Do you need to be a monster brain in economics to get the hang of tariffs? If you deep-dive into all the complexities surrounding every possibility, maybe you do. Nevertheless, the basics are the basics. Much like erecting a wall. Putting up a barrier makes it harder to do business. Harder to communicate. Harder to understand common concerns.
It’s a perfectly human thing to do. We erect barriers all over the place. That garden hedge, wooden fence or brick-built wall are a statement that says, this bit is mine and that bit is yours. Rarely is this absolute. Both sides of these unnatural barriers have mutual interests. Not admitting that reality is a problem. In fact, disputes between neighbours are one of the most common forms of dispute.
A barrier isn’t an invitation for you to disregard the concerns of your neighbours, and vice versa. That all night party, with the music turned up to eleven, maybe fine once a year but don’t do it every week. Well, don’t do it unless you are quarrelsome.
Economic barriers, like tariffs, are going to happen. When perception is all, the idea that one party can protect itself from those who would wish to do harm or take advantage, is very powerful. I say “perception” because a threat doesn’t need to be real. Politics is much about perception.
Trouble is that erecting barriers has a painfully poor history of failure. If we go back to walls, there’s not one that has stood the test of time. Maginot Line[1] is a case in point. The lesson there is that a barrier concentrates the opponents mind on how to overcome it. The elaborate nature of a barrier is no defence to the inventive mind. Barriers are time limited.
Tariffs, and non-tariff barriers are much the same. They may work to advantage for a while only to crumble when their weaknesses have been discovered. Although, I would say that non-tariff barriers are more powerful than straightforward economic barriers. The point being that the former is far more difficult to understand, counter and control.
2025 is a year of volatility, at least so far. Talk of tariffs is on, then it’s off, then it’s on again. It’s the real cat on the hot tin roof. A hop, a jump, and a skip. Everyone is left wondering what comes next. Even if there’s to be any return to a form of reasonable stability anytime soon. That’s the point.
Disruption offers opportunities. At least, for those quick inventive minds with resources to hand. If you don’t fit into that category, then chances are there’s a big downside and a lot of hurt.
To give the monopoly of the home market in the produce of domestic industry…………………must, in almost all cases, be either a useless or hurtful regulation. Adam Smith. The Wealth of Nations (1776).
[1] https://www.britannica.com/topic/Maginot-Line
John Vincent 