United States Politics: ∆τ_i*ε*φ*m_i<0 where ε=4 and φ=0.25

[Potato]

I've watched this and it's become clear, from where I sit, observing my own and others business, that nobody has a clue how tariffs or a tariff war plays out. So everyone is just nervous. When nervous, you bet towards safety, I suppose. 

But I get no sense from anyone that they understand the tariff angle. They're just scared of it because they can't predict it.

People, in fact, do have a clue how tariff war plays out. 

https://www.ussc.edu.au/chinas-trade-restrictions-on-australian-exports

China’s trade restrictions against Australia were relatively unsuccessful as many Australian exporters found new markets. They may have even backfired, encouraging market diversification in some industries. China is also reliant on certain Australian commodities for its own industries, including iron ore, LNG and wool, so any restrictions on those products would reverberate back on China.

https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act

Smoot-Hawley contributed to the early loss of confidence on Wall Street and signaled U.S. isolationism. By raising the average tariff by some 20 percent, it also prompted retaliation from foreign governments, and many overseas banks began to fail. (Because the legislation set both specific and ad valorem tariff rates [i.e., rates based on the value of the product], determining the precise percentage increase in tariff levels is difficult and a subject of debate among economists.) Within two years some two dozen countries adopted similar “beggar-thy-neighbour” duties, making worse an already beleaguered world economy and reducing global trade. U.S. imports from and exports to Europe fell by some two-thirds between 1929 and 1932, while overall global trade declined by similar levels in the four years that the legislation was in effect.

https://pmc.ncbi.nlm.nih.gov/articles/PMC7255316/#:~:text=The%20wasteful%20effects%20of%20protectionism,marginally%2Dsignificant%20increase%20in%20unemployment.

Are tariffs bad for growth? Yes, say five decades of data from 150 countries

The empirical evidence on the growth effects of import tariffs is sparse in the literature, notwithstanding strong views held by the public and politicians. Using an annual panel of macroeconomic data for 151 countries over 1963–2014, we find that tariff increases are associated with an economically and statistically sizeable and persistent decline in output growth. Thus, fears that the ongoing trade war may be costly for the world economy in terms of foregone output growth are justified.