President Ronald Reagan explains the pitfalls of imposing tariffs on imports.
At first glance, tariffs may seem like a patriotic move to protect American products and jobs.
However, Reagan explains that this protection is short-lived and ultimately harmful. He outlines how high tariffs lead to domestic industries becoming complacent, stifling innovation and competitiveness.
Moreover, tariffs often trigger retaliatory measures from other countries, resulting in trade wars, higher prices, and reduced competition.
The end result? Shrinking markets, collapsing businesses, and widespread job losses. Watch this video to understand why Reagan believed that free trade, not protectionism, is the key to prosperity.
April 25 1987
At first, when someone says, “Let’s impose tariffs on foreign imports,” it looks like they’re doing the patriotic thing by protecting American products and jobs. And sometimes for a short while it works — but only for a short time. What eventually occurs is: First, homegrown industries start relying on government protection in the form of high tariffs. They stop competing and stop making the innovative management and technological changes they need to succeed in world markets. And then, while all this is going on, something even worse occurs. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs, higher and higher trade barriers, and less and less competition. So, soon, because of the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying. Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.
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