The economic reason why tariffs won't increase factory-building and domestic production:
Let's say it's early 2025 and Trump starts imposing tariffs on foreign countries. Your company imports foreign goods, e.g. components or bar-stock or raw-material or maybe even finished goods. And suddenly your procurement costs go up. That's eating into your profits.
What do you do? You increase your sales-price and you start looking for cheaper ressources.
But that doesn't help. By now it's mid-2025 or early 2026. 2025 was a bad fiscal year. You need to act.
"HEY, I HAVE AN IDEA! LET'S BUILD A FACTORY RIGHT HERE IN THE US TO CUT COSTS!"
* First you need to find a plot of land:
A plot that already has or can provide at a reasonable construction-cost the industrial amounts of electricity and cooling-water you will need. A plot where you can get the permit for your industrial waste. A plot where you can get the permit for storing the flammable and toxic chemicals the factory will need. A plot that has access to a highway or railway or port.
* Then you build the factory-building.
Of course, you need to figure in that building the factory will be extra expensive, because cement and lumber imported from Canada now cost extra. And you cannot hire mexican immigrants for minimum-wage.
* Then you need the machinery and tools.
The companies who sell those don't have spare ones waiting for a customer in a warehouse. High-end manufacturing equipment is made to order. With a waiting-list of many months. And a down-payment. Plus tariffs, of course.
* Then you need to install the equipment in your factory-building, and get it up and running.
For that you need production-engineers and process-engineers. Depending on what your factory is supposed to produce, finding engineers with the correct expertise can be really hard. And expensive, if they are in demand. Expertise and experience in your staff are absolutely key, because no two machines are exactly alike, and things WILL go wrong in the beginning.
* Then you need workers.
Depending on what your factory is supposed to produce, you need to find either people with expertise, or maybe you can get away with unskilled labor. But don't expect getting away with paying minimum-wage. Because no Mexicans.
"CONGRATULATIONS! It's 2027 or 2028 and your factory is up and running and can finally start the years-long process of paying off the investment."
Except...... Except it would be 2027 or 2028 until your factory opens.
Would you, in 2026, be willing to bet tens of millions of company-dollars on Trump staying the course on economics?
Or would Trump do something crazy half-way through his term that would render your half-finished factory obsolete and leave you with all the costs?
And even if you trust Trump that the tariff-situation will remain the same, that supply and demand will remain the same by 2028 as they were in 2025, what about the 2028 election?
Would you, in 2026, be willing to bet tens of millions of company-dollars on whether the winner of the 2028 election will keep or undo the tariffs?
Or... would you take the route with minimal fiscal risk for your company, don't build the factory, take the temporary loss in profits and hope for better luck in the 2028 election?
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