US protectionism is a bad idea - Natixis

Patrick Artus, Research Analyst at Natixis, explains that international productive specialisation leads to a situation where US production in the short term is no longer substitutable for US imports.

Key Quotes

“In the short term, protectionism (customs tariffs) does not lead to a fall in imports in volume terms, but only to a rise in import prices, leading to a loss of real income and a decline in demand.”

“However, the idea may be that protectionism will lead to reshoring to the United States in the long term. But first, the costs of reshoring are high, for the United States and overall; second, there would have to be an available labour force in the United States to work in these reshored production facilities; third, reshoring production of unsophisticated goods to the United States would lead to a fall in the country’s level of product sophistication and would not correspond to its comparative advantages.”