Competing in the global marketplace ethically and responsibly
Tariffs and their impact on U.S economy
Q1. Tariffs encourage Americans to buy U.S.-made product: The mere purpose of tariffs in any economy is to restrict imports of any goods that the governments’ think would have a negative impact on the economy. Likewise, U.S tariff would rather push the American public to buy goods locally made because they would not have any extra/ additional imposed taxes that might increase its price. For example, if U.S imposes tariff on Japanese steel, the manufacturers would prefer buying U.S steel because it would be feasible for them (cost efficiency) and quick without any hassle of importing. This would help push the country to a domestically driven economy. However, the foreign firms that are of different countries as result open up in US soil and try to imitate like local firms in order to compete with already existing firms in the local market. This as a result, causes more employment. But the question that would Americans buy products made in local firms is doubtful. The SAGE Journals online informs that the public would seek to buy apparels only those that would suit them best i.e. products that would be of interest to them would be
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Q2. Tariffs protect American jobs and wages: It is true that tariffs are imposed to increase domestic sale of goods. However, the situation becomes more complex after imposing tariffs, harming the jobs sector. According to the Mackinac Center for Public Policy in 2002, the unemployment would increase rather than decrease: it would only revolve; hiring in one industry is firing in another. The Mackinac Center for Public Policy states that due to the tariffs imposed in 2002 on imports of steel, the country might face unemployment/reduced wages in the steel consuming industry at a higher ratio (5:1) in a bid to save jobs in steel producing industry. This means that five jobs would be sacrificed for saving one single job. Similarly, when we look at other arguments, we find that other nations too are now progressing. Countries such as China, India have been on the verge of producing more cost efficient products because of cheap labor. This as a result is causing industries to shift to foreign nations and thus produce cheap products. If U.S imposes tariffs on goods made cost efficiently in these countries, then foreign countries much also place a counter tariff that would only further create a problem for the US job market. Therefore, with these arguments the statement seems logically invalid.
Q3. Tariffs help us to maintain a favorable balance of trade and balance of payments: Tariffs do help an economy to reduce its balance of payments and trade by reducing imports bill and encouraging exports through pushing domestic industries. However, on the contrary, if the foreign country whose imports are being tariff puts back a counter tariff, the step would not serve its purpose. Rather it would help reduce exports, resulting in a slow economy. The step would only work if the foreign country and other countries allow goods to sell in without and counter tariffs. Moreover, we also see that the policies of imposing tariffs have not shown any positive signs. The main reason I found to back this argument is that today, we still see Chinese products on the rise in our wall mart and perhaps that is the best deal we can buy. This is causing US to be one of the highest trade deficit countries of the world which is a major concern for US in the long term amid the financial crisis. Therefore, the policies of I.M.Wright seem not working because of lack of long term planning. Therefore, the statement is arguably invalid.
Q4. List your references according to APA guidelines in the space below. You are required to use at least one outside source to support your viewpoint and this source can be the textbook:
The Economic Effect of Tariffs. How Tariffs Effect The Economy. From http://www.economics.about.com/cs/taxpolicy/a/tariffs.htm
The Mackinac Center for Public Policy. New Steel Tariffs Will Kill Jobs. From http://www. mackinac.org/article.aspx?ID=4107
Dissemination Branch, Washington, D.C. 20233. From http://www.census.gov/foreign-trade/balance/c5700.html#2007
American job losses. From http://www.aflcio.org/aboutus/thisistheaflcio/publications/magazine/0404_manufacturing.cfm
Low savings rate of american consumers. From http://www.msnbc.msn.com/id/11098797