Overview of the International Trade Policy

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INTERNATIONAL TRADE POLICY POST (300 WORD MAXIMUM) In theory, high tariffs and importation quotas are beneficial to domestic economies because they reduce the competition from foreign manufacturers for domestic industry. However, the effectiveness and advisability of tariffs and quotas is severely constrained by various factors that cannot be ignored. First, the relative weakness of the U.S. dollar makes it difficult for domestic manufacturers to compete internationally. Second, the fact that other nations (such as China, most notably) artificially manipulate the value of their currency to keep their domestic manufacturing costs low undermines the value of tariffs on their goods. Third, neither tariffs nor quotas is an effective mechanism when the goods at issue are no longer even produced domestically, as in the case of many of the cheaper consumer goods that the U.S. typically imports in high volumes from foreign manufacturers. Fourth, one consequence of controlling foreign competition through tariffs and quotas is that they are usually targeted to specific foreign nations, which can simply open the door to other foreign manufacturers from other nations to whatever extent those mechanisms are effective against specific nations targeted by them. However, perhaps the most important complication to the tariff and quota approach to boosting the national economy is that the costs of those mechanisms are ultimately borne by the domestic consumer. During times of economic
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