"Jan 23 (Reuters) - U.S. President Donald Trump told the World Economic Forum on Thursday that businesses should make their products in the United States if they want to avoid facing a tariff."
As I've written here before, Trump's position on tariffs and reshoring manufacturing is, in many ways, oversimplified and ignores the complexities of modern global supply chains. While the desire to bring jobs back to the U.S. and reduce reliance on foreign manufacturing is laudable and understandable from a political standpoint, the strategy itself is fundamentally flawed and will likely hurt the U.S. economy.
As someone who once played significant roles in thwarting credit card fraud, an analogy can be drawn between that criminal activity and imposing tariffs. When a customer disputes a charge (a chargeback), the company that processes the transaction loses money because they have to reverse the charge and potentially cover additional fees. To recover that cost, the company might raise prices for all customers, spreading the financial impact. Today, credit card fraud has merely become a cost of doing business. Similarly, when tariffs are imposed on imported goods, businesses that import those goods face higher costs. To protect their profits, they might raise prices on the products that are affected by the tariff, passing the increased cost onto customers.
In both cases, the company that bears the financial burden (whether from chargebacks or tariffs) often transfers that burden to the consumer through higher prices.
Do you really expect this to happen any other way?
Additionally, Trump's approach to tariffs assumes that companies can quickly shift production from places like China or Mexico back to the U.S., but in reality, that's not a simple or fast process. Many U.S. companies have long-established supply chains with foreign partners, and the infrastructure, labor costs, and expertise in those regions have been developed over decades. It would be costly and time-consuming for companies to move their production facilities or switch suppliers.
Products made in the US will ultimately cost US consumers more, so one way or another, U.S. consumers will pay higher prices for products whether they're made overseas (with increased tariffs) or the United States.
I thought this guy is supposed to be some kind of "4D-Chess" genius?