International trade questions
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When the U.S. imposes a tariff or quota on imports, who pays it? Who benefits from a tariff or quota?
How do changes in interest rates, inflation, productivity, and income affect exchange rates? What do you see are the economic pros and cons of the North America countries including Canada and Mexico get from adopting a common currency?
What is the global impact of the U.S. outsourcing to foreign countries?
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Solution Summary
effects of tariffs, quotas, inflation, interest rates, and productivity on international trade
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Tariffs are a form of taxation which benefits domestic manufacturers at the expense of the consumer. They pay a higher price than would have been the case had no duty been imposed on the importer. Another consumer group is the one which buys an American product at a high price which is protected by the tariff. Were there no tariff, the domestic firms would either be forced to lower their prices or shift to some line of production in which they could compete successfully. Then there is the non-consumer group which would have entered the market had the lower prices been in effect; their form of the "tax" is simply the inability to enjoy the use of products which might have been available to them had the State not intervened in international trade. A quota benefits domestic producers in the same way a tariff does, but the additional money expended on foreign goods goes to the foreign producers, not the ...
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