Babylon....
I have been struggling to decide how that will play out myself, and have come to no firm conclusions. I believe we will look back on the late nineties as a time when we encouraged a significant portion of our manufacturing capability and the jobs that go with it to relocate overseas, much to our long term detriment.
If we enter into a relatively long term recession as I expect, part of the potential fallout could well be a return to tariff barriers (especially against China) designed to make imports more expensive. That would make new domestic manufacturing start-ups more feasible and attract new capital to the US instead of away from the US as is now the case. It would take time for that to take place, so it would not be a quick fix for the economy, but sooner or later it would work and over time new jobs would be created.
There are problems with using tariffs as a solution, of course, one of which is that trade wars are the normal result, and that is one of the causes of the Great Depression. The difference between now and then is that we are now a nation that relies on imports and the whole world relies on exporting to the US. That will have to change at least to some extent because we can no longer afford to import all our goods (exporting our capital and raising our foreign debt) indefinitely. As things now stand, the rest of the world would have much more to lose than the US in a trade war so that does not seem to present the same dangers that it did going into the Great Depression.
I do not see how we can continue to thrive economically as consumers of goods and services a significant part of which are outsourced and produced elsewhere.
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