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Originally Posted by Wormius
Obviously somebody is benefiting from these windows in tariffs he is opening up.
“Oh, Elon needs some chips, we’ll relax tariffs for him on this day and then tighten things down again whenever his competitors need something”.
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On that, I am a bit too lazy to type it all up myself so I got ChatGPT to do it for me. Always a risk because AI is wrong but the Tl;dr is Tariffs are often less about protecting industries and more about politicians cutting backroom deals, where big businesses with the right connections get exemptions while everyone else pays the price.
Quote:
NSFW!
The full output:
Governments often impose tariffs under the guise of protecting domestic industries, but research shows they frequently grant exemptions to select companies, fostering corruption and rent-seeking. This "you scratch my back, I scratch yours" system allows politically connected industries to secure special treatment, undermining fair competition and economic efficiency. Anne O. Krueger’s 1974 study on rent-seeking highlights how businesses lobby for government favors like tariffs and quotas, diverting resources from productive growth. Other research, like the *Public Choice* study on U.S. trade barriers, estimates that rent-seeking in certain industries can drive social costs up to 12.5% of domestic consumption.
Politicians may also use the threat of new regulations to extract political support, a concept known as rent extraction (McChesney, 1987). This creates an economic environment where lobbying and backdoor deals become essential for survival, distorting markets and benefiting a select few. Historical and recent examples—such as U.S. steel tariffs and industry-specific exemptions—demonstrate how this corrupt cycle plays out in real-world trade policies.
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