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arunabha a day ago

It's clear that there was no reasoned thought behind the tariff push. Tariffs can work if implemented in a principled way and coupled with a complementary industrial policy to develop critical sectors of the economy.

Instead, we had a completely chaotic implementation of tariffs which seemed to be completely at the whim of Trump with zero supportive industrial policy. So much so that the term 'Taco' https://en.wikipedia.org/wiki/Trump_Always_Chickens_Out was coined to describe Trump's approach.

The charitable explanation is that Trump had no plan and was making it up as he went along. The less charitable explanation is that the chaos was an intentional feature to enable a quid pro quo of favourable policy in exchange for under the table payments via crypto or 'investments' in his family's various businesses.

When you couple completely illegal application of a supposed 'emergency' to invoke tariffs with a chaotic, whim based implementation, is there any wonder that they failed?

everforward a day ago | parent [-]

The studies I’ve seen seem to indicate that tariffs can work but are like running with scissors.

The artificially reduced competition will spur buying domestic products, but can also make domestic producers complacent. They don’t develop new features because they have an almost captive audience, until foreign producers advance enough that people will pay the tariff premium for better foreign products.

Then it’s a catch-22. Domestic producers are behind on technology so killing the tariffs will bankrupt them, but raising the tariffs only leans into their complacency.

Saline9515 17 hours ago | parent [-]

There are better ways than tariffs. For instance, you can increase VAT and use the proceeds to decrease taxes on work, or cut taxes for specific sectors. This way your economy is more competitive internationally, while avoiding the distorsions of tariffs.

Tariffs can also be footguns as they increase costs on imports for upstream supplies, making downstream local producers less competitive. VAT is much better for this as it is refunded when you export.