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There's an excellent book by economist Michael Hudson called "America's Protectionist Takeoff" that discusses how the US used tariffs to promote certain industr

There's an excellent book by economist Michael Hudson called "America's Protectionist Takeoff" that discusses how the US used tariffs to promote certain industries in order to compete on the world stage. It was part of Alexander Hamilton's American System. Friedrich List, the German economist that wrote "The National System of Political Economy", used the American System to advocate for the same policies in Germany. Germany eventually adopted these policies and became an economic powerhouse themselves. Likewise, Meiji Japan went so far as to adopt the ideas of Friedrich List's economic policies, which resulted in them becoming a great power in a generation. Tariffs can work, but only if they are targeted towards certain industries/sectors. They can't just be slapped across the board and be expected to work properly. Furthermore, they must be attached to certain KPIs such as exports (i.e., the ability to effectively compete on the international market). Joe Studwell's "How Asia Works" argues that Japan, Korea, and Taiwan all used tariffs and subsidies to promote their own "national champions". In turn, they forced those companies export their products rather than just sell domestically in order to compete. If they didn't meet those export targets, those companies were cut off from state support. Ha Joon Chang, a Korean developmental economist, likens this to raising a child: you spend their initial formative years supporting them until they are able to support themselves without your help.

resters 1y ago
The last thing Trump's tariffs could be described as is targeted industrial policy. They are intentionally a sledge-hammer. They are intentionally emotional. Intentionally full of jingoistic rhetoric and victimhood rhetoric. Sadly there has been zero discussion of doing targeted industrial policy (like China's) in the US. The irony is that Trump's approach benefits China tremendously.
- Waterluvian 1y ago
  A sober approach to promoting the redevelopment of production industry in America would likely involve some tariffs and could make a lot of sense. But, yeah, the current American approach is anything but sober.
  - analog31 1y ago
    It would also involve support for science research and reasonable immigration, plus widespread acceptance for moderately higher consumer prices. People should have a real conversation about what it means to make clothing in the US instead of in Bangladesh (just for example). While the "zero sum game" is generally considered to be a sign of ignorance when discussing economics, in the short term the number of available workers is a zero sum game, and unemployment is relatively low right now.
    - b112 1y ago
      One thing it means is local polluting. We'll have to turn of EPA regs for some industries, or re-engineer to how-to, if they return home. The methods used 30 years ago won't work.
      - Waterluvian 1y ago
        In a way it de-NIMBYizes Americans, forcing them to face the environmental costs of their consumer behaviours. The re-engineering part is the opportunity I see in all this. How do you make manufacturing cleaner and more worker-friendly (or even better: don’t even require human labour).
  - AdieuToLogic 1y ago
    > A sober approach to promoting the redevelopment of production industry in America would likely involve some tariffs and could make a lot of sense. If American production was optimal, or even economically feasible, it would already be in place. Take, for example, textiles. Why would an American business go through the hassle of getting a foreign company to make textile products, get them shipped across vast oceans, taking weeks if not months to do so, only to have them in stores in relatively close proximity? We all wear clothes and purchase them regularly. So why are they not now largely made in the US?
    - Qwertious 1y ago
      I think people are downvoting you because it sounds like you're advocating textiles be produced in the US (I know you're not).
- martythemaniak 1y ago
  There's been tons of discussion and several actual laws - IRA, CHIPS etc. A large part of why you're seeing the Trump insanity is because there's increasingly little connection between reality (ie CHIPS, IRA) and people's perception (ie your comment)
  - hidingfearful 1y ago
    [flagged]
    - ThunderSizzle 1y ago
      The IRA was supposed to reduce inflation, and did nothing of the sort. It exasperated it to a level beyond recognition, to the point the national housing market is still incredibly unstable and overpriced. The worst part is that no one in DC , except some of the MAGA folks, care that housing is twice the price it was 5 years ago, and that the Middle Class was getting completely hounded over the past 4 years.
      - bruce511 1y ago
        I'd argue it did reduce inflation, but I suspect you and I have different understandings of the term. So, inflation is not prices. Reducing inflation does not mean prices go down, it doesn't even mean they-dont-go-up. It means they go up less rapidly. If inflation is 0% prices don't go down. (Prices going down is deflation, which has all kinds of bad side effects. It's really bad, you don't want that.) The original driver of inflation (which is complicated, but simplified) was supply chain issues caused by covid. This lead to imbalanced supply and demand which in turn leads to inflation. That drives prices up. Yes, restored supply can bring prices down, but only if there is competition. Otherwise companies simply keep prices high. Generally speaking, the increase of house prices isn't really an "inflation" thing. Inflation tends to be measured as a collection of inputs. It's more "daily shopping" and less "buying a house is a specific location". Of course house pricing is important, and a big issue, but there are reasons for that which are not inflation. Inflation affects the price of materials, and labor, for building a new home, and that's one part of the equation- but for housing there are also issues like zoning etc. One could take another example, eggs, where external factors (bird flu, lack of competition in the supply chain etc) are driving up prices, mostly as an experiment to see what the market will bear. So, personally I think IRA did have an effect. The US had one of the lowest inflations globally post covid, which reduced the fastest. Which is not to say prices came down, they went up less quickly. Of course, that's all out the window now. Today's policies are pretty much what you would do if you wanted to drive inflation up. Or more accurately if you wanted to maximize corporate profits. Reduce competition (by excluding foreign suppliers), remove regulatory oversight (which work to prevent illegal collusion), and extend corporate tax cuts (growing the deficit.) The lazy way tarrifs have been implemented of course leads to inflated prices for things the US does not produce (like coffee) but that's just just collateral damage. All of these inputs, coupled with a reduction of the physical labor force (with via deportation or simple fear) will drive up the cost of construction, hence making new housing more expensive and less attractive to construct. If you think MSGA cares about this, then you and I are seeing different MAGA. I thought voters care, but since T campaigned on all these things, MAGA voters, it would appear, do not care. MAGA politicians certainly do not care. MAGA politicians are out to enrich themselves. And non-MAGA Republicans are either too scared or too cowardly to do anything about it.
- rayiner 1y ago
  It’s interesting that you don’t see the cause in your second paragraph being what leads to the effect in your first paragraph. We got Trump because of the bipartisan consensus on free trade that wouldn’t admit any sort of industrial policy. Now that Trump has blown the Overton window open, someone should offer the alternative of smarter tariffs.
  - watwut 1y ago
    USA had tariffs prior. It had CHIPS act which worked. Dont blame imaginary bipartisan consensus.
    - hshdhdhj4444 1y ago
      Plus EV tariffs + banning of TikTok unless sold to a U.S. firm. The Biden administration had already taken several targeted measures to defend local industry from China. One can argue whether this was good policy or not, but it’s hilariously wrong to argue that Trump was the first person to recognize the threat of China. In fact, Trump has been extraordinarily useful to China. One of the first steps he took in his first term was to withdraw from the TPP. Again, one can legitimately argue whether the TPP was good or not, but the entire purpose of the TPP was to reduce dependence on and create alternatives to China, which is why the trans Pacific partnership did not include the second largest world economy despite it lying on the Pacific Ocean.
      - deleted 1y ago
        [deleted]
    - Gareth321 1y ago
      > USA had tariffs prior. Clearly insufficient to prevent the destruction of major sectors and industries over decades. The neoliberals argued this was a normal and good thing for the country. The voters appear to disagree.
      - watwut 1y ago
        It is kind of impossible for 2022 legislation to prevent something that was happening decades ago. Tho, America is actually producing more then ever. Republican voters did not cared about any of that. They wanted to own the libs, they wanted the destruction of project 2025 and wanted to harm the people they look down at. They did not wanted to work in factories, they did not want industrial policy and they do not want USA to be a tech leader anymore. Conservatives are not making economical choice, they are just throwing concerns around when they want to bear democrats. They dont care a put putcomes when Republicans rule. You complaining that legislature from 2022 did not traveled back in time to change something in 2010 is quite on point here. This is not about strategy, law nor economics.
- wyldfire 1y ago
  > They are intentionally a sledge-hammer. They are intentionally emotional. Intentionally full of jingoistic rhetoric and victimhood rhetoric. A sledgehammer sounds almost like an instrument of precision relative to the Trump administration tariffs. If they're applied and reversed on a whim, US companies would be fools to invest in building fabrication capability domestically only for the rug to be pulled out from under them tomorrow. And apparently Trump doesn't want the prices on imports to rise [1]? So, if importers and retailers eat the costs of the new tariffs, how can domestic production compete any easier than it could with the baseline conditions? It's not jingoism or victimhood, it's just ineptitude writ large. Trump can't achieve his own policy goals because he's standing in his own way. [1] https://truthsocial.com/@realDonaldTrump/posts/114523638623110397 https://truthsocial.com/@realDonaldTrump/posts/1145236386231...
  - pfannkuchen 1y ago
    A more generous interpretation might be that he doesn’t expect anyone to retool until things settle down, and he is actually implementing tariffs as a shock tactic to force negotiations starting on strong terms. I haven’t read his book but my understanding is that this is an instantiating of the abstract negotiation pattern he endorses in the art of the deal. The alternative would be to negotiate quietly in back rooms before announcing, which is what is usually done. Would that be less chaotic? Definitely. Would it result in equally good or better trade deals as the shock method? Unclear, it’s not obvious that it would. He also likes dramatic optics. I don’t agree with the guy on most things, but I really think many people mischaracterize him pretty severely.
    - watwut 1y ago
      Well, gigantic tariffs with china were dropped to just huge ... and he got nothing for it. Asian counties that were willing to do deals have none, because Trump administration frustrates them by not knowing wtf they want.Talks with EU are stalled and UK deal amounts to not much. It is easy to argue normal negotiations work better.
      - nwienert 1y ago
- hshdhdhj4444 1y ago
  > Sadly there has been zero discussion of doing targeted industrial policy (like China's) in the US The CHIPS act is exactly this. Of course Trump is killing the CHIPS act.
wingspar 1y ago
If I remember correctly, India is manufacturing iPhones for export because the government would not let Apple expand sale of iPhones(or was it open Apple stores) in the country unless they produced the phones locally? So Apple setup production in India starting with old model iPhones. Then expanded to today…
sandra_vu 1y ago
this is a very good answer. I'd like to point that often great tariff policies are work of technocrats, not a performative administration.
- guestbest 1y ago
  What is a performative administration and how is it different than a technocracy?

resters 1y ago

The last thing Trump's tariffs could be described as is targeted industrial policy. They are intentionally a sledge-hammer. They are intentionally emotional. Intentionally full of jingoistic rhetoric and victimhood rhetoric. Sadly there has been zero discussion of doing targeted industrial policy (like China's) in the US. The irony is that Trump's approach benefits China tremendously.

Waterluvian 1y ago
A sober approach to promoting the redevelopment of production industry in America would likely involve some tariffs and could make a lot of sense. But, yeah, the current American approach is anything but sober.
- analog31 1y ago
  It would also involve support for science research and reasonable immigration, plus widespread acceptance for moderately higher consumer prices. People should have a real conversation about what it means to make clothing in the US instead of in Bangladesh (just for example). While the "zero sum game" is generally considered to be a sign of ignorance when discussing economics, in the short term the number of available workers is a zero sum game, and unemployment is relatively low right now.
  - b112 1y ago
    One thing it means is local polluting. We'll have to turn of EPA regs for some industries, or re-engineer to how-to, if they return home. The methods used 30 years ago won't work.
    - Waterluvian 1y ago
      In a way it de-NIMBYizes Americans, forcing them to face the environmental costs of their consumer behaviours. The re-engineering part is the opportunity I see in all this. How do you make manufacturing cleaner and more worker-friendly (or even better: don’t even require human labour).
- AdieuToLogic 1y ago
  > A sober approach to promoting the redevelopment of production industry in America would likely involve some tariffs and could make a lot of sense. If American production was optimal, or even economically feasible, it would already be in place. Take, for example, textiles. Why would an American business go through the hassle of getting a foreign company to make textile products, get them shipped across vast oceans, taking weeks if not months to do so, only to have them in stores in relatively close proximity? We all wear clothes and purchase them regularly. So why are they not now largely made in the US?
  - Qwertious 1y ago
    I think people are downvoting you because it sounds like you're advocating textiles be produced in the US (I know you're not).
martythemaniak 1y ago
There's been tons of discussion and several actual laws - IRA, CHIPS etc. A large part of why you're seeing the Trump insanity is because there's increasingly little connection between reality (ie CHIPS, IRA) and people's perception (ie your comment)
- hidingfearful 1y ago
  [flagged]
  - ThunderSizzle 1y ago
    The IRA was supposed to reduce inflation, and did nothing of the sort. It exasperated it to a level beyond recognition, to the point the national housing market is still incredibly unstable and overpriced. The worst part is that no one in DC , except some of the MAGA folks, care that housing is twice the price it was 5 years ago, and that the Middle Class was getting completely hounded over the past 4 years.
    - bruce511 1y ago
      I'd argue it did reduce inflation, but I suspect you and I have different understandings of the term. So, inflation is not prices. Reducing inflation does not mean prices go down, it doesn't even mean they-dont-go-up. It means they go up less rapidly. If inflation is 0% prices don't go down. (Prices going down is deflation, which has all kinds of bad side effects. It's really bad, you don't want that.) The original driver of inflation (which is complicated, but simplified) was supply chain issues caused by covid. This lead to imbalanced supply and demand which in turn leads to inflation. That drives prices up. Yes, restored supply can bring prices down, but only if there is competition. Otherwise companies simply keep prices high. Generally speaking, the increase of house prices isn't really an "inflation" thing. Inflation tends to be measured as a collection of inputs. It's more "daily shopping" and less "buying a house is a specific location". Of course house pricing is important, and a big issue, but there are reasons for that which are not inflation. Inflation affects the price of materials, and labor, for building a new home, and that's one part of the equation- but for housing there are also issues like zoning etc. One could take another example, eggs, where external factors (bird flu, lack of competition in the supply chain etc) are driving up prices, mostly as an experiment to see what the market will bear. So, personally I think IRA did have an effect. The US had one of the lowest inflations globally post covid, which reduced the fastest. Which is not to say prices came down, they went up less quickly. Of course, that's all out the window now. Today's policies are pretty much what you would do if you wanted to drive inflation up. Or more accurately if you wanted to maximize corporate profits. Reduce competition (by excluding foreign suppliers), remove regulatory oversight (which work to prevent illegal collusion), and extend corporate tax cuts (growing the deficit.) The lazy way tarrifs have been implemented of course leads to inflated prices for things the US does not produce (like coffee) but that's just just collateral damage. All of these inputs, coupled with a reduction of the physical labor force (with via deportation or simple fear) will drive up the cost of construction, hence making new housing more expensive and less attractive to construct. If you think MSGA cares about this, then you and I are seeing different MAGA. I thought voters care, but since T campaigned on all these things, MAGA voters, it would appear, do not care. MAGA politicians certainly do not care. MAGA politicians are out to enrich themselves. And non-MAGA Republicans are either too scared or too cowardly to do anything about it.
rayiner 1y ago
It’s interesting that you don’t see the cause in your second paragraph being what leads to the effect in your first paragraph. We got Trump because of the bipartisan consensus on free trade that wouldn’t admit any sort of industrial policy. Now that Trump has blown the Overton window open, someone should offer the alternative of smarter tariffs.
- watwut 1y ago
  USA had tariffs prior. It had CHIPS act which worked. Dont blame imaginary bipartisan consensus.
  - hshdhdhj4444 1y ago
    Plus EV tariffs + banning of TikTok unless sold to a U.S. firm. The Biden administration had already taken several targeted measures to defend local industry from China. One can argue whether this was good policy or not, but it’s hilariously wrong to argue that Trump was the first person to recognize the threat of China. In fact, Trump has been extraordinarily useful to China. One of the first steps he took in his first term was to withdraw from the TPP. Again, one can legitimately argue whether the TPP was good or not, but the entire purpose of the TPP was to reduce dependence on and create alternatives to China, which is why the trans Pacific partnership did not include the second largest world economy despite it lying on the Pacific Ocean.
    - deleted 1y ago
      [deleted]
  - Gareth321 1y ago
    > USA had tariffs prior. Clearly insufficient to prevent the destruction of major sectors and industries over decades. The neoliberals argued this was a normal and good thing for the country. The voters appear to disagree.
    - watwut 1y ago
      It is kind of impossible for 2022 legislation to prevent something that was happening decades ago. Tho, America is actually producing more then ever. Republican voters did not cared about any of that. They wanted to own the libs, they wanted the destruction of project 2025 and wanted to harm the people they look down at. They did not wanted to work in factories, they did not want industrial policy and they do not want USA to be a tech leader anymore. Conservatives are not making economical choice, they are just throwing concerns around when they want to bear democrats. They dont care a put putcomes when Republicans rule. You complaining that legislature from 2022 did not traveled back in time to change something in 2010 is quite on point here. This is not about strategy, law nor economics.
wyldfire 1y ago
> They are intentionally a sledge-hammer. They are intentionally emotional. Intentionally full of jingoistic rhetoric and victimhood rhetoric. A sledgehammer sounds almost like an instrument of precision relative to the Trump administration tariffs. If they're applied and reversed on a whim, US companies would be fools to invest in building fabrication capability domestically only for the rug to be pulled out from under them tomorrow. And apparently Trump doesn't want the prices on imports to rise [1]? So, if importers and retailers eat the costs of the new tariffs, how can domestic production compete any easier than it could with the baseline conditions? It's not jingoism or victimhood, it's just ineptitude writ large. Trump can't achieve his own policy goals because he's standing in his own way. [1] https://truthsocial.com/@realDonaldTrump/posts/114523638623110397 https://truthsocial.com/@realDonaldTrump/posts/1145236386231...
- pfannkuchen 1y ago
  A more generous interpretation might be that he doesn’t expect anyone to retool until things settle down, and he is actually implementing tariffs as a shock tactic to force negotiations starting on strong terms. I haven’t read his book but my understanding is that this is an instantiating of the abstract negotiation pattern he endorses in the art of the deal. The alternative would be to negotiate quietly in back rooms before announcing, which is what is usually done. Would that be less chaotic? Definitely. Would it result in equally good or better trade deals as the shock method? Unclear, it’s not obvious that it would. He also likes dramatic optics. I don’t agree with the guy on most things, but I really think many people mischaracterize him pretty severely.
  - watwut 1y ago
    Well, gigantic tariffs with china were dropped to just huge ... and he got nothing for it. Asian counties that were willing to do deals have none, because Trump administration frustrates them by not knowing wtf they want.Talks with EU are stalled and UK deal amounts to not much. It is easy to argue normal negotiations work better.
    - nwienert 1y ago
hshdhdhj4444 1y ago
> Sadly there has been zero discussion of doing targeted industrial policy (like China's) in the US The CHIPS act is exactly this. Of course Trump is killing the CHIPS act.

wingspar 1y ago

If I remember correctly, India is manufacturing iPhones for export because the government would not let Apple expand sale of iPhones(or was it open Apple stores) in the country unless they produced the phones locally? So Apple setup production in India starting with old model iPhones. Then expanded to today…

sandra_vu 1y ago

this is a very good answer. I'd like to point that often great tariff policies are work of technocrats, not a performative administration.

guestbest 1y ago
What is a performative administration and how is it different than a technocracy?