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Comment by ConspiracyFact | Hacker News Reader

I may have worded that wrong. Articles say that they will hurt American consumers and don’t address the actual purpose of the tariffs, which is to put political pressure on their targets. If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.

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> If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.

… Eh? Retaliation is an absolutely standard part of a trade war; it virtually always happens, and, unfortunately, it can’t really be foregone. Like, people are talking about retaliatory tariffs because that is _how it works_; that is what always happens and really must happen.

Again: articles claim that tariffs are pointless because target countries simply pass the cost along to consumers. But if that were the case, there would be no reason for the targets to “retaliate”.

Does anybody else have hazy childhood memories of those kids who would hit others but throw a bewildered crying tantrum when they were hit back in direct response?

One of them's setting policy right now.

Targets talk about retaliation if they think the tariffs have some chance of succeeding, true. Targets also talk about retaliation if they think retaliation has a chance of succeeding.

What?

There are two possible reactions to tariffs that you think will put political pressure on you.

One is to retaliate. You only do this if you think you might win the trade war. Canada retaliated, and Canada thinks it might win the trade war.

The other is to roll over. You only do this if you don't think you'll win the trade war. That's what Columbia did.

Retaliation is a sign that the attack was strong, yes, but it's also a sign that the defence is strong.

> The other is to roll over. You only do this if you don't think you'll win the trade war. That's what Columbia did.

The situation is a bit different IMO, Colombia had a clear reason for getting tariffs and it was possible for them to roll over.

Canada though, it's not even clear why the tariffs are there or what Canada could do not to have tariffs. There isn't really anything for Canada to do except retaliate.

Political pressure to what end? Trump said “jump” on border measures and Canada jumped even before the tariffs.

The retaliation is posturing for the other party and for the electorate. If you’re driving in a car and your passenger pulls the pin on a grenade, you can “retaliate” by pulling the pin on your own grenade.

But if the tariffs don’t actually cost the target anything, why retaliate?

… Eh?

Tariffs do of course cost the target; they reduce the market for its goods, because consumers and businesses in the country applying tariffs can no longer afford to buy them. Now, how much they hurt will depend to some extent on whether there are other markets, etc.

Imagine there are two countries, A, B. A exports $1bn in raw materials annually to B. B exports $1.1bn in finished goods to A. B imposes a 25% tariff on A. Businesses buying the raw materials will generally not be able to afford a 25% increase in input price (very few manufacturing businesses have margins anything like that high) so will fold. A no longer has B buying its stuff, so the raw material production will halt, leading to losses there. A will no longer be able to afford to buy B’s finished goods (even if A does not impose retaliatory tariffs, which it almost certainly will), so even if some of B’s industry can survive the input cost hike, it has a smaller market.

Obviously this is _extremely_ simplified (for a start, other countries exist, and you might see more of a _rerouting_ around A, a little like what has happened to post-Brexit UK. But it’s a serious mistake to think of this as a zero-sum game. In general high broad tariffs hurt everyone.

> But if the tariffs don’t actually cost the target anything

I don’t think anybody has suggested this.

Or, see my analogy; pulling a grenade pin in a moving car costs everybody.

But there are many articles that suggest exactly this.

They do cost the target, the claim is not they cost nothing. But, if they costed the target nothing, you would safely retaliate, because that is rational response to someone trying to target you.

There are several articles and videos that claim that the cost of a tariff is simply passed on to the consumer.

You mean ... supposed pressure for Canada over the fentanyl? What exactly is to be gained there? It is political pressure for the sake of political pressure and looking like a macho man.

In that setup, Canada has no choice but retaliating. Trump is a bully and so is Musk. If you do what they want, they will bully you further. So, you have to retaliate if you can.

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