this post was submitted on 04 Aug 2025
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Explain Like I'm Five
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Even then localy produced products may go up in price to just under the imported price to maximize profits even though there is no additional overhead.
Totally, yes. That's where my "kinda" qualifier comes in. If done well, the tariff is dialed in to the point where the foreign product is on-par or slightly more expensive than the local one. And you need local competition as well. It's not enough to have a single local producer.
A somewhat decently working example is European cars vs Chinese EVs. The Chinese ones are much cheaper than what European manufacturers could do. Tariffs are used to bring their price up to a point where they don't have a price advantage over European cars. European car manufacturers on the other hand can't just increase their prices too much, because there's still quite a few of them competing locally.