4 ms·

If tariffs are so obviously and universally bad, then why do tariffed countries respond with retaliatory tariffs instead of letting the first country shoot them

• javanissen 2mo ago
  Tariffs (and retaliatory tariffs) can be universally economically negative and still be rationally pursued by individual politicians. For example: if Donald Trump tariffs the country you are in charge of, you are likely willing to pay the economic cost of a retaliatory tariff to seem like you are standing up to America to your constituents. The politician’s goal is to be re-elected. The politician may aim to deter getting tariffed in the first place, and promising a retaliatory tariff if another country tariffs you first is also reasonable as a deterrent from a game-theoretical perspective. All it takes is for one world leader to not understand or care about the clear economic negatives to tariffs to start the chain: everyone else can be a rational actor.
• mallets 2mo ago
  Political pressure works? The immediate pain from tariffs is quite different from the long-term loss.
• vladms 2mo ago
  Maybe reducing trade with a country that is taking bad/strange/stupid decisions might be worth it. If your industry can change some trade partners (and diversify) it might a plus. In Canada's case the reliance of one trade partner (see https://atlas.hks.harvard.edu/explore/overtime/?exporter=country-124&view=markets&locationLevel=country&layout=share&importer=group-1 https://atlas.hks.harvard.edu/explore/overtime/?exporter=cou... ) is probably a weakness that retaliatory tariffs can influence.
• greycol 2mo ago
  The broader tariffs are the worse they are. Targeted tariffs can have a function but if targeted at a country that function isn't an economic good for either country it's only good as a political tool. You could argue that industries that you are the second cheapest in compared to that country could reap some benefits from supplying local markets (but not if there are other countries cheaper than your own that aren't also tariffed that can supply more of the demand) and then a targeted tariff may make some (long term) economic sense. Targeted tariffs can have more nuanced effects. You'll notice that Canadian politicians are talking about targeting red states with their tariffs. These tariffs will also economically hurt Canada, but you won't see a retaliatory tariff on things that hurt Canada disproportionately which would be the case with universal tariffs. You can expect them to pick luxury industries (like they did with bourbon) where preferences can be changed or industrial/commercial ones where (preferably) local or other suppliers are near parity with the US rather than say gasoline.
• pornel 2mo ago
  Because the other non-isolationist countries have the rest of the world to trade with. Their tariffs on USA don't make all of their imports more expensive, only redirect trade to other countries.
• croon 2mo ago
  1) (all) tariffs aren't obviously and universally bad, only when applied universally without any coherent long term goal/strategy. 2) retaliatory tariffs are targeting the hostile actor, not widely against all (other) trading partners, thus redirecting trade towards less hostile country.
• valleyer 2mo ago
  If punching random people on the street is so obviously bad, then why do people fight back when I do it?
• mdnahas 2mo ago
  During Trump 1.0, retaliatory tariffs were targeted at swing states. E.g., on Harley-Davidsons manufactured in Wisconsin. The goal was to make it politically painful to the president and undermine his reelection chances. I imagine Carney is picking industries that are assymetricly painful to the USA or, since Trump isn’t up for re-election, congressional Republicans.