The Wall Street Journal is reporting that U.S. automakers are seeking a workaround to avoid increased expenses resulting from President Donald Trump’s controversial tariff policy: relocating manufacturing to China.
“Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks,” the Journal reports. “Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said.”
Here’s something a lot of folks supporting the tariffs as some bass-ackwards way of returning manufacturing to the US don’t understand: in business, uncertainty is even worse than higher costs. Even if you end up paying a little more, it’s worth it if that payment gets you stability.
Trump’s instability in policy easily outweighs any benefits – and that’s assuming there were ever any benefits at all.
This is the principle of insurance, get a certain loss today, to protect you against an uncertain loss in the future.
Could businesses buy “tariff insurance”? Someone else handles the risk (for a fee) and then they can focus on what they do. Like domestic metal futures or something?
I think Trump is too unpredictable to allow someone to put together an actuarial table around.
I was thinking that you couldn’t because it didn’t has a random process behind, not now that you said this, the problem would be that it’s impossible to model with traditional method, you would need some AS modeling or something like that, maybe RandomMoron, DrunkWalk or XBIGOTBoosting could help.
As someone with a bit of experience around predictive models, those model names you came up with are hilarious.