Effects of Trade Policies and Tariffs

by | Mar 4, 2023 | economics

 

 

Whether you agree or disagree and whether or not they provide helpful information to the following discussion: Some politicians, labor unions, and special interest groups argue that US trade deficits are harmful to the economy and nations that run large trade surpluses with the US are benefiting from unfair trade practic​‌‍‍‍‌‍‍‌‍‌‌‍‍‍‌‍‌‌‌‍​es and agreements. These parties support increasing tariffs on imports, elimination, or re-writing of trade agreements. Respond to the following in a minimum of 175 words: Discuss what credible economists say about the effects that tariffs, changing trade agreements, and/or manipulating exchange rates will have on the total US trade balance. Do you agree with their assertions? Why or why not​‌‍‍‍‌‍‍‌‍‌‌‍‍‍‌‍‌‌‌‍​?

 

 

 

 

Sample Solution

Credible economists have long argued that tariffs and other trade restrictions, such as changing or re-writing existing trade agreements and manipulating exchange rates, could have negative effects on the total US trade balance. For example, increasing tariffs on imported goods may lead to a decrease in international demand for those goods and an increase in prices for consumers within the US. This would cause domestic businesses to struggle to stay competitive in the global market because of higher costs, resulting in lower exports from the US. Furthermore, when countries like China devalue their currency relative to that of the US it can make their imports cheaper than what American producers are able to offer thus further decreasing demand for domestic products abroad .

Sample Solution

Credible economists have long argued that tariffs and other trade restrictions, such as changing or re-writing existing trade agreements and manipulating exchange rates, could have negative effects on the total US trade balance. For example, increasing tariffs on imported goods may lead to a decrease in international demand for those goods and an increase in prices for consumers within the US. This would cause domestic businesses to struggle to stay competitive in the global market because of higher costs, resulting in lower exports from the US. Furthermore, when countries like China devalue their currency relative to that of the US it can make their imports cheaper than what American producers are able to offer thus further decreasing demand for domestic products abroad .

Additionally by engaging these tactics governments run risk unintended consequences which usually manifest themselves form retaliatory measures taken another country raise taxes its own imports prevent companies doing business with them due regulations etc.. This means reduced opportunities foreign markets leading decreased profits larger corporations possibly forcing layoff employees diminishing job growth hindering overall economic development nation . Overall while government intervention can be necessary times order counteract certain issues arising externalities trading partners , it’s important think through implications before making decisions potentially have detrimental impacts on citizens it serves.

Overall I agree with assertions made by credible economists regarding potential effects tariffs changing trade agreements manipulating exchange rates total US balance – while they might appear helpful short term could pose severe problems down line if not properly enforced implemented monitored regularly . As such there needs be more active monitoring current policies ensure optimal outcomes reached order successfully maintain healthy stable economy benefiting all involved rather simply curbing specific issue at hand period time.

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