The more capital protected industries attract the more damage they do to productivity. Some companies will have to shelve investment plans, others will simply curb theirs while some firms might simply not come into existence. The total value of the output this forgone investment would have generated would have exceeded the value of the output the TCF industries new investment will generate. If it were otherwise, these industries would not have demanded tariffs. The additional money that consumers must continue to pay for overpriced textiles, clothing and footwear now means there is less to spend on other goods.
Total demand shrinks.
By restricting imports, the tariff decision has also reduced the demand for the products of our exporting industries and that in turn curbs their demand for labour and other inputs. In short, McCrann's tariff decision misdirects demand. At worst, it may even add to it. It should have become clear at this stage that tariffs are a particularly insidious tax on consumers and exporters because they convey the totally false impression that they promote investment and protect jobs. Nevertheless, the fact that the tariffs will still cause malinvestments by misdirecting capital, exchange rates or no exchange rates, has still escaped him.