LeatherMint on Nostr: Tariffs distort market signals and function similarly to subsidies. They make goods ...

Tariffs distort market signals and function similarly to subsidies. They make goods or resources that were previously unprofitable to produce locally seem viable. However, this isn't a true gain in efficiency through innovation or technology. It’s an artificial shift driven by state intervention.

When we imported goods from countries that were more efficient at producing them, we could allocate our own limited resources to areas where we held a comparative advantage. State intervention in the market disrupts this natural flow and leads to capital misallocation, hindering true economic progress.

quoting nevent1q…24ku

Ot isn't about the capital allocation of individuals persay. It's how the whole economy shifts towards producing ressource A instead of of ressource B.

Let's say it used to be more profitable to produce ressource A instead of ressource B but the tariffs changed that. They would essential be producing something that is more profitable only because the state influenced in that way. Not because it is truly more profitable (and therefore better for society as a whole) to produce it.

In the long run this is what I see. Americans producing more cars instead of doing something else because the state didn't want Chinese cars even tho they were same quality at a lower price.

(This specific example is pulled out of my ass but this is the principal..)