Source: EconLog
by Pierre Lemieux
“About his new tariffs, President Donald Trump said (and repeated in different forms): ‘So what they have to do is build their car plants frankly and other things in the United States, in which case they have no tariffs.’ This is seriously misleading. … the owners of foreign exporting firms may indeed decide to move their plants to the US if the total cost of moving is lower than the cost of reduced sales to America. Moving and building a new plant, and quite certainly losing money on the sales of the old facilities (the owner does not literally move his plant across the border), is costly and takes time. Moreover, production costs will certainly be higher in the US, which is the reason why the firm did not previously decide to produce here—and the owners know more about this than any politician.” (03/09/25)
https://www.econlib.org/firms-moving-to-the-us-pay-a-tariff-equivalent/