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View submission: Thoughts on trump’s economy?
The factories aren't instantaneous. You still have to spend money to build them, and the government subsidizing their construction is by definition increasing the money supply.
Since inflation is driven by expectations, there is always going to be an inflation pulse when in the middle of an investment boom for manufacturing.
Comment by [deleted] at 11/03/2025 at 15:46 UTC
1 upvotes, 0 direct replies
This is a bit of a reductionist take. Subsidizing a critical industry, like Chips manufacturing, which can pose real threat to US economic and security interests is a good move. During the COVID pandemic we saw how a world wide catastrophe impacted local markets. One example I’ll give is that automobiles rose about 25% in cost as chips supply were unavailable to meet demand, causing Used cars to rise in sales price over MSRP of a new car. This same effect impacted everything with chips.
Situations like Chips (a national security interest) is actually a scenario where tariffs actually help btw. Because it does bring more dependency on local production. But you see, tariffs by themselves only raises costs when supply still does not meet demand… so Biden’s 2 pronged strategy of Tariffs + investment in local production actually made sense.