How did export duties stimulate domestic industries?

I read on Britannica that "Export duties may act as a form of protection to domestic industries. As examples, Norwegian and Swedish duties on exports of forest products were levied chiefly to encourage milling, woodworking, and paper manufacturing at home. Similarly, duties on the export from India of untanned hides after World War I were levied to stimulate the Indian tanning industry. In a number of cases, however, duties levied on exports from colonies were designed to protect the industries of the mother country and not those of the colony."

Nonetheless, I thought the mentality back then was "imports are bad and exports are good (mercantilism)?" Won't export taxes hurt your domestic industries as they lose overseas revenues and cannot become more competitive (higher quality) by catering to local markets only? Can someone please explain why Britannica says that export duties protect and stimulate domestic industries?

Posted Jun 17, 2017, 10:21 AM UTC

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