Explain Like I'm Five

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If Trumps tariffs go thru would that not cause the countries the tariffs are imposed on just raise their prices? And a result of that hurt the american consumer? Why do it to begin with? (lemmy.world)

submitted 14 hours ago by [email protected] to c/[email protected]

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[–] [email protected] 33 points 13 hours ago

First, this is a great explanation and example. That being said, tarrifs can be good for the country implementing them in a very narrow set of circumstances.

Let’s say you are in a not very industrialized nation, maybe one recovering from colonialism or war. In that case almost everything is cheaper to import, and so it’s really difficult to get any economy going past subsistence farming. Targeted tariffs can help in that case to encourage local investment in the basic commodities needed to get the economy started.

Similarly, if you have one specific part of your economy that you really care about but it needs some help getting going, tarrifs can help to grow that sector.

In both cases, the tarrifs need to be narrowly targeted and be regularly monitored for when they should be phased out.

But in all cases, a large economy raising broad tarrifs is stupid.