How tariffs have worked for four other countries

There are precedents: Countries from India to Argentina have used tariffs—and a range of other trade restrictions—to protect nascent industries and freeze out imports. In a few rare instances, these measures led to results that pleased the architects of protectionist measures, such as spurring car production in Asia and boosting refrigerator manufacturing in South America.

But in most cases, tariffs and other measures resulted in poorly made appliances, highly expensive imports and industrial stagnation—factories that couldn’t compete in the open market while snuffing out innovation, economists say. It left many countries mired in slow-growth cycles, more dependent on exporting natural resources than competing in fast-growing global sectors.

Here are four countries that have—or had—depended on tariffs and how they fared.

Tariffs hurt competition in India

India, in the decades after its 1947 independence from Britain, went with an import-substitution policy—which sought to replace imports with locally produced goods—designed to create homegrown factories by leveling high tariffs. The plan failed to create a vibrant high-growth economy.

Then, in the two decades following a financial crisis in 1991, India dropped tariffs to an average of 13% from 125% on trade partners. The country’s economy leapfrogged from the world’s 12th largest to now the fifth-biggest. India, though, didn’t abandon protectionism: Tariffs have remained high, and the country hasn’t made the necessary changes to unravel red tape and reform labor laws and creaky courts to create a competitive economy.

India’s apparel exports are a prime example of the self-harm. As wages have risen in China in the last decade, Bangladesh and Vietnam saw opportunity and opened garment plants that added tens of billions of dollars to their economies. India’s apparel export sector, meanwhile, lost ground, which economists attribute largely to high tariffs on synthetic fibers used in fast-fashion products.

“It makes it very hard for India to manufacture goods at a competitive rate," said Abhishek Anand, an economist at the Madras Institute of Development Studies, who has called for India to slash its tariffs.

South Korea’s success story

Seoul showed that tariffs and other protectionist policies, in rare cases, can have desired results. A half-century ago, Hyundai Motors was little known, a company protected by a virtual ban on imported cars and then high tariffs.

The result of the protectionist policies was that Hyundai turned into an exporting powerhouse, becoming with sister brand Kia the third-largest automaker in the world in terms of vehicle sales, after Toyota and Volkswagen. Planning for an export-oriented future paid off.

The same story can be told for South Korea’s economy as a whole.

Seoul imposed high tariffs on consumer goods throughout the latter half of the 20th century, according to a recent analysis by Seoul National University emeritus economics professor Keun Lee. Once one of the world’s poorest countries after the Korean War, South Korea emerged as a star among Asia’s fast-growing economic tigers. By 2023, the country’s per capita output stood at $33,000, according to the World Bank, the same level as former colonial master Japan.

“It can be argued that if Korea had opened up from the beginning without tariffs," Lee wrote, “the Korean economy would not have been as successful in promoting domestic firms."

He said the tariff policy was carefully calibrated to allow exporters low-tariff access to imported machinery while exposing companies to the discipline of world markets and keeping capitalism alive.

By early this century, South Korea’s policymakers felt the nation’s companies were ready to stand on their own. The U.S. and South Korea negotiated a free-trade agreement, which was ratified in 2011. An amended deal in the first Trump administration took effect in 2019.

Argentina’s protectionist wall

Argentina, too, walled off much of its economy in the hope of fostering homegrown factories when the Great Depression hammered what had been one of the world’s richest countries.

In the ensuing decades, successive populist leaders—from Gen. Juan Perón in the 1940s to President Cristina Kirchner earlier this century—made Argentina one of the world’s most closed democracies through a mix of tariffs, currency controls and restrictions on imports.

Kirchner imposed tariffs of up to 35% on imported electronics and implemented other strict import restrictions. Those measures at first created thousands of high-paying jobs as Argentine factory workers assembled Samsung TVs and Nokia cellphones.

But they also created inefficient businesses with huge costs for the treasury and taxpayers. Consumers got substandard products and paid twice as much for a television made in Argentina compared with a customer in neighboring, free-market Chile.

“The level of protection that Argentina has has not helped the economy, it’s generated a lot of inefficiencies," said Pablo Guidotti, an economist at the Torcuato Di Tella University in Buenos Aires.

The protectionism meant some of the world’s most popular tech products, like iPhones, were unavailable, forcing Argentines to pay jacked-up prices on the black market or fly to Miami.

Under President Javier Milei, Argentina is slashing regulations, cutting public spending and preparing for free trade. But so far Argentina has maintained some protectionist policies as Milei works to build up central bank reserves.

The rise of smugglers and oligarchs in Nigeria

Africa’s fourth-biggest economy has an average tariff of 12% across all products, with effective duties of 70% or more on luxury goods, alcohol, and tobacco and similar products, the International Trade Administration says.

Nigerian smugglers have taken advantage, sneaking in everything from rice to cars—items that, despite trade protections, Nigeria still doesn’t produce in quantities sufficient to satisfy the local market.

For the few who have built businesses protected by tariffs and other barriers, it has meant the amassing of wealth. The most prominent is Africa’s richest man, Aliko Dangote, whose fortune comes from cement, sugar, salt and other commodities.

“The tariff has to be there first to create the opportunity," said Samuel Aladegbaye, an analyst at Zedcrest Group, a financial-services company based in Lagos, Nigeria. “But if you just have one person able to take advantage of the opportunity, then you can get a monopoly."

Dangote denies that he has created a monopoly. He emphasized that anyone was free to make the risky investment decisions he made.

Write to Tripti Lahiri at tripti.lahiri@wsj.com, Ryan Dubé at ryan.dube@wsj.com and Peter Landers at Peter.Landers@wsj.com