Eli5: how does increasing or decreasing tarrifs affect a country’s growth?
In: Economics
Basically, your imposing a an additional cost on importing a product vs local produced goods, with the intention of allowing those local businesses to compete with normally cheaper foreign imports.
This is, generally, to the benefit of the producers (as they stay in business) at the detriment of the consumer, in the sense they now have to pay more for the same product than they would otherwise.
Their are secondary benefits that might Still make it a net positive for the wider economy. For example, if that tariff protected producer is THE major employer for the area, it might be better for everyone they stay in business rather than let them fail and cause a local recession.
Another factor is the lack of control you have over an importer. If you have no local producer, theirs nothing stopping them from, say, increasing the price because they don’t have competitors, or attaching strings to sales to you, or them just refusing to sell to you for geopolitical reasons, etc,etc. Thus, for things of national security Importance, theirs a strong argument that protective measures to retain local industrial capacity are worthwhile, even if its “inefficient ” in strict economic terms
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