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by hakfoo 704 days ago
The part of "bootstrap through tarrifs" that's missing here is the "bootstrap" phase.

You can get away with selling domestic rubbish to local consumers when you're a poor country with few options. For an established industrial power:

1. Consumers will not change their behaviour unless you apply punitive levels of tarrifs. A 10% tax probably won't make the customers who have bought a Lexus for their last five cars switch to Lincoln. That's probably why Washington felt they could get away with the huge levies on Chinese EVs (a new market with no established consumer behaviour being disrupted), but didn't breathe a word about Made-in-China Buicks (an established market full of old people who vote).

2. It doesn't grow the total pie very much. When you're Outer Slobavia and just getting your first industrial plants off the ground, there's a lot of growth to be had just reclaiming the domestic market from foreign competitors. But the US is a mature player in most of these markets already. Removing foreign competitors will only buy a few percent market share.

Admittedly, tarriffs don't cause low quality by themselves. It's more that the package deal being presented is "we won't bother making American industry more competitive, since we can just go insular and high-tarriff to create a captive market to keep American factories alive." Even if you win at that captive market, that's a far smaller upside than if they had instead said "we're going to get back on the leading edge of manufacturing and make American products globally aspirational."

1 comments

Perhaps the most significant problem with maintaining free trade with places outside of Europe is that the lax environmental and labor regulations in those places make it extremely hard to compete.

If one factory has to operate clean and one doesn’t, who is going to make the cheaper product? If one factory has access to borderline slave labor and one doesn’t, who is etc.

Putting aside competition and focusing on morality, I don’t really understand how people put their head in the sand about the environmental and human damage they support abroad that they would never tolerate at home. The air we breathe is the same air that factories anywhere in the world pollute into, and people in Asia are just as human as we are.

I think a good approach would be to apply tariffs that offset the cost of environmental and labor regulations in America, which would be removed if the foreign countries adopt equivalent regulations and prove that they are in compliances. The state of affairs we have had for many decades now is insanity.

Competition still works as long as you've got something other than "cheapest" to differentiate yourself on.

The people who say "I'm buying brand X because they have a reputation for quality/good design/better total experience" can help finance any difference in labour and environmental remediation costs.

You can't win a "I want the cheapest generic 330-ohm resistor" market wither higher cost structures, but you can come up with a lot of ways to avoid having to enter that market.