April 17, 2023

The Benefits and Disadvantages of Protective Tariffs

Myths & misconceptions

Trade Tariffs are a common means for governments to apply economic sanctions against foreign producers. Protective tariffs, in particular, have been implemented to protect specific industries from competition and increase revenues.

The benefits of protective tariffs are quizlet

A “tariff” is a tax on goods that are imported into a country. These taxes are designed to both raise revenue for the country importing and protect domestic producers from foreign competition (Menlo-Atherton High School, 2015).

The advantages of protective tariffs are quizlet

One of the most important advantages of protecting domestic industry against foreign competition is that it allows US companies to compete on price with other producers. The advantage of this is that it increases consumer demand for US products and helps to stimulate the economy.

The disadvantages of protective tariffs are quizlet

In addition to boosting prices, protectionist policies divert resources away from more efficient economic activities and into less productive ones. This leads to lower productivity, higher costs, and less innovation.

The cost of these costs are also passed on to consumers. In fact, studies show that American households pay more than a thousand dollars per year in higher prices as a result of the tariffs on imported washing machines and steel.

Protective tariffs also reduce the opportunities for innovation. When firms are not allowed to compete with other firms, they do not have the incentives to invent new ways of producing their products. As a result, they use more outdated methods and processes that waste energy and create pollution.


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