[ben_w]

You want to tax foreign businesses that sell stuff to you?

Ok, given you can only tax stuff when it passes into your territory what you really have there is called a "tariff", it is paid by… the customer, when they buy the thing.

The seller has an entire planet to sell to. The US has about 25% of the money to buy things with, but even then only because we all like your money. Moment we stop liking your money, that probably drops to 20%.

[bluecalm]

You may not like tariffs but it's not as straightforward as "customer pays". Customers and businesses will part of it. Businesses will most likely give up some part of the margin and customers will pay a higher price.

>>The seller has an entire planet to sell to.

For a lot of goods US is responsible for 50% of profits. It was for me for a long time when I was selling software. Quick googling suggests some EU automakers make close to 50% of their profits in US as well.

US is the premium market everyone wants to sell to. There is nowhere else like that, especially for high margin goods.

[SilverElfin]

I’m not sure why this logic isn’t more mainstream. Half the country is clamoring for tariffs, bans on H1Bs, offshoring taxes, etc. They’re not connecting the dots on how this affects innovation, the economy, debt, taxation, etc. Is it a failure of education or a culture of rejecting it?

[morleytj]

For the US, it's not too out of the norm historically speaking. Up until relatively recently tariffs were very popular in the US despite the clear understanding by academics that they were incredibly damaging to the economy. Political movements based around protectionist economic arguments have a long history in the US.

For an example, take a look at the 1888 US presidential election, which largely revolved around tariffs. Grover Cleveland lost re-election due to being part of the pro-business wing of the Democrats, and he came to the conclusion that tariffs were a negative to the economy overall, while his opponents were strongly protectionist. After McKinley's Republicans won the election on a protectionist platform, he instituted the McKinley tariffs (average import duties of around ~50%), which were devastating to the economy despite being extremely popular with the nation in the election. It led to massive price increases which led to the re-election of Grover Cleveland in 1892 (only other non-consecutive term president aside from Trump). Despite expert opinion being fairly solidified against tariffs even at the time, the idea of "protecting American business" and "punishing other countries for their unequal trade deficits with the US" was pretty popular with specific interest groups!

Parts of this sound rather familiar, do they not? I would then argue that it points to a cultural element, out of the two options of a failure of education or a culture of rejecting it. History certainly rhymes on this point.

[hunterpayne]

Serious question, if tariffs are so terrible, why did so many countries have tariffs on US (and other country's) goods?

Also, during the period you describe the US was a major export economy. Now the US economy is far more insular (even before Trump) than it was during that period (foreign trade was more than 50% in the late 19th century vs 7% today). Why would you assume that doesn't impact the effects of tariffs?

[ben_w]

Whole bunch of reasons. Off the top of my head:

1. Making the same mistake as Trump et al.

2. Quick and easy reaction to other nation's tariffs, which we saw this year when Trump announced all his tariffs.

3. Targeted at specific industries to influence politics in other nations. IIRC, the EU is actually doing this to the US, specific states that have a lot of support for Trump, in the hope those voters will make the connection and get Trump to back off.

4. Targeted at specific industries to protect domestic industries from being undermined. The USA has accused China of this in various cases, any "anti-dumping tariffs" would be perfectly reasonable where this happens. China was accused of trying basically the same thing Uber was accused of, spending (VC|tax) money to corner the market then raising prices when all the old (taxi drivers|PV makers) were gone.

5. Sin taxes. Singapore doesn't have their own car industry to protect, they make it really difficult to get a car just because they don't want lots of cars. I mean, it's more of a registration fee, but the effect there is much the same given the lack of local industry.

[morleytj]

There's definitely debate over which specific scenarios tariffs could be beneficial, as I understand it, but the general theme is that any benefits are highly concentrated (one or two companies or industries will benefit) and the negatives are felt in a diffuse fashion(every consumer pays the tax). They are broadly protectionist and the ones that do exist usually are implemented for pretty specific reasons like the following:

1: A government wants to protect domestic industries over ones outside of the country by applying price increases to the foreign ones, with the idea being that the domestic industries just need to grow into being able to compete with the industries in other areas. This is called the infant industries argument. A central problem with this is that the industries will always benefit from the protectionist policy, and are unlikely to ever admit that they have "grown up" so to say. My general view on this is that groups will of course lobby to have benefits specific to their industry, and that there are probably scenarios where we would prefer to have things handled domestically rather than abroad, but I would generally want this to be highly targeted and time-gated(Once the industries are mature enough to compete, we wouldn't want to keep subsidizing them), and that other tools are probably more efficient for this purpose.

2: Some sort of national security argument, where production being cut off during war would be a serious concern. My general thought on this one is that if something is specifically important for national security, broad reaching taxes on all imports probably aren't as useful as targeted government interventions in those specific industries. The government can build whatever factories it wants or contract people to do specific things if it passes a law to do so. If we're worried that we need a domestic supply of beets(randomly selected example) and the government is willing to produce them at a loss for national security reasons, they should probably just do that rather than tax imports of coffee, chocolate, bananas, beets, beef, and cars in order to encourage domestic production of beets. The broad spectrum nature of across the board tariffs doesn't specifically protect any given industry, unless the specific protection desired is "nothing should be imported, only ever produced domestically."

3: Historically speaking tariffs were a major source of government revenue. There was no income tax in the very early US (and this was the case in many places), and tariffs were seen as an efficient way to raise a lot of money for the government. At the time it was also something that was a lot easier to measure than things like property value, sales, or individual income, because all the goods had to come in through a port. Pretty easy to check the majority of the things coming in, compared to other taxation methods. A major argument in the time period was actually that the government was making too much revenue, such that it was constricting the growth of the private economy! A huge debate in the 1880s and 1890s was on how the share of government revenue could be lowered, and the growth of the economy could be encouraged. Republicans argued that implementing more tariffs would actually reduce imports and lead to lower revenues, which was the stated goal of the McKinley tariffs.

The general reason some people oppose tariffs overall is that they represent an approach to economic growth based on zero-sum thinking, i.e. an idea that if another country experiences economic growth, ours must suffer economic decline. There tends to be more support from many people behind the idea that international trade allows multiple economies to grow in tandem, as I understand it, but I'm definitely not an expert in this stuff, haha. I just find the historical aspect interesting.

On your second point, describing it as a major export economy in the period I describe is maybe not capturing the scenario, because we were in the middle of a major change in manufacturing. We were major importers of manufactured goods in the preceding time period, and we exported agricultural goods! The period from 1890 to 1910 roughly(depending on when you draw the cutoff) is when the US mainly started exporting manufactured goods more than importing them, and it was a massive transition. The period we're talking about is probably best understood as when we were in the process of industrializing more.

It's fair to point out that the economy was pretty different at the time, but it was different in a bigger way.

[tick_tock_tick]

> The seller has an entire planet to sell to.

They really don't there is a reason the EU pretty much instantly caved in the last trade "negotiation" and it's most of the world frankly doesn't have much money. There certainly isn't enough untapped demand to fill a USA sized hole anywhere.

[microtonal]

The EU caved because they didn't want to agitate Trump too much due to Ukraine. This becomes less and less important as the EU ramps up arms production.