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As with most things, it depends. If a country isn't trading in good faith tariffs can be used to correct that, just like fines are used to encourage companies t
by Wohlf 8y ago
As with most things, it depends. If a country isn't trading in good faith tariffs can be used to correct that, just like fines are used to encourage companies to follow regulations within a country.
- vkou 8y agoUpon closer inspection, you may find that the definition 'good faith' tends to be incredibly politically self-serving. Take aviation, for example. Do you think the United States exports airplanes built by 'trade in good faith'? Or is Boeing a company that is largely propped up by government largess? Or, if not, would you say that Boeing achieved market and technical dominance via government support in decades past? What about Silicon Valley? It only exists in California because of military contracts and very generous R&D funding for universities in the 70s and 80s. Yet, similar behaviours on the part of other countries are considered 'not trading in good faith'.
- tacogordito 8y agoA more direct example of a good faith violation is China putting a 25% tariff on American imported automobiles or the EU having a 10% tariff on them. Free trade doesn't exist in its purest form.
- mkirklions 8y agoBtw I believe that drove the demand for luxury american cars up.
- vkou 8y agoThey are just trying to bootstrap their auto sector. China's a couple of decades late in development, so they need to do these kinds of things. The United States has done the same thing, when it was behind in industrialization to the United Kingdom. Heavy tariffs on foreign goods, in order to prop up its own domestic sector. Once they get their auto industry together, to the same level of quality as US manufacturers, they won't need that tariff.
- mkirklions 8y agoI agree that its a negotiating piece. It might be bad economics, but maybe we need a bit of pain for everyone to play nice.