Marcos Falcone explains how Argentina’s unusually high tariff barriers distort ordinary economic activity for Argentines every day:
When Argentines go abroad, they usually go shopping. Many of the products they want cannot be bought at home, ranging from clothes to smartphones and all kinds of home appliances. Because of this, it has become a tradition to return from a trip with one or two extra suitcases filled with smuggled goods. Did you know that it is more expensive to buy an outdated iPhone in Argentina than it is to fly from Buenos Aires to Miami, stay for three days, and get the newest one?
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Tariffs do not just make it difficult to get phones at home — they can make life dangerous as well. Argentina’s most sold car, which is artificially expensive because of protectionist measures, got 0 (zero) stars on one of Latin America’s most renowned safety tests. Cars in Argentina are not only more expensive than elsewhere in the region, but also markedly less safe.
To achieve these terrible results, the only thing Argentina had to do was enact tariffs, and now the US seems to be heading in the same direction. But in the past, protectionism has caused the same damage in the north as it caused in the south. Back in the first Trump administration, protecting the steel-production industry saved some jobs, but eliminated many more. Tariffs have also hurt businesses that rely on imports within the US and can continue to do so in a world of globally integrated supply chains. More generally, the 1933 Buy American Act, which forces the government to pay more for US-made goods, has been proven to be both ineffective and costly.
There is no escaping the negative effects of blocking outside competition. The more barriers a country enacts, the more damage it causes to itself. If we, as individuals, acted in a protectionist way, we should aim to grow our own food, build our own house, or make our own cars. But how does that make any sense? Economist Robert Solow once said, “I have a chronic deficit with my barber, who doesn’t buy a darned thing from me”. He meant it as a joke, but he had a point: What matters is to create wealth, which can be done both by selling and buying from others.
The revival of protectionism in the US is worrisome. To avoid it, Americans should take a look at the enormous destruction of wealth that tariffs have caused in other countries. Despite President Milei’s recent efforts to lift tariffs and take Argentina out of the “prison” in which it exists, the fact that the country shot itself in the foot decades ago has put it in a very delicate economic position. The US should not follow its path.