Their industries are not efficient or developed enough to deal with foreign competition so they need to install protectionist measures to allow their industries to compete. They are not poor because of tariffs, they have tariffs because they are poor. Richer countries usually tend to subsidize their failing sectors instead of putting tariffs because they have the money to do so.
Good visualization just don’t confuse it for cause and effect imo, poor countries need to have tariffs if they want their industries to grow at all
Correlation does not equal causation
I don’t know if this is the cause but one use of tariffs is to promote the growth of new industries within the country – infant industry protection. Your local industry starting out will not be efficient, so foreign competitors will undercut them and they will go out of business. The government needs to make them profitable while currently inefficient – that means either subsidise them directly or make foreign competitors less competitive with tariffs.
It is something the US, among others, utilised heavily when developing.
Once your industries are competitive internationally that factor is no longer relevant and it promotes less specialisation/more self-sufficiency and therefore less efficiency.
What about countries that choose over a dozen free trade laws so that US manufacturers can stop paying US citizens decent wages and instead send those jobs to anywhere else they can find worker for less than a dollar an hour?
Wait..wait.. it gets better! Then those companies reap the profits by not lowering cost to consumers, but raising them!!
The poor workers that are laid off in the US don’t have money to buy these products anymore, you know, because of the whole no-job thing, so they start taking on debt through predatory lenders.. staffed by offshore workers getting paid pennies on the dollar!
Stock market does awesome with free trade. The poorer countries do awesome with free trade.. but the cash flow only goes one way and it’s not our way.
Tariffs can be helpful for protecting local industry but often smaller counties just fall into the trap of having a bunch of local monopolies without competition, you need local industry but you also need strong anti trust and domestic competition not just production
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source: [https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS](https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS)
viz created in excel
Their industries are not efficient or developed enough to deal with foreign competition so they need to install protectionist measures to allow their industries to compete. They are not poor because of tariffs, they have tariffs because they are poor. Richer countries usually tend to subsidize their failing sectors instead of putting tariffs because they have the money to do so.
Good visualization just don’t confuse it for cause and effect imo, poor countries need to have tariffs if they want their industries to grow at all
Correlation does not equal causation
I don’t know if this is the cause but one use of tariffs is to promote the growth of new industries within the country – infant industry protection. Your local industry starting out will not be efficient, so foreign competitors will undercut them and they will go out of business. The government needs to make them profitable while currently inefficient – that means either subsidise them directly or make foreign competitors less competitive with tariffs.
It is something the US, among others, utilised heavily when developing.
Once your industries are competitive internationally that factor is no longer relevant and it promotes less specialisation/more self-sufficiency and therefore less efficiency.
What about countries that choose over a dozen free trade laws so that US manufacturers can stop paying US citizens decent wages and instead send those jobs to anywhere else they can find worker for less than a dollar an hour?
Wait..wait.. it gets better! Then those companies reap the profits by not lowering cost to consumers, but raising them!!
The poor workers that are laid off in the US don’t have money to buy these products anymore, you know, because of the whole no-job thing, so they start taking on debt through predatory lenders.. staffed by offshore workers getting paid pennies on the dollar!
Stock market does awesome with free trade. The poorer countries do awesome with free trade.. but the cash flow only goes one way and it’s not our way.
Tariffs can be helpful for protecting local industry but often smaller counties just fall into the trap of having a bunch of local monopolies without competition, you need local industry but you also need strong anti trust and domestic competition not just production
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