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> Can you explain how tariffs are an effective tool against foreign governments subsidizing industries? It has been my understanding that tariffs typically end

by tivert 2y ago

> Can you explain how tariffs are an effective tool against foreign governments subsidizing industries? It has been my understanding that tariffs typically end up being tit-for-tat and relatively zero-sum. They neutralize the subsidy's effect on pricing and prevent the subsidizer from taking over your market, at least. > It has been my understanding that tariffs typically end up being tit-for-tat and relatively zero-sum. The subsidy is already a tit, the tariff is tat. Zero-sum is at least better than just taking the blow and having a negative-sum outcome for yourself.

radlad 2y ago
I think I'm looking for a more substantial answer. > The subsidy is already a tit, the tariff is tat. Zero-sum is at least better than just taking the blow and having a negative-sum outcome for yourself. To be more clear, I meant that it was typical for foreign governments to impose retaliative tariffs. e.g. https://www.trade.gov/feature-article/foreign-retaliations-timeline https://www.trade.gov/feature-article/foreign-retaliations-t... To say nothing of who actually pays the cost of tarrifs.[0][1] [0] https://taxfoundation.org/blog/who-really-pays-tariffs/ https://taxfoundation.org/blog/who-really-pays-tariffs/ [1] https://www.cato.org/publications/separating-tariff-facts-tariff-fictions#who-actually-pays-tariffs https://www.cato.org/publications/separating-tariff-facts-ta...
- tivert 2y ago
  > To be more clear, I meant that it was typical for foreign governments to impose retaliative tariffs. And in the context of massive trade deficits, so what? IIRC, when the Trump tariffs went into effect, there was a lot written that the Chinese didn't have many levers to pull to respond, because of the US trade deficit. I think they implemented a tariff against soybeans (and some other non-tariff actions), and that was about it. > To say nothing of who actually pays the cost of tarrifs.[0][1] Who cares who technically pays, especially when they're correcting for some other market distortion? Focusing on that is a hallmark of libertarian anti-tariff propaganda that's pretty monomaniacally focused on free trade dogma and prices to the exclusion of all other considerations.
  - radlad 2y ago
    > And in the context of massive trade deficits, so what? I was thinking more in the context of consumer inflation. Countries tend to go back and forth in a tariff war, effectively raising taxes and lowering incomes for their citizens.
    - tivert 2y ago
      >> And in the context of massive trade deficits, so what? > I was thinking more in the context of consumer inflation. Countries tend to go back and forth in a tariff war, effectively raising taxes and lowering incomes for their citizens. That's monomaniacal focus on short-term "prices to the exclusion of all other considerations." An artificially low subsidized price isn't a good deal, especially when its competing with your local industry.
saint_fiasco 2y ago
> The subsidy is already a tit, the tariff is tat Why is someone else subsidizing the price of a thing you buy bad? The subsidy is doing you a favor by reducing your input costs, or freeing up your work and capital to produce something else.
- Longlius 2y ago
  For the same reason we disallow severe product dumping - it's a ploy to build marketshare in an attempt to become hostile to consumers down the road. We don't let companies dump products for a reason.
- kranke155 2y ago
  Because they are doing so to erode your manufacturing base through unfair competition. From a national security standpoint this can be deadly in a hot conflict. From an industrial strategy standpoint, it’s the same as any other monopolist practice - they will erode your base, take over your market, then raise prices to fleece your population’s wealth while increasing their own. Industrial bases are economic strongholds that shouldn’t be lost, particularly not to great power competitors.
  - saint_fiasco 2y ago
    > From a national security standpoint this can be deadly in a hot conflict. What about a cold conflict? How much do the tariffs and protectionist policies cost in the middle to long run? For example, the Jones Act costs billions per year and has been going on for a lot of years. How many additional aircraft carriers and submarines and so on could the US have bought with that money?
    - kranke155 2y ago
      Tariffs and protectionist policies are unfairly maligned. They are effectively the only way countries build and rebuild industries. The idea that they are bad is an invention of bad economists who don't study history. See the book "How Asia Works" for an accurate economic history of the growth of industrial power in Asia, how it was based on Germany's ascension before it, and how it was al built on the RIGHT kind of policies. https://www.gatesnotes.com/How-Asia-Works https://www.gatesnotes.com/How-Asia-Works Successful Asian powers studied history, not Milton Friedman. https://en.wikipedia.org/wiki/Historical_school_of_economics https://en.wikipedia.org/wiki/Historical_school_of_economics
Log_out_ 2y ago
or you trade industries .. you get our manufacturing but respect our ips. indirect class warfare. white collar vs blue collar. Then one generation later it all bloes up in your face, destroying your democracy .. but you get to pretend your actions where innocent . its just like the weather , cant do anything about that ..

by tivert 2y ago

radlad 2y ago

I think I'm looking for a more substantial answer. > The subsidy is already a tit, the tariff is tat. Zero-sum is at least better than just taking the blow and having a negative-sum outcome for yourself. To be more clear, I meant that it was typical for foreign governments to impose retaliative tariffs. e.g. https://www.trade.gov/feature-article/foreign-retaliations-timeline https://www.trade.gov/feature-article/foreign-retaliations-t... To say nothing of who actually pays the cost of tarrifs.[0][1] [0] https://taxfoundation.org/blog/who-really-pays-tariffs/ https://taxfoundation.org/blog/who-really-pays-tariffs/ [1] https://www.cato.org/publications/separating-tariff-facts-tariff-fictions#who-actually-pays-tariffs https://www.cato.org/publications/separating-tariff-facts-ta...

tivert 2y ago
> To be more clear, I meant that it was typical for foreign governments to impose retaliative tariffs. And in the context of massive trade deficits, so what? IIRC, when the Trump tariffs went into effect, there was a lot written that the Chinese didn't have many levers to pull to respond, because of the US trade deficit. I think they implemented a tariff against soybeans (and some other non-tariff actions), and that was about it. > To say nothing of who actually pays the cost of tarrifs.[0][1] Who cares who technically pays, especially when they're correcting for some other market distortion? Focusing on that is a hallmark of libertarian anti-tariff propaganda that's pretty monomaniacally focused on free trade dogma and prices to the exclusion of all other considerations.
- radlad 2y ago
  > And in the context of massive trade deficits, so what? I was thinking more in the context of consumer inflation. Countries tend to go back and forth in a tariff war, effectively raising taxes and lowering incomes for their citizens.
  - tivert 2y ago
    >> And in the context of massive trade deficits, so what? > I was thinking more in the context of consumer inflation. Countries tend to go back and forth in a tariff war, effectively raising taxes and lowering incomes for their citizens. That's monomaniacal focus on short-term "prices to the exclusion of all other considerations." An artificially low subsidized price isn't a good deal, especially when its competing with your local industry.

saint_fiasco 2y ago

> The subsidy is already a tit, the tariff is tat Why is someone else subsidizing the price of a thing you buy bad? The subsidy is doing you a favor by reducing your input costs, or freeing up your work and capital to produce something else.

Longlius 2y ago
For the same reason we disallow severe product dumping - it's a ploy to build marketshare in an attempt to become hostile to consumers down the road. We don't let companies dump products for a reason.
kranke155 2y ago
Because they are doing so to erode your manufacturing base through unfair competition. From a national security standpoint this can be deadly in a hot conflict. From an industrial strategy standpoint, it’s the same as any other monopolist practice - they will erode your base, take over your market, then raise prices to fleece your population’s wealth while increasing their own. Industrial bases are economic strongholds that shouldn’t be lost, particularly not to great power competitors.
- saint_fiasco 2y ago
  > From a national security standpoint this can be deadly in a hot conflict. What about a cold conflict? How much do the tariffs and protectionist policies cost in the middle to long run? For example, the Jones Act costs billions per year and has been going on for a lot of years. How many additional aircraft carriers and submarines and so on could the US have bought with that money?
  - kranke155 2y ago
    Tariffs and protectionist policies are unfairly maligned. They are effectively the only way countries build and rebuild industries. The idea that they are bad is an invention of bad economists who don't study history. See the book "How Asia Works" for an accurate economic history of the growth of industrial power in Asia, how it was based on Germany's ascension before it, and how it was al built on the RIGHT kind of policies. https://www.gatesnotes.com/How-Asia-Works https://www.gatesnotes.com/How-Asia-Works Successful Asian powers studied history, not Milton Friedman. https://en.wikipedia.org/wiki/Historical_school_of_economics https://en.wikipedia.org/wiki/Historical_school_of_economics

Log_out_ 2y ago

or you trade industries .. you get our manufacturing but respect our ips. indirect class warfare. white collar vs blue collar. Then one generation later it all bloes up in your face, destroying your democracy .. but you get to pretend your actions where innocent . its just like the weather , cant do anything about that ..