<div class="popup-gallery"> <a class="post-images" href="https://gefira.org/wp-content/uploads/2025/02/Customs.jpg"> <img alt="" class="attachment-thumbnail size-thumbnail wp-post-image" height="150" src="https://gefira.org/wp-content/uploads/2025/02/Customs-150x150.jpg" width="150"/> </a> </div> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">Tariffs and growth – terms that are in everyday circulation whenever economy is talked about – are interesting notions. While tariffs is a double-edged sword, so growth is almost useless, but first things first.</span></p> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">The world is all agog in expectation what President Donald Trump is going to do in his dealings with China and Russia. As is known – as he himself has said on many an occasion – tariffs are the means of promoting American economy and preventing foreign economies from dominating the American market. Thus, to take the example that is very often discussed, the United States has imposed tariffs on Chinese electric cars. It was not only Donald Trump who did it during his first term of office: President Joe Biden continued in Trump’s footsteps in this respect. The former imposed a 25% tariff, the latter – 100%. Such a tariff is supposed to bloc the imports of Chinese cars into the United States altogether. How?</span></p> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">While the end customer would have to pay twice as much as the customer in a country where no such tariffs are in force. Hardly anyone is going to pay through the nose for a vehicle from China. Thus, for all practical purposes the American market is closed to Chinese electric automobiles, and the American market is huge. Does that mean that the Middle Kingdom has been economically punished? Well, yes and no.</span></p> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">Beijing may look for other markets but it is obvious that China cannot sell electric cars – certainly not in large numbers – in Somalia or Uruguay since either the country is too poor or too small. Yet, China can sell its electric vehicles elsewhere. It is not 1945 and onwards when the United States was the only economic power while the rest of the world was in ruins or poverty. Today luxurious goods can be sold because they are in demand in many places all over the world: the Arab countries, Europe, Russia and India. To make tariffs effective in depriving China of its profit from selling electric cars (or whatever for that matter), Washington would need to make other countries do the same. American president would have to take measures Napoleon Bonaparte took when he tried to starve the United Kingdom by imposing on it the continental blockade. To do so, Napoleon had first to subjugate the whole of Europe, which translated into numerous wars, and even then the measures that he took against Albion proved to be ineffective. Why?</span></p> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">First, the United Kingdom could rely on its colonies. Second, there was this big country by the name of Russia, which Napoleon could not subjugate and to which he could not dictate his will. Third, the blockade itself was porous: life is life, people need goods on either side of the blockade border, and so they will always find ways to bypass restrictions, any restrictions. As we know, in an effort to make the blockade complete, Napoleon made an incursion into the Russian Empire and… lost everything. Is the United States on the same or similar trail?</span></p> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">A government resorting to measures in its fiscal or monetary policy is similar to a chess player. Every move on the chessboard – whether the player moves a castle or a knight, whether or not the player sacrifices a piece – every such move has its up- and downsides that are not easy to predict. Only time – a sequence of moves made by both players – will show whether a given decision was correct. In the world of international economy there are many players, many moves and many chess pieces. Tariffs may or may not be beneficial, it is hard to tell at the moment of their imposition. For comparison, see how effective are the sanctions imposed on Russia. They may harm a competitive country, they may as well harm the domestic market and domestic production. Again think about the sanctions against Russia that have backfired. They protect domestic manufacturers and simultaneously rid them of an urge to be competitive. That in the long run might prove fatal. Already the American automotive manufacturer Tesla is losing to its Chinese counterpart BYD in terms of quality. If Tesla continues to be manufactured without the competitive pressure from Chinese BYD, it might end up producing a second or third rate vehicle. The cure (tariffs) may become a death toll.</span></p> <p align="JUSTIFY" lang="en-US"><span style="font-family: Merriweather;">Growth. The modern world of economics seems to be obsessed when it comes to growth. Every year is supposed to be better or at least not worse than the year before. Particular economies are compared in terms of their growth. The data are roughly interpreted in such a way that a country with higher growth is economically better off than a country with lower growth. Yet, is this the whole picture? A man who has already built a house for his family needs only to make occasional repairs to it. Consequently, his economic activity may slow down, his growth will be relatively small or none. Another man is in the process building a house for his family because he has none. Consequently, his economic activity is in full swing and so his growth is much higher than that of the owner of a house. What then do the stats tell us? Why should an owner of a house build another one? Why should he have the same growth as someone who is currently building the house? A country saturated with express and highways, with plants and bridges etc. cannot have big growth in comparison with a country which needs to build all the infrastructure from scratch and is actually building it. Stats are deceptive, especially when taken at face value. China may have impressive growth, yet people from India if they emigrate they do not opt for China but the United States (or Europe). Why? Growth in the United States or Europe is smaller than that in China. Don’t they know it?</span></p> <div class="clearfix"></div>

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