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Think Tariffs Boost U.S. Factories? Try Building a Screw Plant,’ Investor Critiques Trump’s Economic Strategy
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2025-04-16
Angel investor Balaji S. Srinivasan criticized Donald Trump's tariff strategy in a post on X, calling it economically regressive and disconnected from industrial realities. He remarked, "If you think tariffs incentivize building factories in the U.S., try building a screw factory!" Srinivasan argued that these measures fail to encourage American manufacturing and instead stifle it with debt, layoffs, and price hikes.
In a detailed post, Srinivasan dismantled the logic behind steep tariffs, using a hypothetical example to show how a profitable US-based business can be turned upside down overnight. “Suppose your US company imports USD1M of high quality parts, and adds in its own components to produce finished goods sold for USD1.2M per batch. Your gross profit is USD200k per batch,” he wrote. Now, impose a 30% tariff on the imported parts. The company is forced to pay USD300,000 upfront at customs—cash it likely doesn't have. “Even if you do sell everything, you’re now losing USD100k per batch.”
This, Srinivasan says, is the brutal math of protectionism. Instead of reshoring production, tariffs end up punishing companies that still operate domestically but rely on global supply chains. "With a sinking feeling, you realize your profitable business... has suddenly become unprofitable."
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