The entire point of trade, the very purpose of it, is to gain access to the imports. Those things which Johnny Foreigner makes cheaper or better than we do. To tax ourselves because he makes things cheaper or better than we do is simple idiocy. […] Over and above this stupidity there’s the depressing point that trade and trade protection really is a spiral. Here we’ve got the two largest economies on the planet tripping over themselves to punish their own citizenry for their temerity in buying foreign. And as we can see, it is a tit for tat spiral. A little bit of sabre rattling, a response, a larger amount of shouting, a response, then truly impoverishing levels of rock throwing into own harbours and off we go into making our own people less wealthy.
The true sadness here being that the spiral works the other way too. But hugely, vastly, more slowly. GATT was founded in 1947, it became, the process was transferred to, the WTO and it has taken them since then, that two generations, to reduce tariff levels to where they’re not really all that important in trade matters. Something that is being undone in just a couple of months of foolishness. GATT being something of a response to the economic demolition work done by Smoot Hawley of course.
Trade protection does spiral up and spiral down, the sadness being that here’s an asymmetry to the process. The reductions that make us richer take very much longer than the nonsenses that impoverish.
Tim Worstall, “The China, US, Trade War – It’s All Mutual On The Way Down As Well As Up”, Continental Telegraph, 2018-07-11.
November 5, 2020
QotD: The idiocy of tariffs
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