How Tariffs Work

People who subscribe to mercantilism tend to favor internal trading over external trading. If external trading is to occur, they prefer that their nation only export goods while the other nations of the world only import goods. But that ideal is difficult to realize because people in one nation are often interested in the goods and services provided by people of other nations and that interest leads to mutual trade. How can a mercantilist thwart this mutual trade? By imposing artificial barriers on international economic activity. While there are many such barriers that can be raised, the most popular barrier today is the tariff. The Mercantilists imagine that implementing tariffs means that its people will develop a preference for domestic products over foreign products while foreigners will still prefer importing the goods of their nation. Nobody likes an unfair deal so in actuality all that happens is that the nation implementing the tariffs is bypassed:

The European Union and Japan have signed one of the world’s biggest free trade deals, covering nearly a third of the world’s GDP and 600 million people.

One of the biggest EU exports to Japan is dairy goods, while cars are one of Japan’s biggest exports.

The move contrasts sharply with actions by the US Trump administration, which has introduced steep import tariffs.

If the United States won’t play fair, then it won’t get to play at all.

The current administration is playing a stupid game. It’s trying to develop domestic economic activity by artificially raising the price of imported goods even though the United States doesn’t have the experience or capacity to manufacture many imported goods on a scale that can satisfy demands. The result of this game is that consumers in the United States will be forced to pay more for their goods while the rest of the world bypasses the United States.