Who benefits from a tariff or quota? TARIFFS Benefits 1. Local government through increased revenues. 2. Domestic business due to the fact that it would allow them to lower the cost of their products compared to their foreign counterparts. Loses 1. Government-Not setting quotas would make it difficult for the government to control the number of imports coming in. 2. Foreign business whose products would need to be sold at a higher cost due to the tariffs compared to domestic business. QUOTAS Benefits 1. See tariff benefits. Loses 1.
Local government since placing quotas may limit the amount of possible revenue. 2. Foreign business through higher production costs resulting in lower demand of consumers. What are the positives and negatives or protectionist trade policies on the part of the federal government? Which policy do you think is best right now? One of the biggest pros of protectionist trade policies is that it provides job security in domestic industries, especially big industries like the automobile industry, which employees hundreds of thousands of Americans.
General Motors for example; in having to compete with so many foreign companies that are able to sell cars at a lower cost, forces them to close plants, laying off thousands of people. This not only affects the auto industry, but also businesses that affiliate with them, causing a rippling effect, which in the worst case scenario, can devastate our whole economy. One of the only negatives of protectionist trade policies that I find is that it does put a limit on the amount of sales and profits of American businesses.
Therefore, it is my opinion that protectionist trade compared to free trade is the way to go for a few reasons: 1. Historically free trade has caused more job losses than gains. In 1993, Bill Clinton signed NAFTA (North American Free Trade Agreement). At the time, he estimated that millions of jobs would be created within the first few years of implementation. By 2002, the rise of the trade deficit with Canada and Mexico resulted in costing close to 900,000 American jobs. 2. Most trade agreements between the U. S and other countries are not profitable.
In using the automobile example again, if a Japanese car company like Toyota sells 10 million cars in the U. S in one year, compared to the 10 thousand GM cars we sold there, it creates a huge trade deficit. Trade will always be there, however, and we as a country need to protect ourselves in the long run. Economic costs will always be there. We as a country cannot protect all of our people, or all of our industries all of the time, but we do need to have to exercise some type of control over what does transpire as far as trade goes.