Terms in this set (61)

-Tariffs as source of gov revenue - A lot of developing countries earn a lot of their gov budget from tariffs however there are issues w this. They are a regressive tax having negative impacts on income distribution and allocative efficiency. Relying on tariff revenues delays tax system reform. Tariffs should only be a temporary source of revenue, and should phase out as countries grow/ develop.

-Means to overcome balance of payment deficit - Deficit usually happens when imports>exports. Decreasing imports with barriers should theoretically correct the deficit, however other countries will retaliate with trade protection thus reducing exports as well. Trade protection may work in the short term for deficit emergencies, but not in the long term.

-Anti dumping - 'dumping' refers to selling a good in an international market at a price below the cost of making it (usually as a result of a subsidy). Anti dumping refers to adding tariffs/ quotas to raise the price of the good.
The difficulties of anti-dumping is that is is hard to justify what is and isnt dumping, and trade- protection such as subsidies are what causes it in the first place.

-Protection for domestic jobs -Supposedly, when trade barriers are implemented, consumption shifts from import supply to more domestic supply, increasing the domestic demand for labour, thus reducing unemployment.
The difficulty with this is that other countries then face higher unemployment because they are exporting less and they may retaliate by adding trade barriers themselves. If the gov wants to increase employment in the economy, fiscal, monetary or supply side policies are more effective. If the gov wants to raise employments in a certain industry, then subsidies are better than import restrictions (tariffs and quotas) because subsidies have less negative effects.