Question

If you were the U.S. President, under what circumstances would you drastically raise import tariffs for a particular product or for imports from a particular country? Under what circumstances would you enact an embargo? What are some likely impacts on the U.S. industry for that product and the industry for that product in other countries? What are some likely impacts on America’s relationship with other countries?

Answer 1

Import tariffs are imposed on goods imported from foreign countries. Import tariff raises the price of foreign product in the domestic market. Under the following circumstances import tariffs for a particular product are raised:

1. If the industries of any particular product in US are facing challenges to grow and fails to meet the foreign competition.

2. To protect the infant industries of the US from foreign competition.

Under the following circumstances import tariffs for imports from a particular country:

1. If the firms of the foreign country use the US market for dumping.

2. If the firms of any particular country are selling low-quality product in the US market or to restrict the trade from any particular country due to political or social issues.

Embargo: Embargo is imposed on a foreign country to restrict all trade-related transactions. The embargo is imposed under the unfavorable political as well as economical circumstance within the US and any foreign country.

Impacts on US industry: The domestic industry of that particular product will grow in the US and due to import tariff they will face less competition in the domestic market. The US industry can grow more efficiently in the US market.

Impact on other countries: The import tariff makes the product of foreign competitor costlier in the US market and this will lower the quantity demanded of the foreign product. Therefore, import tariff reduces the sale of the foreign industry in the US market and lowers the global demand of the foreign industry.

Impacts on America’s relationship with other countries: Import tariff and embargo negatively affects the relationship of America with the other countries. Restricting trade from any country will create more political and economic difference between the nations.