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China’s plan to get around Western tariffs: Fill the world with factories
(english.elpais.com)
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this post was submitted on 06 Oct 2024
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There are two valid reasons that tariffs are normally applied. The first is to protect the local economy. This usually makes sense where there are marked differences in the cost of living in two regions, giving a financial advantage to the region with the lower CoL. The second is to counteract subsidies in one region allowing a lower sale price in another region. The idea here is to remove the unfair advantage the subsidized companies are enjoying.
There are other reasons, such as simple protectionism, where relative competitiveness is ignored and is more broadly applied to restrict foreign goods and services from flooding a market.
The reason for not applying tariffs for locally-made products is pretty straightforward. Employees are local, goods produced are local, business taxes (if actually paid) are local. Profits will undoubtedly be siphoned off to China, but that's the case for any foreign owned business.