we have discussed the limits of Tariffs on any economic syst

we have discussed the limits of Tariff’s on any economic systems. Will the current Tariff’s that the United States of America has imposed on Canada, the EU and Mexico be good for the US Economy? What are some positive elements for these tariffs? What are some negative elements for the tariffs? How may this affect the US Economy and other economies?

Solution

Ans

No tariffs will not be good. Positive element is increase in domestic employment of labour in labour intensive industries. It also increases producer surplus and Govt revenue. Further nation does not led to loose industries of strategic value. Negative element is that it will reduce consumer surplus and products will become costly. US economy will loose due to deadweight loss of production and consumption. Also other countries may retaliate which will reduce exports. Other countries will loose due to lower exports and producer surplus. Also unemployment will increase