> they'll correct their strategic stances for the newer unstable order: Onshored supply chains, better inventories than just-in-time, less reliance on inflation assets and more on production assets
How exactly do you think instability encourages long-term investment in manufacturing? Not the dynamic of being in a better position if factories simply popped into existence, but actually plunking down money hoping for a return in the face of economic slowdown and political instability.
The actual response I expect is even more goods shipped directly from China, with tariff taxes built right into the sale price (Aliexpress didn't miss a beat on that one), and with the general uncertainty raising Chinese sellers' profit margins.
How does disincentivizing rival supply chains and incentivizing domestic supply chains incentivize the construction of domestic supply chains? Are you really asking this question? Is there an echo?
I am asking how the construction of domestic supply chains is actually being incentivized here. And how it isn't just disincentivizing the remaining few domestic hops of the current supply chains and moving even the warehousing to foreign shores.
If the minimum viable customer-sale price after importing a given product rises above the minimum viable customer-sale price when domestically manufactured, the choice becomes obvious to entrepreneurs. This isn't difficult, and it isn't a trick.
Markets are not computationally easy (ie globally efficient), as you seem to be assuming. If they were, central planning would actually work.
Rather there are many sticky intrinsic factors like network effects, path dependency, and economies of scale that would need to be overcome to make the scales tip the other way. This is why once manufacturing started going to China, it then continued accelerating. To start bringing it back, we would need to clear a high activation energy.
Then there are the additional issues with the current approach. For starters, building new factories requires a bunch of industrial equipment. But with the blanket import taxes that has all shot up in price as well.
There is also the uncertainty of trying to plan on the long term scales of capital payback in the presence of an administration that flip flops on policies by the month, has seemingly no clue what they're doing, carves exceptions for the politically connected who bribe at McDonalds-al-Lago, and continues escalating the attacks against our traditionally stable-for-capital rule of law. From the investment perspective, it feels we're moving in the direction of a South American dictatorship where it only makes sense to run economically-colonizing "suitcase operations" rather than broad-base industrialization.
How exactly do you think instability encourages long-term investment in manufacturing? Not the dynamic of being in a better position if factories simply popped into existence, but actually plunking down money hoping for a return in the face of economic slowdown and political instability.
The actual response I expect is even more goods shipped directly from China, with tariff taxes built right into the sale price (Aliexpress didn't miss a beat on that one), and with the general uncertainty raising Chinese sellers' profit margins.