Comment by tivert

Comment by tivert 2 days ago

> Can you explain how tariffs are an effective tool against foreign governments subsidizing industries? It has been my understanding that tariffs typically end up being tit-for-tat and relatively zero-sum.

They neutralize the subsidy's effect on pricing and prevent the subsidizer from taking over your market, at least.

> It has been my understanding that tariffs typically end up being tit-for-tat and relatively zero-sum.

The subsidy is already a tit, the tariff is tat. Zero-sum is at least better than just taking the blow and having a negative-sum outcome for yourself.

saint_fiasco 2 days ago

> The subsidy is already a tit, the tariff is tat

Why is someone else subsidizing the price of a thing you buy bad?

The subsidy is doing you a favor by reducing your input costs, or freeing up your work and capital to produce something else.

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kranke155 2 days ago

Because they are doing so to erode your manufacturing base through unfair competition.
From a national security standpoint this can be deadly in a hot conflict.
From an industrial strategy standpoint, it’s the same as any other monopolist practice - they will erode your base, take over your market, then raise prices to fleece your population’s wealth while increasing their own.
Industrial bases are economic strongholds that shouldn’t be lost, particularly not to great power competitors.

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- saint_fiasco 2 days ago
  
  > From a national security standpoint this can be deadly in a hot conflict.
  What about a cold conflict? How much do the tariffs and protectionist policies cost in the middle to long run?
  For example, the Jones Act costs billions per year and has been going on for a lot of years. How many additional aircraft carriers and submarines and so on could the US have bought with that money?
  
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  kranke155 2 days ago
  
  Tariffs and protectionist policies are unfairly maligned. They are effectively the only way countries build and rebuild industries. The idea that they are bad is an invention of bad economists who don't study history. See the book "How Asia Works" for an accurate economic history of the growth of industrial power in Asia, how it was based on Germany's ascension before it, and how it was al built on the RIGHT kind of policies. https://www.gatesnotes.com/How-Asia-Works
  Successful Asian powers studied history, not Milton Friedman. https://en.wikipedia.org/wiki/Historical_school_of_economics
  
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  Qwertious a day ago
  
  Tariffs specifically targeting subsidies are good. Tariffs in a vacuum are bad. Protectionist policies are bad.
  
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- heavyset_go 2 days ago
  
  > Because they are doing so to erode your manufacturing base through unfair competition.
  I wouldn't say it's unfair, if other countries actually value domestic manufacturing then they'll provide the subsidies and incentives to cultivate it.
  
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  zamfi a day ago
  
  > …they'll provide the subsidies and incentives to cultivate it.
  Incentivize it by…taxing imported manufactured goods, for example, to make the domestic manufacturers more competitive?
  
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Longlius 2 days ago

For the same reason we disallow severe product dumping - it's a ploy to build marketshare in an attempt to become hostile to consumers down the road. We don't let companies dump products for a reason.

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mattmaroon a day ago

China subsidizes EV manufacturers. Non-Chinese manufacturers can’t compete with the companies that get tons of free money from their government and go out business. Now only China makes EVs, so they can raise prices.
That’s the plan.

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- ac29 a day ago
  
  Sure, but if they raise prices, then US manufacturing becomes more competitive again.
  Even if the US lost capacity to build, EVs arent such advanced technology that manufacturing couldn't return if the conditions were right.
  
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  lupusreal a day ago
  
  > Sure, but if they raise prices, then US manufacturing becomes more competitive again.
  Manufacturing isn't something you can just turn on like a computer program. It takes time develop the infrastructure, talented labor and product designs. For something like cars we're talking about many years. It took China decades of concerted effort and heavy subsidies to get where they are now. Without subsidies, starting this process takes even longer and may even be impossible.
  Accordingly, if you already have this industrial capacity it would be mind blisteringly moronic to let it slip away from you. What can be destroyed in a few years will take many more years to build back, and won't be built back at all unless you reverse the moronic policies that let it get away from you in the first place.
  
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loandbehold 2 days ago

It's a favor in the short term but a blow in the long term because you lose ability to manufacture. Manufacturing capacity is a use-it-or-lose-it thing.

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roughly 2 days ago

Because you are a producer, and not just a consumer.

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johnmaguire 2 days ago

I think I'm looking for a more substantial answer.

> The subsidy is already a tit, the tariff is tat. Zero-sum is at least better than just taking the blow and having a negative-sum outcome for yourself.

To be more clear, I meant that it was typical for foreign governments to impose retaliative tariffs. e.g. https://www.trade.gov/feature-article/foreign-retaliations-t...

To say nothing of who actually pays the cost of tarrifs.[0][1]

[0] https://taxfoundation.org/blog/who-really-pays-tariffs/

[1] https://www.cato.org/publications/separating-tariff-facts-ta...

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tivert 2 days ago

> To be more clear, I meant that it was typical for foreign governments to impose retaliative tariffs.
And in the context of massive trade deficits, so what? IIRC, when the Trump tariffs went into effect, there was a lot written that the Chinese didn't have many levers to pull to respond, because of the US trade deficit. I think they implemented a tariff against soybeans (and some other non-tariff actions), and that was about it.
> To say nothing of who actually pays the cost of tarrifs.[0][1]
Who cares who technically pays, especially when they're correcting for some other market distortion? Focusing on that is a hallmark of libertarian anti-tariff propaganda that's pretty monomaniacally focused on free trade dogma and prices to the exclusion of all other considerations.

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- johnmaguire 2 days ago
  
  > And in the context of massive trade deficits, so what?
  I was thinking more in the context of consumer inflation. Countries tend to go back and forth in a tariff war, effectively raising taxes and lowering incomes for their citizens.
  
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  tivert a day ago
  
  >> And in the context of massive trade deficits, so what?
  > I was thinking more in the context of consumer inflation. Countries tend to go back and forth in a tariff war, effectively raising taxes and lowering incomes for their citizens.
  That's monomaniacal focus on short-term "prices to the exclusion of all other considerations." An artificially low subsidized price isn't a good deal, especially when its competing with your local industry.
  
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Log_out_ a day ago

or you trade industries .. you get our manufacturing but respect our ips. indirect class warfare. white collar vs blue collar.

Then one generation later it all bloes up in your face, destroying your democracy .. but you get to pretend your actions where innocent . its just like the weather , cant do anything about that ..

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