What about all the businesses that export products or the ones that rely on imports. Businesses go bankrupt, prices go up for everyone and less people have jobs.
A study was done on washing machine prices during tariffs of the previous Trump administration. Rather than undercutting foreign goods on price, local manufacturing raised their prices to absorb extra profit. As a kicker, the price of dryers also went up even though they were not subject to tariffs.
The US and Canadian economies have become deeply intermingled over generations. Many materials cross the border multiple times on the way to becoming finished goods and will be subject to tariff each time. There will be 2nd, 3rd, and 4th order effects for a long time even if these tariffs go away quickly, not to mention the poisoning of the closest relationship between nations the world has ever seen.
My fellow Canadians are horrified and enraged at the tariffs that amount to economic warfare and the continuous violations of our sovereignty. I have never seen the whole country this united on anything before. Canadians are furious and every grocery store has American produce rotting on shelves. We will not forgive and forget quickly.
For another source on this point quoted above- (and for people that prefer video explainers) the wall street journal covered how domestically produced washers/dryers went up in price after those tariffs: https://youtu.be/_-eHOSq3oqI?t=102
From "Donald Trump’s tariffs will bring ‘nothing but pain’ to rural America, farmers say - " https://www.ft.com/content/ba4569d3-3c54-47d9-90af-125751434...
"Trump’s last trade war, with China in 2018...led to $27bn in losses for US agriculture, according to estimates by farming groups..farms received as much as $23bn in compensation from the federal government"
These markets produced actually competitive businesses that thrived and outcompeted the market leaders (US and European companies) in multiple industries. So if you keep tariffs forever you end up with Russia or some other backwater where people are forced to buy shitty goods because you have no access to external markets.
The computer market in Brazil, for instance, was like that. Most of what we had were pirated hardware, because there was never an effort to create a real industry in the country, they would just copy and paste whatever was available out there and "launch" in the local market, so even with years of tariffs and protectionism the country did not produce any player in the computer manufacturing market.
Also encouraging people to produce the stuff locally only works if they can rely on the stability of the market.
Plus there's an intrinsic advantage that exporters in lower wage zones have over the domestic market. US workers are paid more than Canadian, and certainly paid a hell of a lot more than Chinese ones. So whatever is made domestically is just intrinsically more expensive.
You can make an argument for protectionism and self-sufficiency on various basis. But you can't make a good argument for erratic and sudden and unreliable protectionism.
This is, to an extent, the problem, yes.
There are plenty of problems, but here's one very obvious one; your own industry almost certainly depends heavily on imports, particularly if you're a developed country. If you basically only have primary industry, then this sort of protectionism can _theoretically_ work and allow development of secondary industry (though in practice there aren't many examples of this), but for a developed country it really makes very little sense.
You're also assuming that local industry _will_ compete on price, versus just accepting the newly-set tariff-induced base price. That will happen in some cases, but not all; in particular for near-monopolistic industries (cars, a lot of heavy consumer goods like kitchen appliances), really, it makes a lot of sense for them to raise their prices under such circumstances.
Unless they raise prices to get better margins since their competition has higher prices now. This is exactly what happened with Trump 1.0 tariffs: foreign product prices went up and so did domestic ones.
> A U.S. business also hires U.S. employees, who pay taxes as well and spend into the economy.
It takes time to on-shore, and until that happens the public is paying higher prices, potentially for a few years. So you take the total higher prices, and divide by the number of jobs created, and you can get the price per job. For washing machines it was $800K/job:
* https://www.nber.org/papers/w25767
There is an argument to be made that production capacity is strategic asset of course:
If you charge Canada a 25% tariff then products sold in the U.S. and shipped from Canada should cost U.S. consumers about 25% more. That, in turn, makes U.S. products look more attractive. A U.S. business pays taxes at the federal and state levels. A U.S. business also hires U.S. employees, who pay taxes as well and spend into the economy.
I’m sure I’m way over simplifying this, to the point of stupidity, but tariffs raise prices on foreign goods to encourage the sale and/or development of local goods, don’t they?