When tariffs are good and when tariffs are bad…

First, let’s start with the case against tariffs. Imagine someone in the US ordering a shipment of acai berries from a farmer in Brazil. Both sides only agree to the trade because they expect to come out ahead. The buyer values the berries more than the money they’re giving up. Whereas the seller values the money more than the berries. As long as everyone’s acting freely and rationally with accurate information, every crossber trade increases the benefit to both parties. Multiply that by millions

Of transactions and you get the basic case for free trade. Now suppose a tariffs are added. A tax at the US border that makes the berries costlier to import. If the tariff is steep enough, our buyer no longer values the berries more than the cost he has to pay. So he cancels the order and the farmer loses the sale. A transaction that both parties wanted and that would have made them both better off simply vanishes. That loss benefit is part of

What economists call dead weight loss.