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    There are several potential costs of tariffs beyond production and consumption deadweight losses. These include effects on income distribution as tariffs benefit some groups over others. Countries may also retaliate with their own tariffs which can hurt trade. Tariffs can negatively impact innovation and productivity. They can also lead to rent-seeking behavior where resources are used to generate revenue without producing goods or services. The United States and Japan most heavily protect infant industries that are not yet competitive with foreign rivals. High-income nations tend to be more affected by the trade barriers of the US and Japan since they export more goods that could face tariffs or quotas when entering those markets. While tariffs and quotas are inefficient and cost consumers,

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    There are several potential costs of tariffs beyond production and consumption deadweight losses. These include effects on income distribution as tariffs benefit some groups over others. Countries may also retaliate with their own tariffs which can hurt trade. Tariffs can negatively impact innovation and productivity. They can also lead to rent-seeking behavior where resources are used to generate revenue without producing goods or services. The United States and Japan most heavily protect infant industries that are not yet competitive with foreign rivals. High-income nations tend to be more affected by the trade barriers of the US and Japan since they export more goods that could face tariffs or quotas when entering those markets. While tariffs and quotas are inefficient and cost consumers,

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    3K views1 page

    International Economics

    Uploaded by

    ulsh0801
    There are several potential costs of tariffs beyond production and consumption deadweight losses. These include effects on income distribution as tariffs benefit some groups over others. Countries may also retaliate with their own tariffs which can hurt trade. Tariffs can negatively impact innovation and productivity. They can also lead to rent-seeking behavior where resources are used to generate revenue without producing goods or services. The United States and Japan most heavily protect infant industries that are not yet competitive with foreign rivals. High-income nations tend to be more affected by the trade barriers of the US and Japan since they export more goods that could face tariffs or quotas when entering those markets. While tariffs and quotas are inefficient and cost consumers,

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    Shaun Ulrich International Economics 2/10/2013 PAGE 147 4.

    In addition to the production and consumption side deadweight losses, what are some of the other potential costs of tariffs? There can be many different kinds of effects of tariffs starting with the effects of income distribution. There are also the issues of trading partners retaliating, the impact of innovation and productivity, and lastly rent seeking activities which is an activity that uses resources to capture more revenue without producing an actual product or service. PAGE 167 1. Which industries are more heavily protected in the United States and Japan? Are highincome or low-income nations more affected by American and Japanese trade barriers? Explain Infant industries are protected by the United States and Japan because in order to compete with more mature firms in the industry. There are two main reasons for this one is because natural market forces dont support the development of an industry because foreign competition. The second reason is the spillover benefit which just means that the positive externalities that make the industry more valuable to the national economy than the wages or revenues it would generate. 3. Given that tariffs and quotas cost consumers and that they are grossly inefficient means for creating or preserving jobs, why do citizens allow these policies to exist? As the book stated I believe ignorance does play an important role as many people dont really realize the effects. They also named some other reasons I hadnt really thought about that make a lot of sense and the first being that the cost of the policies are spread over many people, and the second being the benefits are concentrated. 5. Evaluate the labor and infant industry arguments for protection.
    I think the labor argument can be a good one but it does fail to consider a lot of different issues. The main issue to me is that it doesnt consider productivity differences between countries. Efficiencies and wages vary a lot depending on the country. The infant industry argument makes more sense to me based simply on the logic that it would seem hard to compete with a mature firm without help. Even though you need this assistance I think it is important that it is only temporary, and only when the industry has falling costs. It needs to make sense to protect the firm in order to allow it to mature to a size where it can protect itself, this would only be possible with falling costs.

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