The Problem With Import Taxes

There are two major problems with protectionist policies. The first problem is that they make everything more expensive for consumers. To be an advanced economy, or even a developing economy in today's world, it's almost impossible to make everything you need in-house. Now economies can deal with higher prices within reason. What economies can't deal with though is how this artificially inflated price impacts their export competitiveness. Instead of penalising imports, a government will subsidise local manufacturers with grants, tax breaks, strict payments or guaranteed purchases. You are effectively trading higher prices for higher employment and self-sufficiency. This makes those goods less cost-competitive, which will show up as price inflation in domestic markets