Toss onion, 2 tablespoons vinegar, and ½ teaspoon salt in a bowl. Marinate at room temperature, tossing occasionally, until slightly softened and pink, about 45 minutes.

Bring a large pot of salted water to a boil. Add potatoes and simmer until tender, about 20-25 minutes (depending on the size of the potatoes).

Whisk together 3 teaspoons Old Bay seasoning with sugar, remaining 1 ½ teaspoons salt, and remaining ½ cup vinegar in a small bowl.

Drain potatoes in a colander, and when cool enough to handle but still warm, peel and cut into bite-sized wedges. Toss warm potatoes with vinegar mixture in a large bowl. Add onion mixture and oil, tossing to combine. Add more Old Bay seasoning, if desired (I liked mine with a couple extra teaspoons). Serve immediately or chill for up to 24 hours.