Imagine that the Trump tariffs have been imposed, and that you are an entrepreneur with plenty of money to invest. You are considering starting a business that will manufacture and sell big screen televisions. What factors will you consider, and will you do it?
Here are the two biggest concerns you will have:
- Your very large investment will only make financial sense if you are certain that the tariffs will remain in place for quite a long time. Are you sure of that?
- You will need to hire hundreds of workers at a time when the labor market is extremely tight. The wages you pay them cannot be so high that your product will be uncompetitive even with the tariffs in place. Are you certain this can be done?
If I’m the entrepreneur, the answer to both questions is no. As a result, I’m not making the investment.