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Do tariffs raise the quality of domestic substitutions, or do we simply pay more?





For many products, domestically manufactured substitutes still have some inputs that come from international suppliers.

Could be some raw materials, the machines that make it, or the packaging. Now everything is going to be massively more expensive and it's going to have impacts even on domestically manufactured goods.

There's also the substitution effect, where heavy tariffs on one thing will increase demand on substitutes and therefore raise their prices.

It's really bad policy all around. Nobody who has any familiarity with manufacturing thinks it's going to encourage more domestic manufacturing because the tariffs suddenly restricted your ability to buy inputs and machines at reasonable prices. You're better off building a factory in another country to service global demand.


I have a friend who started a snowboard factory recently, in the USA, he was able to do this because of Chinese made CNC machines and presses that were half the price and had great support.

Now everything he needs from them to keep his factory going is going to be ridiculously more expensive, probably screwing over his business as well.

This factory wouldn't have got off the ground if it wasn't for Chinese made machines.


Tariffs lower the quality and increase the prices of domestic substitutes. There is no competition. Tariffs are how business is done in third-world countries like India. Production of everything is banned/controlled, except for the few buddies of the government in power.

Either you will pay more for domestic producers or (more likely) you will not pay at all since either domestic production will not ramp up for niche things, or you will not be willing to pay hikes domestic prices for the same utility.

lower quality, higher price.



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