Dev Diary #38 – Trade Routes & Tariffs

[PDJR_Alastorn]

Can you impose import tariffs on specific goods, making them more expensive so as to favour locally produced goods?

Or also export tariffs on specific goods, to ensure they do not flow to other markets and are cheaper at home?

Tariffs are not currently set on specific goods they are set across the board as a policy of all traded goods. Thats the intent for now - going into calling out specific goods beyond that is something that was considered but has not been put into play.

How are trade routes created by the player? You mention a player can create an import route of goods, but how is that done? Is it created through the Trade Centre itself, or is there a separate Trade window one sets routes up in, similar to HOI4?

I also note that import routes have +/- buttons allowing one to adjust the size of them, but export routes lack that. Are exports then automatic?

Its one of those things that you kinda just expect that others know about and apologies for not making that clear. Trade is done either through the market screen or the lens for trade on the bottom of the UI, you can choose to import/export a specific good and then the market you wish to get it from/send it to. This interaction will then create a trade center. It is then summarized for ease in the Trade Center Menu (though this UI exists in the Markets summary as well).

Forgive me if this information is elsewhere but what is the list of Economic Systems and the effects of each system? What are the effects of the other 3 Trade Policies that are not in the screenshot?

I'm saving that for future leaking at some point in the future. Unless another dev wishes to spoil my fun and post it. It is very similar to the Economic Systems that were shown in previous dev diaries as it was trade policy that was split out of it.

Is it possible to embargo (sanction) a specific country? Like only embargoing German coal but not coal from the rest of the world

It is not currently possible to embargo a specific country, though if we did put in such functionality it would have to be embargoing a specific national market - as countries themselves do not trade.

 

[PDJR_Alastorn]

In the Twitter Teaser Sulfur had a higher price in the US market, but still exported into the Texan Market. How does the Trade Center make a profit if the good its buying has a lower price at the goods destination then its source? Wouldn't the trade center lose money from the goods it's trading? and if so why would the traders continue trading?

So, didn't see the teaser until now and yes looking at those numbers it seems like that would be a loss/loss trade (assuming that its not a bug that the 53 and 59 are reversed and thats where the profit is in the marginal revenue - Entirely feasible the game is under development after all and bugs are common). Took me awhile to answer this one only because I had to go back and run some marginal revenue calculations to assume I wasn't going crazy because its late here and I am tired.

But lets assume that the trade is unprofitable, well that means there isn't profit to go to the trade centers, which means that they are conducting this trade at a loss. Now this loss may wash out in the many other profitable trades the trade center is conducting. Regardless to some degree this means that less profit is at the trade center, which means salaries are lower because profits are lower - if this was the only trade route well salaries would dry up - pops would look elsewhere for jobs and as a result of not being able to staff your trade center the trade route would not deliver goods.

 

[PDJR_Alastorn]

That's a massive shame. Import substitution relies on high tariffs on finished goods and lower tariffs on intermediate goods and raw materials. I think in his report on manufactures, Hamilton already advises as much (although predating the game's time frame). Probably influenced by Friedrich List, the Zollverein in the 1840s also adopted higher tariffs on finished products while keeping tariffs on iron and other raw materials moderate.

I could easily foresee dozens of scenarios in Victoria 3 where I want to fine tune my tariffs. How can I nourish my industrial base if I can only set tariffs across the board? Either I make everything expensive and nobody will be able to import raw materials and intermediate goods (and probably machines) to get my industry going or I make imports so cheap that it's not worth to produce these goods locally.

While you are not wrong that it would be cool to utilize such features (maybe one day in the future) you are quoting mercantilist doctrine that is a bit early for the timeperiod. That is early colonialist of the late 1700s mercantilism where it was understood that colonies were only methods on which to access raw materials and the industrial metropoles were the intermediate and manufactured goods. Hamilton's advice was for the US to become its own "metropole" of the Western Hemisphere. While the Zollverein also touches on this its at the tail end of that variation of mercantilist thought with its founding - I will remind you that it did not stay an absolute of what you describe throughout its entire history and adapted as the times did. By the late 1800s its less the aquisition of materials which determines the progress of industrialization but the capturing of markets outright as a means to sell to fuel the means of industrialization. While Empires still fought over specific reasources of importance it was the ability to sell to the market that becomes the prevailing factor. Colonies could not just be places to extract resources from, they needed to be rich enough to buy the goods back. Mercantilism is a strange economic ideology because it honestly shifts in its understanding throughout the timeperiod instead of just being replaced by a newer idea?

All this is to say economic thought changes, especially with politics because thats history and as I am quoted in the last dev diary saying "my god its hard to make a system to represent the fact that throughout history there's not always an agreed upon meaning (or many many outliers) when economics and politics get involved."

Economic thoery tangent short: There are plenty of other ways in game to nourish your industrial base including subsidizes, encouraging consumption, and embargoing specific goods coming into your markets which are available to you. It might not be the exact level of detail you want this moment but it is there.

And maybe oneday I will convince the devs to implement a more detailed tariff system.

 

[PDJR_Alastorn]

Are Treaty Ports something that can only be gained in China, or it will it be possible to have Treaty Ports elsewhere? Maybe Russia forces Germany to turn Danzig into a treaty port, or Britain forces America open through taking New York City

If there's a state - and a power willing to fight for it - there's a treaty port to be had wherever that may be.

 

[Wizzington]

How is ai set up to deal with situations where it does not have a car factory because it has no rubber, but it does not import rubber because it has no car factory to demand rubber?
Another question- are trade routes set up for a fixed amount of goods? How do shortages from the exporting market affect the trade?

The AI will have functions to determine that it should want to import a good because importing that good would let it build buildings that would then be profitable in the market.

Trade routes can be setup in such a way that you cause quite crippling shortages in a market - that's why having a Protected Export Share or high tariff barriers can be important to protect your domestic industries. If there are more demands for export from a market than the market can actually provide, the relative competitiveness of each trade route determines who gets what share.

 

[PDJR_Alastorn]

Are customs unions and national markets synonyms?

Not entirely. See the last dev diary for more details.

National markets are the well... national market of X nation. A customs union is when two parties agree that one nation will subject its national market into another. The nation who's market remains is the senior parter, the one who subjects its market to the other is the junior partner. There can be multiple junior partners in a customs union.

So a Custom's union is X number of countires who share a national market.

 

[Wizzington]

What are the difficulties of implementing goods-specific tariffs (Game dev-wise)?

Say I want to protect my infant machine parts industry but don't have access to much iron.

I'd like to keep my iron imports as cheap as they can be but make foreign machine parts expensive through tariffs so that my own industries will buy locally.

Is that kind of strategy possible right now, somehow?

There's two principal issues:
1) It overlaps with how embargos function in that it is a reactive (or proactive) tool to protect a specific good.
2) Using embargoes in a proactive way would effectively be spending Influence on something that doesn't earn you any money, which wouldn't be a very good gameplay flow.

Something we've considered is the ability to selectively make goods duty-free where you want to encourage their import/export.

 

[Wizzington]

So with Treaty Ports, could any port city theoretically become a treaty port? Or is it locked to very specific cities as before? I do think having more flexible treaty ports, potentially all over the globe, would be quite fun and give them more variety, even if it would be quite hard to snag one in like the UK or something

Treaty Ports can be demanded from anyone. There's also some Treaty Ports at the start of the game, like Gibraltar and Melilla.

 

[Wizzington]

How viable would economic warfare be with this system?

Trade can absolutely be wielded as a weapon. An example would be exporting their raw materials and flooding them with manufactured goods to destroy their domestic industries, especially if you acquire a Treaty Port or force them into adopting Free Trade so that they don't have too many tools to fight back with.

 

[Wizzington]

Does the AI really only take profitability of that specific goods into account when making such decions? That makes it sound like it could be possible to crash a certain market with the intent of making an AI nation shut down its factories, just to strangle their supply of that goods just to exploit the AI to cause unrest, lack of access to military supplies etc. once they have shut down their factories.

No, the AI doesn't just work on pure profit calculus. There's other factors that play into it as well, most importantly which economic strategy it's following. The important thing is that the AI is built with the intent that it should be able to predict opportunities instead of just being reactive - I'll go more into how this works in a later DD.

 

[PDJR_Alastorn]

A further development of the tariff system would be really good. I feel like trade in its current form fails to tie itself to diplomacy as a game pillar, it seemingly lacks reactions. Trade during the 1800:s with the exception of the UK was reciprocal and bilateral , to my understanding, yet here trade policy seems to be an entirely internal unilateral proccess. Doesn't this system fail to model things like tariff wars, or diplomatic trade agreements like the Cobden-Chevalier agreement between the UK and France when you cannot diffentiate between nations?

I don't want to be needlesly negative though. This is by far the best model for trade made in a paradox game so far.

Trade Agreements are totally a thing within the diplomatic actions of the game and there are plenty of options you can take within diplomatic plays to pry open more walled off markets and get them to change their systems to better align with yours. While I am always on the lookout for how to tie trade further into the relations of diplomacy, what has been stated in the dev diary is not necessarily everything outright.

 

[Wizzington]

I just realized that introducing treaty ports will also make those weird one-province outposts like Macau much more important and useful. In previous Vicky games they were almost more of a liability than an asset, since their only real use was as coaling stations for your navy.

Macau is in fact a Treaty Port and can give Portugal a significant leg up on Chinese trade at the start of the game. Hong Kong is another potential Treaty Port in China's main Trade Center.

 

[PDJR_Alastorn]

Does that mean a country can not subsidise a trade center? In a world where those trade centers are the only way to import goods not produced in the country?

If you look closely at the trade center image you will notice it has a subsidize setting. Its just greyed out because its not currently allowed by the economic laws of that country.

Its totally possible for you to run just trades that would be a loss (maybe to conduct economic warfare?) and to subsidize the trade centers to ensure it takes place.

 

[PDJR_Alastorn]

I want to go back on this. The way you worded this makes it sound like any state can be host to a treaty "port." Does this include inland states? Can Prussia open up Russia by having Warsaw be a treaty "port?" Or is this limited to coastal states?

If the former, this would bring the treaty port game up a whole other level.

Limited to coastal states - treaty ports require ports at current.
The former is a neat idea to consider for the future but scope creep upon scope creep means the game never gets released sadly.

I’m curious: so the way that treaty ports are structured - is there any benefit to holding more than one treaty port, in terms of levels of access to the captive market? Maybe that was clear from the diary but I didn’t understand!

Having more than one treaty port (if managed) means that your trade centers will likely be balanced between the two ports which puts less stress on infrastructure and makes it easier to maintain a larger volume of trade. It also means more ports to defend so take it as you will.