7 ms·

But if the tariffs don’t actually cost the target anything, why retaliate?

Marsymars 2y ago
> But if the tariffs don’t actually cost the target anything I don’t think anybody has suggested this. Or, see my analogy; pulling a grenade pin in a moving car costs everybody.
- ConspiracyFact 2y ago
  But there are many articles that suggest exactly this.
watwut 2y ago
They do cost the target, the claim is not they cost nothing. But, if they costed the target nothing, you would safely retaliate, because that is rational response to someone trying to target you.
- ConspiracyFact 2y ago
  There are several articles and videos that claim that the cost of a tariff is simply passed on to the consumer.
rsynnott 2y ago
… Eh? Tariffs do of course cost the target; they reduce the market for its goods, because consumers and businesses in the country applying tariffs can no longer afford to buy them. Now, how much they hurt will depend to some extent on whether there are other markets, etc. Imagine there are two countries, A, B. A exports $1bn in raw materials annually to B. B exports $1.1bn in finished goods to A. B imposes a 25% tariff on A. Businesses buying the raw materials will generally not be able to afford a 25% increase in input price (very few manufacturing businesses have margins anything like that high) so will fold. A no longer has B buying its stuff, so the raw material production will halt, leading to losses there. A will no longer be able to afford to buy B’s finished goods (even if A does not impose retaliatory tariffs, which it almost certainly will), so even if some of B’s industry can survive the input cost hike, it has a smaller market. Obviously this is _extremely_ simplified (for a start, other countries exist, and you might see more of a _rerouting_ around A, a little like what has happened to post-Brexit UK. But it’s a serious mistake to think of this as a zero-sum game. In general high broad tariffs hurt everyone.

> But if the tariffs don’t actually cost the target anything I don’t think anybody has suggested this. Or, see my analogy; pulling a grenade pin in a moving car costs everybody.

ConspiracyFact 2y ago
But there are many articles that suggest exactly this.

watwut 2y ago

They do cost the target, the claim is not they cost nothing. But, if they costed the target nothing, you would safely retaliate, because that is rational response to someone trying to target you.

ConspiracyFact 2y ago
There are several articles and videos that claim that the cost of a tariff is simply passed on to the consumer.

rsynnott 2y ago

… Eh? Tariffs do of course cost the target; they reduce the market for its goods, because consumers and businesses in the country applying tariffs can no longer afford to buy them. Now, how much they hurt will depend to some extent on whether there are other markets, etc. Imagine there are two countries, A, B. A exports $1bn in raw materials annually to B. B exports $1.1bn in finished goods to A. B imposes a 25% tariff on A. Businesses buying the raw materials will generally not be able to afford a 25% increase in input price (very few manufacturing businesses have margins anything like that high) so will fold. A no longer has B buying its stuff, so the raw material production will halt, leading to losses there. A will no longer be able to afford to buy B’s finished goods (even if A does not impose retaliatory tariffs, which it almost certainly will), so even if some of B’s industry can survive the input cost hike, it has a smaller market. Obviously this is _extremely_ simplified (for a start, other countries exist, and you might see more of a _rerouting_ around A, a little like what has happened to post-Brexit UK. But it’s a serious mistake to think of this as a zero-sum game. In general high broad tariffs hurt everyone.