ec340ch5 - Chapter 5 Tariffs Understand what a tariff is...

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Chapter 5 Tariffs Understand what a tariff is and why it is used. Understand and be able to explain the welfare effect of a tariff on a small country. Understand the differences between the effective rate of protection and the nominal tariff rate During the 2000 presidential campaign, President George W. Bush promised to consider implementing a tariff on the imports of steel. This was a political move to secure votes in large steel-producing states as the tariffs would “protect” the domestic producers of steel. The steel tariff is an example of a trade policy—a government action meant to influence the amount of international trade. Because gains from trade are unevenly spread, producers often feel the government should help them limit losses due to competition from trade. Trade policy can include the use of import tariffs (taxes on imports), import quotas (limits on imports), and subsidies for exports. This chapter will focus on the use of tariffs as trade policy.
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This note was uploaded on 02/14/2012 for the course EC 340 taught by Professor Ballie during the Spring '10 term at Michigan State University.

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ec340ch5 - Chapter 5 Tariffs Understand what a tariff is...

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