This always sounded like the broken window fallacy to me.
The idea often goes something like this. Necessity is the mother of invention. This folk wisdom has a powerful grip. When politicians propose tariffs on Chinese semiconductors or European steel, they often invoke a simple logic: make foreign goods expensive, and domestic companies will innovate their way to competitiveness. Cut off cheap imports, and necessity will spark the…. something something… needed to build better products and processes at home.
The first issue is that it’s not clear why this “necessity” would dominate. Surely, increased competition from foreign companies introduces new necessities. Improve or go out of business seems like a necessity. Would that effect dominate? It’s an empirical question. Second, we need to disentangle genuine innovation—things that move out of the set of possible things made—from adaptation just to deal with a problem.
They start off by providing examples of induced-innovation which provides most of the intuition behind the tariffs spur innovation belief. Then the effect of trade liberalization (e.g. China shock) on R&D expenditure and technology upgrading. The evidence, they imply then conclude, mostly speaks in favor of liberalization if you don't focus narrowly on product competition and consider things like access to import and export markets too.