are so many interlocking problems gumming up the process that any “we just need to fix X” solutions (where X is gerrymandering, money in elections, lobbying, the two party system, first past the post, corruption, income inequality, the electoral college, the slow death of journalism, consolidation of industries, etc) are nearly impossible and also probably insufficient because they all feed back into one another: they are both causes and effects.
So when people are mad about a downstream effect like the price of eggs and digging any deeper touches one of the topics above (“to fix egg price gouging you need to reinvent the political system” sounds a lot like “to make an omelette first you need to create the universe”), it’s really easy to throw your hands up.
A codebase accumulates messes during it's entire lifetime. Sometimes, it gets to the point to where a rewrite is a good option. Even if the rewrite doesn't have all of the features...Even if possible, it may be better not to keep all of the features. As some features aren't important enough to maintain. The same can be said about government structures.
That is a fair analogy of the problem. But the solution is inherently more complex.
1. The agents of political change are themselves subject to politics. (Unlike maintainers of a codebase, who are able to make top-down decisions about the code.) If you make a bad decision, it may be the last one you’re allowed to make.
2. There are no unit tests for politics. There is only history, which is an imperfect predictor.
Granted large political systems are uniquely complex. But complex & old software can share the attributes you outlined.
1. Politics does enter into programming teams. There's several articles of this genre. Where the most highly regarded programmer made bad decisions over a long period of time & exhibited hubris in doing so. This programmer was fired, but if he was a founder otherwise held some leverage, then he may not be fire-able. However, other staff can leave. It's more difficult to leave the impact of politics.
Entire industries can make bad decisions due to incentives. Such as I must learn technology X because companies hire for technology X. Companies choose technology X because developers know technology X. Technology X could have fundamentally flaws. Compounding complexity in the ecosystem as additional tech is made to fix the flaws...which will also have flaws.
These cycles of compounding bad strategic decisions yet good tactical decisions can last decades.
2. In some ways there are unit tests for politics. Geopolitical signals can be sent. So if X happens, there's a tacit agreement that Y will be the response. Unit tests are great for small units. However, complex systems can be difficult to comprehensively test. This is why there is fuzzing...which is effectively a monte carlo simulation. Monte Carlo simulations are widely used in political analysis.
3. There's non-deterministic inputs. And the system can be more complex than what's possible to model. Leading effectively to non-determinism in making decisions about how to modify the system.
Clearly a non-sequitur, but I'll bite anyways. Paul Pelosi is a VC, and I'm sure that most of the Pelosi net worth is due to his income, not hers. Since the laws preventing members of Congress from trading on information they receive as part of their duties, you can't say that the Pelosi's have violated any securities laws.
And both sides of the aisle benefit from this. Whether it's legalized insider trading or jumping to corporate jobs when out of office, it's a corrupting influence. All members of Congress, SCOTUS and POTUS should have to place their assets into blind trusts. That won't stop this corrosive influence, but it is the bare minimum.
> Since the laws preventing members of Congress from trading on information they receive as part of their duties, you can't say that the Pelosi's have violated any securities laws
The feds can and do go after people for using family members and friends to execute trades. So if Nancy Pelosi told her husband some material non-public info, and Paul Pelosi traded on it, that would still be insider trading.
There was a guy at Microsoft who was caught once using a friend to place trades. He said he talked himself past his ethical concerns by reasoning that members of Congress do it.
Edit: to be clear, the absence of a prosecution does not mean that the Pelosis did not insider trade. Nor that they did. We can't tell from this distance, only speculate.
"Paul Pelosi, 83, sold 30,000 shares of Google (GOOGL) stock in December 2022, just one month before the tech giant was sued over alleged antitrust violations."
> Since the laws preventing members of Congress from trading on information they receive as part of their duties, you can't say that the Pelosi's have violated any securities laws.
iirc as soon as anything becomes beyond the border the President holds the keys for various reasons including the ever-vague “national security” but also due to being prescribed as the primary negotiator https://en.m.wikipedia.org/wiki/Treaty_Clause
Tariffs are not treaties, they're taxes/duties - only Congress has the power to raise them. Article I is extremely clear on that. Historically, tariffs were always raised by acts of Congress, not by Presidential fiat.
Trump is using extremely misguided legislation from the 1960s/70s where Congress allowed the President to enact tariffs for national security and emergencies. There is a very strong argument (in the sense it resonates with the conservative SCOTUS majority) that Congress cannot delegate its fundamental powers to the executive by legislation alone.
I think people are just too cowardly to bring a case in front of the courts to challenge the constitutionality of it all. Non-delegation doctrine is what the Federal Society want to use to kneecap all federal regulation. Trump operates on a spoils system so it's not in the interest of conservatives or businesses to challenge him, for fear of retribution.
Trump is using tariffs not to raise revenue, but rather use it as a stick to force companies to invest in USA.
Previously they were outsourcing and offshoring as much as they could get away with it. Which led to transfer of advanced technologies outside USA and America losing its manufacturing and technology edge
So how's that going? Outsourcing seems to be going strong, the tarriffs instead pissed off allies who are preparing counter-tarriffs, and the CHIPS Act is being dismantle as we speak (there goes our investment.
Tariffs are a form of taxation. If I want to import say tea, and the government is placing a tariff on that imported tea, I am effectively taxed by the government. And only Congress can impose new taxes.
Not saying you're wrong, but... I have seen claims that tariffs are a source of government income that Congress doesn't control. You're claiming they do.
I haven't seen a citation from either side. Can you substantiate your position?
I have already explained my thinking up this comment chain. I'm mostly replying to GP who misunderstands that the intent of the tariffs is besides the point.
TL;DR read Article I section 8, read up about the Trade Expansion act of 1962 and Trade act of 1974, and "non-delegation doctrine", and you can trivially find legal debate about the constitutionality of IEEPA. Rather than listen to random nerds on HN you should seek out this information yourself.
There is no jobs problem in the US though. Unemployment is at 4% which is mostly just job churn. Long term unemployment is only 1%.
US consumers, that’s all of you, are being hammered with taxes on imported goods most of which can’t realistically be produced in the US anyway, to solve a problem you don’t have.
A commitment like this takes years to plan. It can’t possibly be a response to tariffs announced weeks ago. This is all optics.
I fully believe that the real ("main street not wall street") economy is in worse shape than government numbers on unemployment suggest and both sides are to blame for different aspects of this problem.
But nothing Trump is doing is going to fix your situation.
In fact he (or rather Elon/doge) is very actively making things worse for you with the massive government layoffs, flooding the market with even more people to compete with you for jobs making finding work more difficult and also eventually dropping all of our wages.
>But nothing Trump is doing is going to fix your situation.
I'm aware. I'm sure he's responsible for at least 3 job freezes I ran into mid-interview this year. He's literally costing me job opportunities because no one can budget around this chaotic government.
4% too many and probably understated. The BLS repeatedly underestimated unemployment during the previous administration. Also the labor participation rate, which is harder to game, still hasn't reached pre-Covid levels yet: https://www.bls.gov/charts/employment-situation/civilian-lab...
In February 2020 it was 63.3% and in January 2025 it was 62.6%, for a difference of 0.7%. Also note the steady decline post-2008 and the multi-year plateau that jitters around 63%.
Having the plateau change from ~63% to ~62.5% isn't an unreasonable scenario.
False, USA has a big problem with manufacturing. All US jobs are service jobs to prop up consumer economy, that have no strategic benefit.
A lot of fake employment and low productivity jobs are in the government/NGO sector, paper pushers, DEI jobs, law/compliance type jobs - that should have been manufacturing jobs instead.
USA has no shipyards and infrastructure is crumbling precisely because of misallocation of resources and labor
if shipbuilders were not insulated from competition, they would have offshored their manufacturing long time ago and sold out to Hyundai or some other foreign conglomerate. (just like the rest of manufacturing left USA in 80s-90s)
Jones Act is the reason US has at least some form of domestic shipbuilding
The US domestic civilian shipbuilding doesn't exist. It's dead and already smelling.
For example, the Washington state needs new ferries, and their cost is literally almost 10x than the cost for the similar ferries produced in Turkey for the nearby Vancouver, BC. With this kind of cost gap, there is simply nobody who would buy the US ships unless they _have_ to.
Without the Jones Act, the shipbuilders would have adapted long ago to produce high-margin high-tech components for the ships for the international market. And likely in larger quantities than they do currently.
How is the Jones Act responsible for the failure of domestic ship building? Seems like the Jones Act didn't go far enough if we really cared about a strong domestic ship building industry.
The government determines the employment rate via surveys, i.e. they just go and ask people if they're employed. It's not a calculation from taxes or from employers or anything.
So it's up to the gig workers if they think they're employed or not. Presumably this depends on how often they do it.
Apparently, yes. I saw mention of discussion around the Trump administration potentially giving Apple a tariff waiver. And I believe in Trump’s last term, Apple did have some sort of waiver.
I’m on mobile but Googling for “Apple tariff waiver” and “Apple tariff exemption” will point you to several news items.
Maybe the next administration should keep up the tariffs (as Biden did to a degree). Cheap trade with China distorts the tech sector too. Jobs and Wozniak were the products of a system in which americans had to build products at home. Tim Cook is the product of a system where you can become a trillion company by hyper-optimizing foreign supply chains. Which is better?
You’re incorrect about history. Mercantilism not only restricted foreign trade, but restricted domestic industrial development by requiring the colonies to sell raw materials to Britain and buy finished goods from the Britain. Tariffs were a core pillar of the Lincoln Republican Party.
There’s been an isolationist wing in tech as long as I’ve been in it (early 2000s). I remember chatting with someone at Cisco/Juniper in the late aughts about Huawei ripping off their router designs down to the silk screening. Of course today Huawei makes their own state of the art routers with their own silicon, and some lower-end Cisco/Juniper gear is white boxed foreign equipment. And of course tech folks were complaining about immigration and outsourcing back in the early 2000s when Republicans were enthusiastically supporting both.
Having access to cheap oversea steel allows Americans to focus on building companies with significantly higher value-add. Onshoring low-value industries is a massive human capital waste and an easy way to depress wages.
It allows a very small portion of Americans to build companies with significantly higher value-add.
It destroyed the futures of a larger number of Americans.
Then again, why do we make the distinction "American"? If you have people who became unfathomably wealthy by shipping off strategic industries to the lowest bidder regardless of geopolitical implications, does nationality matter anymore?
No, the analysis (and it’s not exactly rocket science) says just the opposite: Way more downstream manufacturing jobs that rely on steel as input are lost, vs. domestic steel production jobs gained.
Do "normal Americans" pay taxes? From the numbers I've seen, ~1/3 - ~1/2 of tax filers receive more money from the government than they pay. To them, "refund season" is a cause for celebration rather than a stressful event.
The on-average crossover between negative and positive net total federal income (individuals will differ because of individual circumstance beyond just income level) tax when taking into account refundable credits (most notably, but not exclusively, EITC) is a bit below the median personal income but not that far below it, so certainly lots of individual "normal" (by most reasonable definitions) Americans do not pay net federal income tax .
But even if they don't pay net federal income taxes, they probably still pay a net positive amount in a variety of state taxes, federal payroll taxes, and federal consumption taxes (e.g., gas tax.)
Withholding has everything to do with it. Why do you think $10 an hour comes down to 1200 instead of 1600/month?
You can choose to withhold more or less, but the default taxation on w-2's do generally give a bit of a refund. Better to take out too much when you don't need it than slam down a gigantic bill when at once a year later.
"Refund season" is mostly a thing because the default w2 withholdings are set at a level where you slightly overpay on each paycheque, to avoid a surprise tax bill at the end of the year.
The problem with taxes is that it's a prisoner's dilemma. You need global cooperation at some base level of taxes, otherwise companies move to more favorable tax jurisdictions in the long term and offshore from there, which would hurt the US even more. It doesn't have to be all-or-nothing, but any marginal dollar of increased taxes in one place will have some non-zero effect of encouraging the next investment dollar to be spent elsewhere.
To be clear, I do think capital gains taxes are criminally low in the US relative to income tax, so I'm not arguing in _favor_ of lower taxes. I'm just saying why raising taxes isn't a panacea.
Creating an underclass that relies on economic elites paying taxes rather than being economically independent because you want to optimize for "high value add industries" is a terrible long term strategy.
> tax those people appropriately and pump that money back into the economy
So make the US to be like a far less successful country? Kill your economy by increasing taxes? The US economy is singularly successful because it has incentives to build businesses - see YC.
Have you tried living in a country that doesn't encourage businesses? They are often great tourist destinations. I'm in New Zealand and too many ambitious young people leave here: we have an emigration problem because our economy sucks. The government fixes the economy with 30% immigrants (disclaimer: I love immigrants). I have many friends that are never coming back here except for holidays. I hate the New Zealand government incentives for businesses (taxation and regulation) and I can see no way to fix them. Even our "business" political party ACT is completely fucked (latest story - they will be selling everything profitable to overseas "investors" - destroying the economy).
Taxation incentives matter to businesses. Be careful what you ask for because the majority have little understanding and vote for the wrong incentives.
Even business owners don't seem to understand incentive systems that well. Perhaps game designers do?
However I believe that incentives need to be marginal. If you already have a lot perhaps you need a big carrot as your incentive? I don't know any billionaires that I can ask how they feel about taxation incentives: I reckon you are making assumptions about what you think they should feel.
What makes Tim Cook make the US more money?
Taxation cliffs are shit. In New Zealand our Green party decided that 1 million was enough. Why would you bother growing a business after you reached 1 million? Retirement? A business is defined as being about making money (albeit some people do run "businesses" for other outcomes - why is Warren Buffett still working?).
High marginal taxation is also shit IMHO.
The hard part is to design the incentives so that productive people build your economy for the benefit of everybody.
If a government discourages business then the economy is crap and everybody suffers. See other economies.
Few people understand the incentives of others, and few people understand how wealth is created for all: the hoi polloi dismiss the wealthy as vampiric money grubbers. Anyone who uses the word capitalist in a derogatory way has been brainwashed. Most everything that makes our economies work is invisible non-monetary rewards. https://news.ycombinator.com/item?id=43162596
I can speak for my own financial incentives. My perception is that I have an effective tax rate of well over 50% in New Zealand (any retirement savings are not safe because our demographics and governments will screw our economy).
I do not feel the incentive to work in a business - My attitude means I now produce marginally less than I could for the New Zealand economy (I still pay taxes so they are advantaged but they could get a lot lot more from me). I now mostly selfishly concentrate on those closest to me. Why should I work if it isn't marginally beneficial enough for me? I'm no more selfish than my retired friends that I know (a wide variety of people from many walks of life).
(Reëdited to expand and clarify).
We can't decide how much is fair. Compare yourself to a dead king - what is fair? We can design systemic incentives so that we each make the world better for everyone. Not that that it is easy... Trite thoughtless dismissals of the most productive members of society are not helpful.
Edit 2: I guess this discussion is as close to work as it gets for me. Too much adulting. Should I get into politics? Are morals an impediment to helping others? There are too few politicians I admire, and too many I wouldn't want to shake hands with or be associated with. Every idiot has political opinions - how much of an idiot am I? Every politician is smart enough to win an election - they are not stupid yet they make too many horrific mistakes. What about the cryptically smart ones? I see how systems affect people that join a system. What would I become if I join our political system? Understanding our different systems is hard because they grow so weirdly with vestigial complexities due to history, complex interactions, and reflexivity.
So What Does Drive Political Disagreement?
If you’ve read The Psychopolitics Of Trauma, you already know my answer to this: it’s all psychological. People support political positions which make them feel good. On a primary level, this means:
\* Successful people want to hear that they deserve their success.
\* Unsuccessful people want to hear that successful people don’t deserve their success, lied / cheated / nepotismed their way to the top, and are no better than they are.
\* People want to knock down anyone who makes a status claim to be better than them.
People want to feel like their own identity group is heroic net contributors, and that their outgroup are villainous moochers.
People want to feel like their own identity group deserves more power.
* People want to feel like their preferred lifestyle and policies have no negative implications at all and they don’t have to feel guilty about them.
* People want to feel like they’re part of a group of special people poised to change the world, and everyone else is hidebound bigots who resist temporarily but will eventually be forced to recognize their genius.
People want to virtue-signal: demonstrate that they have the good qualities that their ingroup considers most important.
* But people also want to vice-signal: demonstrate their willingness to breezily dismiss the supposedly good qualities that the outgroup considers important.
>Do Medicare and Medicaid exist without businesses?
In a purely technical sense, yes. Because you don't necessarily need an American salary to pay taxes that cover these facilities.
It was very much a concerted effort for most other non-govt Healthcare to be tied to often American jobs. Which of course causes a cacophony of problems when less employers are even offering full time work.
>Why do you look at money as though that is all that matters?
It does not, but business these days sucked up enough money that it's starting to affect basic survival, let alone any pursuit of happiness. There's no point finding upsides when the common person is is so low on the totem pole.
Making hypotheticals of "well look on the bright side, you're not dead" doesn't help either. When America starts using that wealth to make sure no one in a first person country isn't dying on the street, we can discuss the subtleties of capitalism.
>Every poor person I've met avoids taxes.
Well I can't speak for New Zealand. You can't tax a poor person with no income. That's how bad the situation is here.
> Because you don't necessarily need an American salary to pay taxes that cover these facilities.
That is a weirdly employee centric view. I'm talking about the US economy. American salaries depend on American businesses. America has some of the best healthcare available in the world. If US businesses are fucked due to the beliefs of citizens (or whatever else), then the US socialised healthcare is fucked too. There's plenty of poorly run countries to compare against (including Cuba where I discovered their lies about their healthcare first-hand as a tourist). NZ socialised healthcare is okay but our economy is not improving and regardless of our desires for more, the social benefits have no choice but to match our economic output.
> it's starting to affect basic survival, let alone any pursuit of happiness
Only if you're one-eyed. US citizens are the rich. In a fair world we would tax all Americans at 90% and redistribute that to the poor in the rest of the world. Maybe same for NZ too (Wikipedia shows that NZ's disposable median income is ⅔ that of the US however it also strangly says that NZ's median wealth is nearly double that of the US -- I'm guessing because houses are more unaffordable in NZ). Income is usually a better measure within an economy of useful output (economies can't really save for next year). The US federal poverty line is about $16000 for one person - a hell of a lot of money for people in many countries.
> Making hypotheticals of "well look on the bright side, you're not dead" doesn't help either.
I guess you're referring to my comment "Compare yourself to a dead king - what is fair?".
My obfuscated point is that few people (maybe narcissists) would give up their modern life to live in past poverty. Antibiotics, freedom, technology, access to the intellectual output of the world. We are mostly a lot better off than the past. Most people don't value that instead they are money-centric (as many of your comments are). Most people seem to compare themselves to people that are wealthier than themselves and then complain about how they are not getting their fair share. Few people compare themselves against the global poor and then talk about how much they should share their wealth downwards. They talk about how others should share their wealth - they rarely seem to consider how they should share their own wealth. Especially ironic given that it appears that the majority of commenters on HN are the wealthy of the world (and often part of the tech overlords - e.g. YC).
The US is often a parasite upon other countries. If you were to say that the US pays it back to poor countries with technology (mostly from rich companies), then you would be implicitly arguing that wealthy US companies deserve to be wealthy. I recall that weapons are the biggest US export (nice!)
I guess I'm saying is really take care not to kill your geese laying golden eggs (even if you think the geese seem to be keeping too much golden egg to themselves): the socialised good that you have depends on those geese (US businesses). The bad is bad but don't destroy the good.
An economy is a delicate balance - as shown by many failed economies.
> When America starts using that wealth to make sure no one in a first person country isn't dying on the street
I get the value add argument, but lots of people just need income to pay for living expenses. Without an income, those people become disaffected and sometimes violent. Then they embrace right-wing protectionism because, while their gadgets are cheaper, they have no income to buy cheap gadgets.
Nor can they move to these offshore places (where the cost of living is lower) because immigration laws exist in part to control worker mobility.
> Having access to cheap oversea steel allows Americans to focus on building companies with significantly higher value-add. Onshoring low-value industries is a massive human capital waste and an easy way to depress wages.
That's the talking point, but it's bullshit. A lot of those "low-value industries" are fundamental capabilities, and China sure as hell isn't going to let the US own the "higher value-add" areas. They dominate those next, and the US free-trade business elites will be fine with it as long as they get to make some money for themselves.
Being a high value-add area is endogenous to how hard it is for others i.e. China to reproduce. In other words, if it were easy to make GPUs they wouldn't be so damn expensive.
> Being a high value-add area is endogenous to how hard it is for others i.e. China to reproduce. In other words, if it were easy to make GPUs they wouldn't be so damn expensive.
China's going to put the money into making GPUs, and they're going to get it right, probably sooner than later. Then they'll drive the American manufacturers out of business, like they've done in many areas before. Their government isn't beholden to the profit-focused capitalist attitude that is one of the West's biggest vulnerabilities.
Also, it's pretty foolish to 1) forget power and security doesn't come from rarefied high value-add stuff, 2) that there are a lot of people that can't be employed doing stuff like making GPUs.
>> Isn't this why we declared independence in the first place? To get away from the British restricting free trade?
No. I'm not sure where you got that idea. If you look at something like the Boston Tea Party, it wasn't high taxes on tea that were being protested against, it was lowered taxes on tea that undercut the smuggling operations of people like Sam Adams and John Hancock. "No taxation without representation" makes better press than "No undercutting my smuggling operation" though.
In the early years of the US, between 80 and 90 percent of federal revenue came from tariffs. Not exactly free trade.
> In the early years of the US, between 80 and 90 percent of federal revenue came from tariffs...
To be fair, the Federal Budget back then was 2%-ish of GDP. And their political consensus gave the Federal Gov't very few things that it had the power to tax.
Govt spending as a share of GDP is probably a good measure of how involved the government is in the economy. There are arguments that too much government involvement leads to stagnation, which considering many of the economies the US regularly out-grows have higher share of govt spending as a % of GDP has some merit. Its an interesting economic question what level that would be which changes depending on how you approach the problem.
I want to say “that’s not what isolationism means”, but I realize it starts to feel vague just like the word “fascism”, used when convenient but varies wildly in rhetorical meaning… to be more specific is better, I like what George Washington had to say about it in his farewell address because it shows the nuance of the topic across the spectrum, it’s not as simple as isolation good vs bad:
The great rule of conduct for us in regard to foreign nations is, in extending our commercial relations to have with them as little political connection as possible. So far as we have already formed engagements let them be fulfilled with perfect good faith. Here let us stop.
Europe has a set of primary interests which to us have none or a very remote relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns. Hence, therefore, it must be unwise in us to implicate ourselves by artificial ties in the ordinary vicissitudes of her politics or the ordinary combinations and collisions of her friendships or enmities.
Our detached and distant situation invites and enables us to pursue a different course. If we remain one people, under an efficient government, the period is not far off when we may defy material injury from external annoyance; when we may take such an attitude as will cause the neutrality we may at any time resolve upon to be scrupulously respected; when belligerent nations, under the impossibility of making acquisitions upon us, will not lightly hazard the giving us provocation; when we may choose peace or war, as our interest, guided by justice, shall counsel.
Why forego the advantages of so peculiar a situation? Why quit our own to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toils of European ambition, rivalship, interest, humor, or caprice?
It is our true policy to steer clear of permanent alliances with any portion of the foreign world, so far, I mean, as we are now at liberty to do it; for let me not be understood as capable of patronizing infidelity to existing engagements. I hold the maxim no less applicable to public than to private affairs that honesty is always the best policy. I repeat, therefore, let those engagements be observed in their genuine sense. But in my opinion it is unnecessary and would be unwise to extend them.
>when belligerent nations, under the impossibility of making acquisitions upon us, will not lightly hazard the giving us provocation; when we may choose peace or war, as our interest, guided by justice, shall counsel.
Ironic that as a Canadian, the US is moving from the nation that would be guided by Justice into the belligerent nation in this situation.
It also serves as a lesson to us that we should have learned from you and George Washington, and stood on our own first and ensured our own security before cooperating with others. We have a long way to go to get back there now, unfortunately under the position of potentially our closest ally and economic partner being belligerent, untrustworthy and unreliable.
I believe the body of people who are promoting such a narrative (and it’s clearly coordinated) have major conflicts of interests, they want to maintain the status quo for their own enrichment at the expense of any specific nation, because in reality plain old paying attention shows nearly the exact opposite is true in every sense.
They are very good at their propaganda which is exactly how they got in that position but they are not looking out for your interests in the slightest, they just want to “manufacture consent” for the forward march of the global hegemony, that oligarchy… nobody in their right mind, with eyes unclouded by hate, would come to these conclusions naturally.
It’s probably the scariest thing too, and it’s nothing new! Go read Chomsky’s book by the same name “manufacturing consent” and he lays out many examples that were happening in the 70s-80s, and they are following the same playbook today just with Ukraine and Gaza instead of Colombian Jungles and Vietnam.
>I believe the body of people who are promoting such a narrative (and it’s clearly coordinated) have major conflicts of interests,
I'm a Canadian. Operating SOLELY on the actions and statements of your executive branch, not the media's reporting but the wording of the government, their executive orders, their direct public statements. your government is increasingly belligerent, untrustworthy and unreliable.
Belligerant -> Constantly making subtle threads of annexation. Calling the Prime Minister of Canada the "Governor" of Canada. Constantly lying about trade deficits that are surpluses and drug and migrant problems that are actually a bigger problem moving north across the border than south.
Untrustworthy -> After renegotiating NAFTA to USMCA and hailing that as a great agreement, now its a shit agreement and he's putting tarrifs on to get more from Canada under the threat (and likely actuality) of causing economic harm to both our countries.
Unreliable -> You were our biggest and staunchest ally. Electing an administration that is actively hostile to our government and sovereignty means you are no longer reliable as an ally.
> they want to maintain the status quo for their own enrichment at the expense of any specific nation, because in reality plain old paying attention shows nearly the exact opposite is true in every sense.
The current actions of the administration are destroying hundreds of thousands of lives in order to enrich a few thousand at the top. They are alienating ally's, destabilizing peace and almost guaranteeing more conflict and war in the near future.
Chomsky warned of the damage a demagogue supported by a disenfranchised, hurting and angry populace can have on a country. This is happening now, and half the country is burying their head in the sand claiming its propaganda.
>This is total nonsense, nobody thinks they can annex Canada…
Trump defies typical expectations and does things everyone else thinks would never happen. Often because to do so would be very damaging and idiotic, but that never actually stops Trump.
However you do NOT threaten to annex, take over or otherwise threaten the sovereignty of an ally or friend. That is geo-politics 101, so regardless of how serious he is about doing it, the act of threatening it is belligerent and shows he isn't a reliable trading partner or ally.
Outside of annexing, the trade war is also actively hostile on top of being perpetuated on complete lies.
>they just want to “manufacture consent” for the forward march of the global hegemony, that oligarchy… nobody in their right mind, with eyes unclouded by hate, would come to these conclusions naturally.
The oligarchy has taken over. The few that benefit from the "global hegemony" you refer to, which is largely the 'interests of the rich' are now completely in control of the US.
The US administration absolutely is not looking out for the interests of the average Americans. Most of what they are doing directly hurts most or all Americans in one way or another, and the few things they do that help Americans benefit the rich the most.
Now is the time much of the US populace has always claimed it would stand up against tyranny, an oppressive "lord" class and kings. They are watching it and cheering it on instead.
China's economic power is certainly not rooted in their isolationist social policies. They're just as bullish about foreign investment as the US was at the height of the free trade era.
Apple went bankrupt under Jobs and Wozniak and was saved by hyper optimizing foreign supply chain company Microsoft only to rise 10 years later by focusing on hyper optimizing foreign supply.
There was a lot more than that going on and I think you've pretty generally mischaracterized the main problem with the mid-80's era Apple—which had nothing to do with domestic manufacturing and everything to do with not delivering new products that people wanted, at a reasonable price. You can claim overseas manufacturing solved the pricing component of that, but that's not at all clear: other companies were manufacturing in the US at the time and still out-competing Apple.
That timeline isn’t even close to accurate. Apple was doing quite well in the 80s when Jobs and Wozniak were there. In the early/mid 90s was when they started going downhill (well after Jobs was gone), and by that time they had already outsourced a lot of their manufacturing (computers in Cork, Ireland and Singapore, and motherboards/components in places like Taiwan).
I don't know about Microsoft, but I'm very clear that the "miracle" operated by Apple was exactly to perfect foreign supply chain at a time when Intel/Dell/HP and others were still heavily focused on the US. The quality of Apple products was already there since the beginning, but they had no way to compete with the PC market until they figured out Asian supply chains.
Maybe instead of saying the t-word tariff, US gov can charge Apple a special fee on each iPhone. They can call it something catchy, like say, a Core Technology Fee.