Finshots Daily A simple explainer on tariffs and the new world order
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Apr 11, 2025 Discover the intricate world of tariffs and their historical significance. Explore the tension between protecting local businesses and the risks of trade wars. Learn about the US-China tariff dynamics and how they impact the global economy. India's strategic position offers exciting alternatives for manufacturing as global trade evolves. Tune in for insights that could reshape your understanding of international commerce!
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US History with Tariffs
- Historically, the US primarily relied on tariffs, not income tax, to fund its government and protect nascent industries.
- This approach fueled American manufacturing growth, but high tariffs during the Great Depression worsened the economic downturn.
How Tariffs Work
- Imagine Indian bakeries selling cupcakes for Rs. 30, then cheaper French cupcakes arrive at Rs. 25.
- To protect local businesses, the government adds a Rs. 10 tariff on French cupcakes, making them Rs. 35.
Modern Tariff Developments
- Trump implemented tariffs on Chinese and EU goods, leading to retaliatory tariffs from China.
- Despite a 90-day pause on new tariffs for most countries, China remains excluded from this reprieve.