Scrutinizing economic ideas for dealing with COVID-19 n light of COVID-19’s impact on the Australian economy, there have been calls for:
Reintroducing a tariff on any imported good, so as to support local industry
Taxing any foreign-owned assets in Australia to promote Australian ownership.
However, you can’t just impose taxes on foreign products and expect good results. We simply don’t have the local industry in place to compensate. It would take a long time and a lot of effort to build enough local production to replace imports. Whacking a tax would simply cause a lot of problems now and vastly increase the cost of living.
Increasing local production is a very complex issue
If we had to, first suggestion would be to somehow build up the basics of the supply chain. Our raw materials are worth a lot more to the country if we transmute and refine them ourselves, rather than selling that overseas. So perhaps state-run refineries would be the better initial option, as it would be very hard to get the initial investment privately.
Next step: push out lots of programs and grants to get small and medium businesses running to create the components necessary for local manufacture. I think this would be better done privately given the enormous variety of compone
nts and products needed to fuel final-end manufacturing.
Thirdly, once this infrastructure is operational, that’s when you bring in the tariffs on foreign products. This is especially applicable to tech products. Scrutinizing economic ideas for dealing with COVID-19