Is this a general tariff on all imports, or a specific tariff only on a specific product?
A general tariff that lasted over 100 years is what made the USA prosperous, frim 1787 to 1913. Does that sound very inefficient? It only made us an industrial superpower exporter and a creditor nation. That sounds pretty efficient to me.
So the question must be concerning specific tariffs. That kind of tariff usually does more harm than good. It benefits only those who make that item, while raising prices for everybody.
A general tariff raises prices on all goods, so the free market is preserved. A specific tariff distorts the free market by raising the price on only one product while leaving others unchanged.
The purpose of a tariff is to restore balanced trade. So any tariff is inefficient if it fails to achieve this purpose.
The most inefficient tariff is one like the Smoot-Hawley tariff of 1930. We already had a trade surplus then, so a tariff was uncalled for. That caused our trading partners to retaliate by refusing to buy our exports. That was really really inefficient.
So tariffs must be applied wisely to be efficient. A poorly managed tariff can be inefficient.
A general tariff that lasted over 100 years is what made the USA prosperous, frim 1787 to 1913. Does that sound very inefficient? It only made us an industrial superpower exporter and a creditor nation. That sounds pretty efficient to me.
So the question must be concerning specific tariffs. That kind of tariff usually does more harm than good. It benefits only those who make that item, while raising prices for everybody.
A general tariff raises prices on all goods, so the free market is preserved. A specific tariff distorts the free market by raising the price on only one product while leaving others unchanged.
The purpose of a tariff is to restore balanced trade. So any tariff is inefficient if it fails to achieve this purpose.
The most inefficient tariff is one like the Smoot-Hawley tariff of 1930. We already had a trade surplus then, so a tariff was uncalled for. That caused our trading partners to retaliate by refusing to buy our exports. That was really really inefficient.
So tariffs must be applied wisely to be efficient. A poorly managed tariff can be inefficient.