A government is considering placing tariffs, taxes, on imported goods. Write a cost-benefit analysis for the situation—with at least one benefit and one cost.(1 point)

Question

Responses

Domestic businesses would sell their goods better since the imported goods would cost more; however, consumers would be required to pay more for the goods.
Domestic businesses would sell their goods better since the imported goods would cost more; however, consumers would be required to pay more for the goods.

International trade would be unaffected since the number of goods imported would be the same; the price would just be different. As a result, this would not lead to domestic job creation.
International trade would be unaffected since the number of goods imported would be the same; the price would just be different. As a result, this would not lead to domestic job creation.

Domestic businesses would sell their goods better since the imported goods would cost more, and more domestic jobs would be created to meet the higher demand for domestic goods.
Domestic businesses would sell their goods better since the imported goods would cost more, and more domestic jobs would be created to meet the higher demand for domestic goods.

Consumers would be required to pay more for the goods, and there would be less trade with foreign countries since their goods would not sell as well.

Answer 1

Cost-Benefit Analysis of Imposing Tariffs on Imported Goods

Benefits:

1. Support for Domestic Businesses: Imposing tariffs on imported goods makes those goods more expensive, giving domestic businesses a competitive price advantage. This can lead to increased sales for local manufacturers, boost their profits, and potentially stimulate investment in expansion and innovation.
2. Job Creation: As domestic businesses become more competitive and experience increased demand for their products, they may need to hire additional employees, leading to job creation within the country.

Costs:

1. Higher Prices for Consumers: With tariffs in place, imported goods become more costly for consumers. This results in higher prices for a wide range of products, potentially reducing consumers' purchasing power and overall economic welfare.
2. Reduced International Trade Relations: Imposing tariffs can lead to tensions with trading partners, potentially resulting in retaliatory measures such as trade wars. This may harm exports from domestic businesses that rely on international markets and further decrease overall trade activity.

In summary, while tariffs can help support domestic industries and create jobs, they also lead to increased costs for consumers and can negatively impact international trade relations.