Potentially valid Arguments for Protections

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Potentially valid Arguments for Protections FinaIly, we can consider three arguments for protection that may true economic merit. • Tariffs may shift the tenna of trade in a country’s favor. • Temporary tariff  for an infant industry” with growth potential may be efficient in the long run. • A tariff may under certain conditions help reduce unemployment. Get Any […]

Import Relief.

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Import Relief. In the United States and. other countries, firms and workers who are injured by foreign competition attempt to get protection in the form of tariffs or quotas. Today, relatively little direct tariff business is conducted on the floor of Congress. Congress realized that tariff politics was too hot to handle and has set up specialized agencies to investigate […]

Retaliatory Tariffs

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Retaliatory Tariffs While people Would agree that a world of free trade would be the best’ of all possible worlds. they note that this is not the world we live in. They reason. “As·long as other countries impose import restrictions or otherwise discriminate against our products. we have no choice but to play the protection self defense. Well go along with free […]

Competition from Cheap Foreign Labor

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Competition from Cheap Foreign Labor Of all the arguments for protection. the most persistent is that free trade exposes U.S. workers to competition from low-wage foreign labor. The only way to preserve high U.S. wages. so the argument -goes, is to protect domestic workers by keeping out or putting high tariffs on goods produced ir, low-wage countries. An extreme version of this […]

Tariffs for special Interests.

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Tariffs for special Interests. The single most important source of pressure for protective tarifIS is p0werful special-interest groups. ‘Firms and workers know very well that a tariff on their particular prod- -ucts will help them even if it imposes costs on others. Adam Smith understood this point well when he wrote: To expect freedom of trade is as absurd as to […]

Unsound Grounds for Tariffs

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Unsound Grounds for Tariffs Mercantilism. To Abraham Lincoln has been attributed the remark. MI don’t know much about the tariff.I know that when I buy a coat from England, I have the coat and England has tile money. But when I buy a coat in America. I have the coat and America has the money. This reasoning represents an […]

Noneconomic Goals

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Noneconomic Goals If you are ever on a debating team given the assignment of defending free trade. you will strengthen your case at the beginning by conceding that there is more to life than economic welfare. A nation should not sacrifice its liberty. culture, and human rights for a few dollars of extra income. The U.S. semiconductor industry provides […]

THE ECONOMICS OF PROTECTIONISM

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THE ECONOMICS OF PROTECTIONISM Having examined the impact of tariffs on price>;and quantities. we now turn to an analysis of the arguments for and against protectionism. The arguments for tariff or quota protection against the competition of foreign imports take many different forms. Here are .the main categories: (1) non economic arguments that suggest it is desirable to sacrifice economic welfare in order […]

The Economic Costs of Tariffs

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The Economic Costs of Tariffs What happens when America puts a tariff on clothing, such as the S2 tariff shown in Figure 15-8? There are three ‘effects: (1) The domestic producers, operating under a price umbrella provided by the tariff can expand  production (2) consumers are faced with higher prices and therefore reduce consumption and (3) the government gains tariff […]

Transportation Costs.

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Transportation Costs Wha~of transportation costs? The cost of moving bulky and perishable goods has the same effect as tariffs, reducing the extent ofbeneficial regional specialization. For example, if it costs S2 per unit to transport clothing from Europe to the United States, the supply-and-demand equilibrium would look just like Figure. 1>8, with the American price S2 above the European price. But there […]