What is the size of the tradable sector in the USA?
"The tradable sector refers to industries whose output in terms of goods and services can be traded internationally."
In other words, these are good that can be made in the USA in competition with, inter alia, Chinese manufacturers.
A tariff upon all goods entering the USA will be good for this sector to the extent that inputs do not come from abroad and foreigners do not reciprocate. This is where Trump thinks his policy is going to do wonders for the USA.
Now, what is the non-tradable sector in the USA?
The non-tradable goods are those that can be consumed in an economy in which they are produced, and cannot be exported or imported. The non-tradable sector consists of locally-rendered services, including health, education, retail and construction.
This sector does not win anything from the imposition of tariffs and it can be affected negatively by tariffs on inputs coming from abroad.
The problems here is that industries already exporting can end by being negatively affected due to: 1) higher costs for imported inputs and new foreign entry barriers, and (2) the fact that specialization has created a huge, complicated supply chain. Goods can be assembled in the USA (Boeing airplanes) with parts coming from all over the world.
Finally, bringing industry back to the USA will impose very high costs to the firms trying to do it has and has to be a long- term strategy, a thing that does not go well with Trump's unpredictable flip-flops and the fact that next president may do things differently..
