Hacker News Reader

Comment by gtirloni | Hacker News Reader

I was a kid but I remember Brazil had huge tariffs on electronics to "protect the national industry". That actually set the country back a decade. I remember people talking about the "new" 386 processor in 1995-ish (it started mass production in 1986).

That's not even remotely comparable to the US situation but it gives me pause when countries enact tariffs to protect anything.

View on HN

Tariffs protect domestic companies against competition from more innovative foreign companies. Because they remove incentives for domestic companies to improve their products or reduce their prices, tariffs gradually reduce the competitiveness of domestic firms; the longer and higher the tariffs, the more likely domestic industries are to turn into rent extractors, only able to sell their products because foreign competition has been handicapped.

If a country wants to have globally competitive, innovative companies, that is not compatible with tariffs.

To be fair, some of this "innovation" is just a lack of environmental regulations and human safety standards.

This is a huge, huge part of it. Tariffs on high-tech electronic devices and tariffs on steel are different beasts.

We're rightfully appalled at companies that literally grind up employees - but we happily buy from companies in countries where that's just Tuesday.

https://www.washingtonpost.com/business/interactive/2025/osh...

That’s a good point.

I could maybe imagine supporting tariffs that were legitimately tied to these goals. For example, if there was a tariff against a particular industry in a particular country that would be dropped the moment that the country in question implemented some environmental regulation.

The danger is even if tariffs are implemented for good reasons, they still incentivize domestic firms to just become rent extractors.

Counter example : Tata, current owner of Land Rover.

Same deal in Australia. We had tariff walls up until the early 1990's. The trajectory of the economy was plainly obvious it triggering a speech by the then treasurer saying Australia was at risk of becoming a "banana republic". They then went about a wholesale re-arrangement of Australia's economy. They did a lot of things, but the major one was tearing down the tariffs. During the re-arrangement a lot of people lost their jobs, and it triggered a major recession. It was a painful time.

But that was the last recession we had. It's been 30 years of growth thereafter.

I suspect the younger Australians have forgotten the lesson, but it the word "tariff" still frightens my generation. In the USA, you have no one who has lived through tariff's for near a century (Smoot-Hawley in 1930). The economists and academics will be advising anyone who would listen what the effect of rasing tariff walls would be, and it seems like the USA politic did a reasonable job of listening to them for the last 40 years or so. But now the current mob running the place got there by championing not listening to elites.

It's time to re-learn the lesson, I guess.

You're telling me that domestic chip fabs didn't just pop out of the ground?

Reagan put tariffs on Harley Davidsons and steel in the 1980s.

These gave HD a little breathing room to restructure which helped them to bounce back (for maybe 30 years), but couldn't cure the natural limits of selling a nonessential vehicle for over $20k to middle-aged men who bought a hog only to fulfill their bucket list.

But Steel didn't benefit as much as HD, since the economics of pivoting giant ossified corporations like USX take decades -- especially when hampered by old men in gray flannel suits and self-destructive unions that had no idea how unsupportable their benefits already were.

The question remains whether tariffs really accomplish anything lasting, other than attract votes in the short term, for re-election.

Reply on news.ycombinator.com