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by maxerickson 147 days ago
What happens if you avoid conflating cost and price and also assume that pricing is vaguely competitive, rather than cartoonishly favorable to tariffs?
1 comments

Assuming that pricing is vaguely competitive is conflating cost and price, since competition would cause margins to be thin. The general issue is that domestic production often has a higher cost, e.g. because domestic labor is more expensive, or because foreign production has already amortized some long-term fixed costs over past sales that a new domestic manufacturer would yet have to recover over future sales. It then needs a higher price, at least temporarily, in order to be competitive, which is what tariffs do.