Source: Garrison Center
by Thomas L Knapp
“A long-term tariff is certainly economically damaging. It both raises prices on imports and enables domestic producers to raise THEIR prices on the same kinds of goods. It makes everyone (except the politically connected domestic producers who lobbied for it) poorer. But at least a stable tariff can be planned for. Investors just factor it in to their decisions. Suppose, however, that tariffs were set on a daily basis by spinning a roulette-type wheel. One day the tariff on, say, imported cars was 0%. The next day, 100%. The day after that, 29%. Existing auto manufacturers would factor the maximum POSSIBLE tariffs into their prices rather than risk losing money on sudden changes, and few would invest in the risky business of building new plants to build more cars. Consumers would get screwed on car prices every day; investors wouldn’t risk getting screwed on profitability going forward.” (02/08/25)