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Speaker 1: Welcome to Ask Fear and Greed, where we answer questions

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Speaker 1: about business, investing, economics, politics and more. I'm Adam Lang

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Speaker 1: and here to give the actual answers is Sean Aylmer.

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Speaker 2: Hello, Sean, Hopefully give the answers.

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Speaker 1: Today's question, Sean, it's a doozy. Are there any good

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Speaker 1: reasons for tariffs?

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Speaker 2: Well, he's a great question because we talk about Donald

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Speaker 2: Trump's tariffs and what it has asked that they are.

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Speaker 1: But maybe there is there something in it.

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Speaker 2: Not all tariffs are bad in a perfect world. In

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Speaker 2: a perfect world, countries would produce goods and services in

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Speaker 2: which they have a competitive advantage in they'd be free

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Speaker 2: trade flows everyone benefits. Theoretically, that ain't going to ever happen, though,

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Speaker 2: let's face it, countries, including Australia, have all sorts of

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Speaker 2: protectionist policies or trade barriers, and that's what a tariff is.

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Speaker 2: I think before we start blasting the US, So don't

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Speaker 2: get me wrong, I'm happy to blast the US, we

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Speaker 2: kind of have to look at home first. There are

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Speaker 2: a few really good examples of protectionist policies in Australia,

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Speaker 2: which is unfair on foreign manufacturer. So the PBS the

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Speaker 2: Pharmaceutical Benefit scheme. Yes, governments judge that subsidizing drugs is

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Speaker 2: a good thing for Australians. Therefore they reduce the pharmaceuticals

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Speaker 2: companies or ability, the pharmaceutical company's ability to maximize profit.

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Speaker 2: Now where I stand, I think cheaper medicines for people

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Speaker 2: in Australia's is a good thing, so I have no

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Speaker 2: argument with that. But it is a protectionist policy, and

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Speaker 2: it reduces the ability of pharmaceutical companies to make money.

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Speaker 1: And it's selectively applied. Right, there's about a thousand on

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Speaker 1: the list.

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Speaker 2: Yeah, yeah, I don't know the number, but yeah, selectively applied.

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Speaker 2: Open skies is another one. There's only seven nations in

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Speaker 2: which we allow unlimited commercial flights, so China, Japan, India

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Speaker 2: and New Zealand, Singapore, US and UK. And remember we

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Speaker 2: had the big hu ha. There's a word who ha

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Speaker 2: about Qatar Airways from Dalhart wanting to fly more into.

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Speaker 1: For example.

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Speaker 2: That's because we don't have an open sky's policy. That's protectionists.

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Speaker 2: That hurts. So therefore, you know, look at our own,

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Speaker 2: our own backyard. First, we actually impose tariffs, albeit small,

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Speaker 2: on many many goods, particular countries where we don't have

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Speaker 2: a free trade agreement. But the big one is actually

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Speaker 2: the GST that's effectively a tariff because the good comes

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Speaker 2: into Australia, we wack on an extra ten percent, so

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Speaker 2: off we go. So you know, we're complaining about these tariffs.

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Speaker 2: The JEST is effectively a tariff.

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Speaker 1: That's a good point.

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Speaker 2: You can argue that many of these examples are good

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Speaker 2: reasons to have protectionist policies or a tariff. So JST

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Speaker 2: case raises money for the government.

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Speaker 1: Tax sorry UK does. America has state sales taxes, so all.

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Speaker 2: Those things are to build infrastructure, and you know, and

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Speaker 2: it means that we don't have to pay as much

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Speaker 2: income tax, not as much as corporate tax. You can

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Speaker 2: argue that's a good reason. A bunch of other reasons

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Speaker 2: that tariffs might be arguing. They might be needed to

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Speaker 2: protect industries deemed to be in the national interest, and

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Speaker 2: normally that's defense or critical infrastructure. Do we want country

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Speaker 2: operators from overseas coming into Australia and building our defense? Therefore,

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Speaker 2: put tariffs on that sorts of things. They might be

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Speaker 2: necessary to offset the effects of unfair trade practices. So,

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Speaker 2: and this is often used in the aviation industry and

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Speaker 2: overseas government subsidized as a good of service that's then

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Speaker 2: sold into Australia. But unfair on the Australian manufacturers, isn't it.

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Speaker 2: We don't get government support, so it's an unfair playing field.

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Speaker 2: Then maybe we need a tariff on that retaliation. What

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Speaker 2: if another country puts tariffs on our goods, well we'll

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Speaker 2: just whack them straight back. So you can argue that

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Speaker 2: there are actually a lot of good reasons than tariff's.

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Speaker 1: Yeah.

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Speaker 2: What the world has done really well in the last

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Speaker 2: thirty or forty years, though, is to work towards reducing

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Speaker 2: tariffs across the board. And we had all these multilateral

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Speaker 2: trade arrangements, so we had bilateral trade arrangements that became

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Speaker 2: multilateral trade arrangements, and you know, the European Union is

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Speaker 2: a great example of that. Countries have done a really

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Speaker 2: good job of breaking down trade barriers that reduces the

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Speaker 2: damaging economic consequences of them. Unfortunately, Donald Trump has tipped

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Speaker 2: that on its head, so he has said We're just

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Speaker 2: going to have willing neary tariffs on all sorts of

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Speaker 2: countries and will negotiate them. But they were talking fifteen

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Speaker 2: twenty twenty five percent on a bunch of countries, and

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Speaker 2: that really undoes a lot of the hard work that's

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Speaker 2: been done over the last thirty or forty years without

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Speaker 2: and all in mind, I don't think tariff's a good idea,

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Speaker 2: but sometimes there are really good reasons to have them.

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Speaker 1: Well played, Sean, Thank you, Adam. So if you've got

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Speaker 1: a question about business, investing, economics, politics or anything to

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Speaker 1: social media channels, and we'd love to have you featured

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Speaker 1: on an episode of Ask Fear and Greed. I'm Adam

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Speaker 1: Lang and that was as Fear and Greed