“Robots Don’t Wear Nikes.”

“Robots don’t wear Nikes.”

I really wish I could claim credit for that quote. It’s a brilliant quote (relative to the thoughts I’m about to share with you).

It came from my colleague, Ted Baumann, as he kicked back on a couch at the Grande Real Santa Eulalia Resort in Portugal’s Algarve region last weekend.

Ted, myself, and a bunch of other editors and experts had all gathered for International Living’s Fast Track Europe conference. Ted and I got to chatting about this, that, and the other thing—the “other thing” being Trump’s tariff agenda that has befuddled the world, global markets, and—more relevant to this dispatch—me and Ted.

Now, as I always preface… this is not a political jab at the president.

Rather, it’s an honest attempt at understanding A) the rationale for imposing exorbitant tariffs and on friend and foe, and B) trying to make sense of the contradictory goals that the White House has put forward.

Here’s what I mean:

1. Tariffs are supposed to generate so much money from other countries that America can shutter the IRS and rely on income from an External Revenue Service.
2. Tariffs are supposed to force companies to bring manufacturing back to American shores.
3. Tariffs are supposed encourage Americans to buy American-made goods.

All fine and dandy…

But that math doesn’t math, which is where I am confused.

If #1 happens, then Americans are buying foreign goods, not American-made goods. So #3 is a no-go.

But if #3 is the end result, then #1 isn’t happening at any scale, which means the US isn’t bringing in nearly enough money to cancel the IRS and rely on an ERS instead.

The IRS in 2024 collected $5.1 trillion. The US imported about $4.1 trillion in foreign-sourced goods. So we’d need a tariff of more than 100% on every pencil and Porche coming into the US to replace the IRS.

But if Americans are buying “Made in the USA” products instead… well, where do we collect $5.1 trillion to replace the IRS?

And if #2 is the goal, then, again, #1 can’t be the end result.

If all these manufacturing plants return to America, then Americans aren’t buying enough tariffed products to make the IRS extinct.

And if #2 does happen to some degree, well, that raises a question that gets to Ted’s comment that “Robots don’t wear Nikes.”

Any manufacturing plant that springs up in the US of A isn’t going to look like some 1950s-era Ford Motors assembly line. It’s going to look like a highly automated factory floor from Taiwan or China, where robots are doing all the heavy lifting, and half-a-dozen 20-somethings run the whole shebang on AI-powered laptops.

That is not an exaggeration.

Amazon already uses robotic systems throughout the company’s distribution warehouses, relying on an exceedingly minimal number of humans. Foxconn in China, Adidas and Siemens in Germany, Philips Electronics in the Netherlands, FANUC in Japan… they’re all running so-called “dark factories” or “lights out factories” where robots are doing everything pretty much in the dark with just a few humans around to make sure nothing goes pear-shaped.

Why would a manufacturer relocating a factory to the US adopt a bygone business model to compete against dark factories all over the world? The US is already an exceptionally expensive place to build things—which is why offshoring happened in the first place—so how is it that the US would be even remotely competitive if new American factories are staffed with tons of humans who need salaries and benefits and vacation days and time off for sick leave?

Which gets to the point that the robots that will go into any new American manufacturing plants won’t be spending their free hours shopping for a new pair of Nikes… or a double-cheeseburger from Mickey D’s… or a head of lettuce from Super Target.

In short, a manufacturing boom isn’t likely to drive a middle-class employment boom beyond the initial construction of the facilities.

We’ll see more hiring of highly qualified IT dudes and dudettes, but we’re never going to see a vast revival of high-wage, middle-class jobs for blue-collar workers. That era has passed.

And the truth is, I don’t think we’re going to see many production plants return to the US beyond a few token examples. Given the cost structure of America—higher costs for wages, resources, materials, land/rent, insurance—companies don’t have much incentive to onshore in America.

Paying the tariffs and letting US consumers shoulder those added costs is far smarter (which is why #2 and #3 above aren’t likely).

Nike is a great example.

Nike sells shoes globally. It makes its shoes in Vietnam, China, and Indonesia. Trump’s tariffs on those countries have zero impact on the shoes Nike sells outside the US… and that’s the bulk of Nike sales. Less than 40% of sales happen in the US.

Why would Nike take on the added costs of US production? That would destroy Nike’s competitiveness globally because shoe prices based on US production costs would leave the shoemaker vulnerable to Adidas and Puma and ASICS, and all the other global sneaker brands that would have pricing power over Nike.

So, Nike will either remain offshore and simply pay the tariffs that US consumers will absorb… or it will appease Trump and build a small production plant in the US to make a limited number of (higher priced) shoes for the US market.

Either way, the US consumer pays more.

And that production plant, assuming Nike does build one in the US to appease Trump, will be run almost entirely by robots, not human shoemakers.

Which gets us right back to where we began…

Robots don’t wear Nikes.