American producers: I can’t compete with that $10 foreign product, I have to sell my product at $12 to turn a razor thin profit.
Politician: ok I’ll slap a $5 tariff on the foreign product to protect you.
Act 2
American producer: awesome so now the foreign product costs $15! I can compete
American consumer: oh well I guess I can spend $12 instead of $10… sucks but America first I guess
Act 3
American producer: no need to leave $3 on the table, let’s sell ours for $14.99, I need more profits because everything I want to buy with my profits is now more expensive for some reason.
American consumer: the foreign one used to cost $10 and the domestic one cost $12… now they cost $15 and $14.99. I guess I’ll buy the American one and skip dinner tonight.
Why tariffs are stupid in three acts
Act 1
American producers: I can’t compete with that $10 foreign product, I have to sell my product at $12 to turn a razor thin profit.
Politician: ok I’ll slap a $5 tariff on the foreign product to protect you.
Act 2
American producer: awesome so now the foreign product costs $15! I can compete
American consumer: oh well I guess I can spend $12 instead of $10… sucks but America first I guess
Act 3
American producer: no need to leave $3 on the table, let’s sell ours for $14.99, I need more profits because everything I want to buy with my profits is now more expensive for some reason.
American consumer: the foreign one used to cost $10 and the domestic one cost $12… now they cost $15 and $14.99. I guess I’ll buy the American one and skip dinner tonight.