First, this is a great explanation and example. That being said, tarrifs can be good for the country implementing them in a very narrow set of circumstances.
Let’s say you are in a not very industrialized nation, maybe one recovering from colonialism or war. In that case almost everything is cheaper to import, and so it’s really difficult to get any economy going past subsistence farming. Targeted tariffs can help in that case to encourage local investment in the basic commodities needed to get the economy started.
Similarly, if you have one specific part of your economy that you really care about but it needs some help getting going, tarrifs can help to grow that sector.
In both cases, the tarrifs need to be narrowly targeted and be regularly monitored for when they should be phased out.
But in all cases, a large economy raising broad tarrifs is stupid.
As an anecdote about this, most countries in South America charge a 100% import tax on almost all electronic devices (laptops, phones, pc parts, cameras, etc). Not only the exchange rates already make these purchases almost impossible, they also have to pay double. The ripple effects on the future of a country where people don’t have access to the tools they might need to develop themselves is tragic.
First, this is a great explanation and example. That being said, tarrifs can be good for the country implementing them in a very narrow set of circumstances.
Let’s say you are in a not very industrialized nation, maybe one recovering from colonialism or war. In that case almost everything is cheaper to import, and so it’s really difficult to get any economy going past subsistence farming. Targeted tariffs can help in that case to encourage local investment in the basic commodities needed to get the economy started.
Similarly, if you have one specific part of your economy that you really care about but it needs some help getting going, tarrifs can help to grow that sector.
In both cases, the tarrifs need to be narrowly targeted and be regularly monitored for when they should be phased out.
But in all cases, a large economy raising broad tarrifs is stupid.
As an anecdote about this, most countries in South America charge a 100% import tax on almost all electronic devices (laptops, phones, pc parts, cameras, etc). Not only the exchange rates already make these purchases almost impossible, they also have to pay double. The ripple effects on the future of a country where people don’t have access to the tools they might need to develop themselves is tragic.