Ok was reading a post somewhere else and came across someone saying how trump likes tariffs too much, which is not the first time i have heard tariffs frowned upon. I have always been of the opposite opinion and I guess would also 'like tariffs too much' so please enlighten me as to why they are bad.
My view:
I like to visualize the flow of wealth and whether wealth is flowing in to or out of an area. When I researched Fredrick the Great, he had become 'the great' thru making Prussia wealthy, and he had done this by freeing up and empowering local producers while limiting... thru tariffs... goods externally produced. This makes total sense to me. Prussian producers then pull wealth in while foreign producers no longer pull wealth out.
Another parallel is when developing countries have farmers that cannot produce goods cheaply enough to compete with the oversubsidized foreign goods flooding their market and, because their government does not tariff up the prices of the foreign goods, the locals get thrown in to poverty. These two things have always, to me, implied the role of tariffs is to prevent wealth from being drained out of an area and, as a byproduct, divert business and thus success inward instead. Because this helps local prosperity, I, I guess similarly to Trump (?), have historically viewed tariffs as generally a 'good' tool.
So please, explain where I'm wrong, if I am, and why tariffs would be bad. thank you
I am no economy expert, so I am glad to be corrected by others. But my understanding is the following:
The fundamental idea is that specialisation is good and because of that most things should be done where it makes the most sense and is efficient. A person in silicon valley is probably better utilized working on semi conductors (or any kind of tech) instead of growing wheat.
So ultimately globalisation, trade and division of labour grow the pie for everyone.
With tariffs you are intervening into this process. Sometimes this makes sense, e.g. to counter subsidies that distort the market. Other times it is done purely to gain an advantage.
This might work in the short term. But long term others will do the same and in the end everyone will have to produce everything. And then you have to ask yourself why we e.g. started producting clothes in Asian countries like Vietnam instead of the west.
The US especially has profited massively from free trade.