I don't think the US is underestimating China... I do think that the US is preemptively shoring up a domestic posture against long term changes. It would be a pretty bad strategy to continue to outsource everything and continue to see a massive trade imbalance with the outside world for a prolonged period of time.
> It would be a pretty bad strategy to continue to outsource everything and continue to see a massive trade imbalance with the outside world for a prolonged period of time.
It's not actually a strategy at all. It's the organic result of being the global reserve currency. Foreigners want American dollars so that they can trade with everyone else and are incentivized to do whatever it takes to get it.
Also, the "massive trade imbalance" is only an imbalance in goods. When you take services & the flow of foreign investments/loans into consideration as well, things don't look anywhere near as uneven as Donald Trump would like you to believe.
It’s not even just the flow of services Trump is ignoring: an iPhone is made in China but the design and software is done in the USA, most of the parts come from other countries, most of an iPhone’s value isn’t originating from China.
Trump wants us to give up high value jobs in designing hardware and software so we can make less working in factories again.
No... not everyone is capable of doing hardware or software design... There are over 350 million people in the US. There are nowhere near that many software/hardware jobs.. or other IP generating jobs. Not only that, but corporations are bringing in a lot of people to do those jobs as well, driving down those wages.
It's not even just jobs, it's also the tax revenue itself.. the population is overburdened with taxes and increased prices combined with relatively lower wages due to excessive inflation the past few years. While tariffs can increase prices, they can also eat into the margins of foreign production leading to more insourcing of jobs.
Beyond those aspects is being able to handle production of critical infrastructure in times of supply constraints... such as war or a global pandemic. You can increase from 50% production of medications to 100% of domestic needs pretty easily, but scaling from 0% is almost impossible in any reasonable time frame.
We already have a low unemployment rate and we have plenty of low paying jobs even in manufacturing that are going unfilled now. Surely those workers have to come from somewhere, and China is really eager to switch places with us. A decade from now Americans will probably be manufacturing stuff for rich Chinese consumers who would rather work jobs in product design and software development that we used to do, and we will owe it all to Trump and the voters that put him in power.
