Special: Can tariffs make you rich? with Ha-Joon Chang
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FULL INTERVIEW OUT ON SUNDAY In the past some countries – like South Korea, Britain and the US – have used tariffs to protect and foster nascent industries, and grow rich from the results. Can America's current experiment with protectionism work out the same way? UNDERSTAND, SHARE & PUSH BACK GET THE TRADING GAME - penguin.co.uk SPOTIFY - open.spotify.com INSTAGRAM - @garyseconomics TIKTOK - @garyseconomics BLUESKY - bsky.app X - twitter.com FACEBOOK - @garyseconomics PATREON - patreon.com DISCORD - discord.gg WEBSITE - garyseconomics.org SUBSCRIBE, SHARE & START A CONVERSATION Performed by Gary Stevenson @garyseconomics
The interview frames tariffs as a policy instrument that can either help or hurt, depending on the goal and method of deployment. Early on, the discussion situates tariffs within a historical context, noting that several now rich nations like Britain, the United States, Korea, and others used protective measures during their development. Ha-Joon Chang emphasizes that tariffs are not inherently good or bad; their effectiveness hinges on how they are designed and whether they accompany a broader industrial strategy, such as subsidies, skilled labor, and infrastructure. The analogy to infant industry protection is explained in detail, describing how protecting small, emerging domestic industries can allow them to mature and compete internationally. The dialogue then contrasts targeted protective strategies with broad, sweeping tariffs, arguing that broad protection can backfire, create inflation, and worsen inequality if not part of a coherent ecosystem. The interview also covers the role of the financial system, arguing that even well-intended protection can fail if financial markets siphon resources away from productive investment into shareholder payouts. The closing assessment remains cautious: meaningful gains require long timelines, targeted sectors like automotive or advanced manufacturing, and a supportive industrial and financial framework rather than broad protectionism, which is unlikely to lift living standards quickly or sustainably.
Topics · economy · trade · policy_considerations · development · inequality
Questions answered
- What is infant industry protection and when can tariffs be beneficial according to Ha-Joon Chang?
- Infant industry protection is a strategy that shields developing domestic industries from foreign competition so they can mature, acquire capabilities, and become globally competitive. Tariffs can be beneficial when paired with a broader industrial policy, subsidies, skilled labor development, and infrastructure, allowing the protected sectors to grow until they can compete on equal footing.
- Why does broad, sweeping protectionism risk failing to improve living standards?
- Broad protectionism risks failing because it can raise costs, create inflation, and neglect the need for a complete industrial ecosystem, including skilled workers, infrastructure, and R&D. Without these supports, protected firms may not achieve high productivity, and profits may be diverted to shareholders rather than investment in growth.
- How does the role of the financial system affect the outcome of tariffs, according to the interview?
- The interview argues that a dominant, parasitic financial system can siphon off resources that protected firms would otherwise invest in productivity improvements. Instead of funding expansion, profits may be returned to shareholders via dividends and stock buybacks, worsening inequality and undermining any potential gains from tariffs.