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0 pointssigilis2y ago0 comments

If people don’t buy foreign cars because they are too expensive, then no one. For the union there’s no intrinsic downside to such a protectionist action.

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rz2k2y ago

Why would American consumers purchase a car made in Europe without the tariff?

It is never possible that the producers and their labor will benefit more than the aggregate harm imposed on consumers by a tariff.

The cost of a tariff on the economy will always be more expensive than the benefit it gifts to a select few. However, the political reality of the cost spread out to many people compared to the larger per person benefit enjoyed by a smaller number of cronies means that tariffs will almost always be popular.

riversflow2y ago

That's only true in a perfect globalized market economy. To head you off, I understand the the downward shift of the demand curve when the price level rises, that makes complete sense. However, if the net result of not having protectionist trade policy is a loss of on-shore production and at a later date their is global instability, whether from a pandemic virus or war, such that a global market no longer functions freely, then wouldnt the "expense" be an investment? Demand for cars is fairly elastic I would imagine, so wouldn't domestic suppliers increase production?

Looking at vehicle production through the single dimension of economics without considering geopolitics seems naive.

d_e_solomon2y ago

Higher tariffs leads to less overall supply in the domestic market which leads to higher prices for consumers. Higher prices for consumers leads to grumpy consumers at the people who supported the tariff in the first place.

Moreover, longer term tariffs leads to domestic suppliers not being as efficient and hence fall behind international competition. Thus, domestic consumers get garbage cars and become grumpy at the people who supported the tariff in the first place.

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