Economics Macroeconomics Many Companies Produce Term Paper

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Countries that are just getting started often use tariffs, quota, and embargos to protect their industries until they can compete without government help. The difficulty with this infant industry argument in support of trade restrictions is that it is not always possible to foresee which industries will do well. For this reason protection frequently lasts long after the industry has matured (Trade Restrictions and Their Effects, n.d.).

Governments are enthusiastic to protect what are called strategic industries. These have included in the past industries, such as steel, cars and chemicals. Today, they are more often the high tech, high wage industries like commercial aircraft production. One way of assuring that they remain strong is to protect them from foreign competition. Agriculture is another area that a lot of governments try to protect. Tariffs help make sure that domestic farmers can earn enough profits to continue farming. The decision to use trade restrictions like tariffs is an important one. Tariffs help some domestic industries, but they mean higher prices for consumers.

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They help the owners and workers in the protected industries. They hurt the people who have to pay higher prices for the goods those industries produce. Reducing imports reduces the income of foreigners. They will reduce their foreign purchases, hurting exporting industries and workers in the country that put the tariff on the imports (Trade Restrictions and Their Effects, n.d.).

The majority of economists argue that trade restrictions, while offering protection to certain industries, damage the economy as a whole by raising prices and limiting the diversity of products that are accessible to consumers. Free trade, on the other hand, benefits the economy as a whole through augmented competition, which lowers prices and increases product variety (Hall, 2011). If a trade restriction has to be used in my opinion the most efficient is that of the quota. Even though this drives the price of goods up, it also stimulates American production which creates jobs and helps the economy overall......

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