Do you agree with there being an imported goods tax (despite free trade agreements?)

Asked by: ramramgeorge
  • A reasonable, flexible, and slight one (something like 20%- or even 12%- is ridiculous)

    An imported goods tax is actually healthy for the economy as it does increase prices, but only for goods imported from other countries. This actually encourages domestic industry and discourages outsourcing. It essentially encourages local production because cheaper goods made in sweatshops will become more expensive and less competitive or threatening to the competitiveness of local manufacturing.

    It may end up creating unemployment elsewhere that's true (to an extent), but we need to put our needs first and encourage more domestic businesses and diversifying our economy to capitalize on all three levels of industry. If you want to help others, help yourselves first.

    However, I am fully aware that trying to impose such a policy on food, fuel, water, or any other essential material seems inhumane. And the fact that trying to impose such a policy in the United States would not work because of all the free trade agreements we have.

    However, lets say we were making our own country... I think a small (like 5-10%) tax on imported goods would help strengthen the competitiveness of our domestic business and diversify our economy.

  • Overall, the effect of any tariff would be negative...

    It would certainly help domestic industry, yet would hurt the consumers more (from the increase in prices) than it would help the producers. Thus, such a policy will have an overall negative effect upon the economy.

    The reason why such a policy would hurt consumers more than it would help producers is that some of the welfare gained by consumers buying foreign goods would be lost. This is because some consumers will accept the price of foreign goods, yet will not purchase the same good if a tariff is imposed (thus increasing the price), and this will then lead to some consumers not purchasing and engaging upon a transaction which would otherwise have been mutually beneficial.

    Furthermore, it should be noted that the way in which to get the greatest prosperity within a nation is to specialise according to the nations comparative advantage and then trade.

    Here are two links that give examples of comparative advantage:



    Posted by: WXL

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