Tariffs work when you have multiple suppliers and only impose them on one. As long as there is someone else to buy from at a cheaper/normal price, it works.
They don’t work when when you tariff everything coming into the country (like Trump is doing). That’s just a tax on the consumer.
Even then localy produced products may go up in price to just under the imported price to maximize profits even though there is no additional overhead.
Totally, yes. That’s where my “kinda” qualifier comes in. If done well, the tariff is dialed in to the point where the foreign product is on-par or slightly more expensive than the local one. And you need local competition as well. It’s not enough to have a single local producer.
A somewhat decently working example is European cars vs Chinese EVs. The Chinese ones are much cheaper than what European manufacturers could do. Tariffs are used to bring their price up to a point where they don’t have a price advantage over European cars. European car manufacturers on the other hand can’t just increase their prices too much, because there’s still quite a few of them competing locally.
Tariffs work when you have multiple suppliers and only impose them on one. As long as there is someone else to buy from at a cheaper/normal price, it works.
They don’t work when when you tariff everything coming into the country (like Trump is doing). That’s just a tax on the consumer.
They kinda work if you have a solid local production that is not dependant on imports. The US doesn’t have that.
Even then localy produced products may go up in price to just under the imported price to maximize profits even though there is no additional overhead.
Totally, yes. That’s where my “kinda” qualifier comes in. If done well, the tariff is dialed in to the point where the foreign product is on-par or slightly more expensive than the local one. And you need local competition as well. It’s not enough to have a single local producer.
A somewhat decently working example is European cars vs Chinese EVs. The Chinese ones are much cheaper than what European manufacturers could do. Tariffs are used to bring their price up to a point where they don’t have a price advantage over European cars. European car manufacturers on the other hand can’t just increase their prices too much, because there’s still quite a few of them competing locally.