Here is Balaji Srinivasan of The Network State with a mega 𝕏 post on why “re-shoring” and “bringing supply chains back to the US” are a lot harder to do than the glib words of politicians suggest.
The core thing you’re getting wrong is that you can’t do high-tech without a reliable source of medium-tech and low-tech.
And the US outsourced all of that to China over 45 years, but now thinks it can rebuild a million factories and retool its entire economy faster than China can copy technologies and sell Treasuries.
That’s not realistic. All the talk about “bringing supply chains back to the US” treats a supply chain as if it’s something you can order off Amazon for $50B. But just look at the TSMC Arizona disaster [1] — it’s clear from that why things don’t get built in America. This supposed chip Manhattan Project is predictably snarled in labor disputes and visa delays.
Bringing supply chains home is more like saying “change America’s entire business model, and either put tens of millions of people back into low-paying factories OR build millions of low-cost robots to replace expensive in-person employees.”
However, you can’t even take the option of millions of low-cost robots without a reliable supply of steel. And of rare earth elements, and of screws, bolts, and nuts. But China controls much of that.
As a concrete example, Raytheon — a defense contractor! — admits that it can’t build without China. [2] That means the US military itself is made in China. And you can’t fight your factory.
I mean, one just has to be realistic. China has geared their entire society for mass production for 45 years even as the US has gone in the other direction. It’s decades to turn this around.
And you might not even be able to turn it around without the dollar going away as the reserve currency. Because the most profitable export for the US now is just dollars. Why make anything when you can print everything? That’s contributed to deindustrialization.
Problem is, dedollarization can happen at a much faster speed than deindustrialization. Remember, China already has WeChat/Alipay/digital yuan, India has IndiaStack, and the Internet has Bitcoin and crypto. All of those are already superior to DC’s antiquated payment tech like ACH. The only thing the dollar tech stack has going for it is incumbency — no one would pick it from first principles today.
So, that is why all the comparative advantage logic breaks down. The US is pursuing trade war and decoupling with China — not comparative advantage.
But it’s much easier for China to replace the US than for the US to replace China. Because it’s much easier for China to copy technology and advocate the use of its own currency than for the US to build millions of factories and change its entire economy.
