Tariffs

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Our perspective is proactive. Governments are accountable for providing essential services within their jurisdictions. When these services are at risk, they utilize tools like income taxes to stabilize the internal economy and apply tariffs to manage imports and exports.

Our definition prioritizes government objectives over the interests of individual business groups.

Healthy economies depend on free markets. As local providers emerge from nearby towns and regional cities, prices in interstate commerce tend to decrease, leading to increased supply until all citizens have access to essential goods such as wheat, corn, meat, electricity, vehicles, and internet services.

However, this free market can be disrupted by outdated thinking. Former nobles or diplomats may intervene to manipulate or monopolize production within their influential networks. They establish quotas that do not set prices but divide the market akin to a syndicate, cartel, or mafia. Each participant thus becomes a monopoly, and the oligopoly raises prices, ultimately driving out competition and reducing supply for a portion of society.

In contrast, free market economies implement tariffs. When tariffs are established, they apply uniformly to specific imports, maintaining competition while reducing imports. This shift encourages domestic production, enhancing education, resilience, and supply chains. It also insulates the economy from significant currency fluctuations. Competition with external partners continues to ensure lower prices and complete coverage.

Tariffs should not be feared. Forward-thinking companies adapt their product offerings. For instance, when tariffs are imposed on cars, domestic manufacturers often target the lower market segments. Foreign producers may then incorporate tariffs into their pricing, moving towards luxury vehicles, where consumers are less price-sensitive. This trend explains the success of many European luxury brands such as Mercedes Benz, BMW, and Louis Vuitton, as well as premium British consulting services.

The only area where tariffs may have a more negative impact is on commodities. Creating higher-priced alternatives for iron ore or bauxite is challenging. Tariffs on oil or raw materials could lead to price increases, potentially causing temporary inflation spikes. However, tariffs on finished goods typically redirect imports towards luxury items, reducing dependence on foreign suppliers for essential goods.

This fundamental distinction allows countries to implement tariffs without significantly affecting GDP. In fact, new domestic semiconductor manufacturers could reduce prices by dismantling the monopolies and quotas resulting from decades of government subsidies in Taiwan or South Korea. Revenue generated from tariffs can be allocated to support interest rates or insurance for new local businesses entering the semiconductor manufacturing sector.