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PaperclipPerfector  9d ago (text post)   32710 thread views

Culture War Roundup for the week of March 31, 2025

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Smart tarries can help by essentially protecting an industry of national security interests or an industry that the government wants to invest in for eventual export. If I have an industry like chips manufacturing, I want to keep it protected because those chips are also used in military gear, so I might heavily tax imports o& chips so that native chip manufacturers don’t get undercut by cheaper imports and we are then dependent on those imports for vital products or military hardware. Or you might decide that the future is solar panels an$ thus create a huge tariff on solar panels until your own are good enough to compete on the world market.

Or you end up with something like the Jones act and basically destroy the industry by making sure they never compete and they turn into parasites.

This gets to both sides of the tariff problem. If you're going to give domestic producers license to collect rents instead of competing, they're going to do it. And on the flip side, you're not going to maintain global competitiveness by trying to rely on a fenced off domestic market (even a big one like the US) - domestic producers are all too willing to phone it in. You demonstrably can astroturf a competitive export industry, but it relies on pretty much the opposite of trying to bolster domestic markets. You're usually deliberately screwing domestic consumers and domestic workers for the sake of international competitiveness.

(You also have to be realistic about your circumstances. US post-war supremacy in manufacturing exports was in no small part the product of a confluence of events that are not really repeatable)

It plausible as well. It takes someone who knows economic theory well enough to do it right. I don’t think Trump is that kind of an expert. But it’s not insane to do something like that temporarily to protect a nascent industry until it’s strong enough for the global market.

The relevant skill isn't economic theory - it is a deep understanding of supply chains and of potential sources of competitive advantage. Industrial policy is working on the flow of goods (and occasionally services), not the flow of money that pays for them.

But Trump isn't doing infant industry protection - the most important infant industry right now in the US is semiconductors, and they were excluded from the tariffs. There doesn't appear to be any microeconomic justification for the tariffs even from supporters. The main arguments being used to defend the tariffs are "we don't actually mean to do this - it's a negotiating tactic" and "this is a fiscal transfer from foreigners to Americans that will allow us to cut taxes". And if it is a negotiating position, the likely end goal is macroeconomic - the Mar-a-Lago accords will fundamentally be about exchange rate policy.

Off-topic, but: I wonder if the problem with the Jones Act wasn't exactly the restriction itself, but the failure to enforce export discipline. In another timeline, the Jones Act is probably still around, and is much more unassailable because the US went South Korean with shipmakers.

I definitely wonder if a smarter Jones Act (e.g. tariff discounts for goods delivered to US points in US vessels) would work better than the Jones Act as implemented.

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