How would tariffs on foreign goods strengthen a country’s economy? Conversely, how does another country imposing tariffs cost the target country money?

Question

I read an example recently where the Obama administration imposed tariffs on tires from China and in response China imposed tariffs on chicken from the U.S. Both were said to have ‘cost’ the U.S. (in tire prices passed to consumers and … it wasn’t clear). How does this work?

In: Economics

Answer 1

All of these examples are ignoring historical cases of salutary tariffs. In the late 1800s, British steel was the best in the world. Nevertheless, Congress put a tariff on it so that the nascent US steel industry could compete with it. It worked. By 1900, US steel was much improved and incredibly abundant. US steel production went on to be a pivotal factor in changing world history in the 1900s.