this post was submitted on 16 Jul 2025
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I’m adding this as a sub comment cause I think this would be extra points, but I guess it might be interesting for some, if they’ve never really read or thought about it.
But do first note that I’m no expert of governments or foreign trade relations. I’m just an observer.
You might be wondering if tariffs is the only way for governments to protect local industries, and you’re most probably thinking that that shouldn’t be the case. And you’re right. That said though, keep in mind that a tariff is a pretty simple tool for governments to use, and fairly good too: you fork out some money upfront to set up the tariff and all its supporting processes, and you get to earn money for the country. What actually happens is that you’ll tax any imports on the exporter, but what ends up happening is that exporters just add that to their cost and thus increase their prices, so it is typically like a tax on your own citizens. There are exporters who do just sort of eat that cost themselves, but that’s not common afaik.
Another option you could support a local industry is by providing subsidies, which can be done in a myriad of ways: materials, procurement, research, labour, etc, and you can even mix and match some of them. The problem here, though, is that the government has to fork out that money — that’s why it’s a subsidy. The Chinese government loves doing this for any industry that they deem strategic, and they can do so a lot more freely than most democratic countries, because, well, they just don’t have to worry about an election if people aren’t happy with where the investment went. Here in Canada though, people do get mad when subsidies are offered for industries that they don’t like, and that affects the polls.
You could also outright ban the import of certain products from certain countries, but that usually triggers very negative reactions from the affected countries, unless you have a clear law that literally bans the consumption or use of that product; people want to make money after all, and you’re literally making it impossible to do so. Examples of “okay” bans that most countries have over Canada are like cannabis, cause that’s deemed illegal in their country, and Canada doesn’t really have the desire to make those exports. It’s definitely a strong tool though, with potentially negative consequences.