Protect Me? Essay

1512 Words 7 Pages
Protect Me?

I’ve decided to write my paper on protection policies associated with trade. I should let you know that I’ve been reading the book “Trade Under Fire” and I agree that trade restrictions “overall” cause more harm than good. I’ll focus mainly on American policies regarding import tariffs and the impact it has on domestic producers and the domestic job market. My paper will be delivered as follows:

• Benefits from Trade
• Imports and Exports
• Tariffs on Imports
• The Job Issue
• Conclusion

Benefits from Trade:

As we’ve discussed in class, any time there is trade there are benefits. David Ricardo helped prove this with his Law of Comparative Advantage, which states: “Each country (involved in trading) should
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This protection is sometimes done to preserve jobs (which I’ll talk about later) or to protect entire industries. The problem is that when imports go down exports usually follow suit.

Let’s begin with with a simple example that ignores capital flows. If tariffs reduce US purchases of Chinese goods then China will buy fewer US goods and US exports are reduced. China doesn’t buy fewer goods from the U.S. as retaliation Instead, the limited imports bring fewer Yuan into the U.S. and fewer dollars into China. Consequently each country now has less foreign currency to buy more goods with. This limits the exports of both countries. This is a very simple (very simple) example of how exports depend on imports. The reverse is true, meaning that every time a country limits domestic imports they’re limiting foreign exports which in turn limit their own exports or the foreign countries imports. As I said earlier there are many ways to have protection, the one I’ll be addressing is tariffs. Tariffs on Imports:

I’ve just discussed how limiting imports can hurt a country’s exporting. Now let’s discuss how imports can be limited. Tariffs are basically taxes that are put on imported goods upon entrance to a country. These taxes are put on imports usually because the domestic producers in the market feel that they will not be able to compete with the foreign competition. This is usually because the foreign producer can produce the product for much less than

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