“The potentially valid arguments for tariff protection—military self-sufficiency

Question

“The potentially valid arguments for tariff protection—military self-sufficiency, infant industry protection, and diversification for stability—are also the most easily abused.” Which of the following illustrates the potential for abuse of tariff protection?

A. There is a tendency for trade barriers to remain in place even after a so-called infant industry becomes established.

B. Military self-sufficiency eliminates subsidies for other sectors.

C. Protected industries shoulder the burden of tariff protection.

D. Dumping cases by foreign firms in the United States are frequent but difficult to prove.

Explanation / Answer

A) THERE IS A TENDENCY FOR TRADE BARRIERS TO REMAIN IN PLACE EVEN AFTER A SO CALLED INFANT INDUSTRY BECOMES ESTABLISHED.

IT IS VERY DIFFICULT TO SAY THAT WHICH INDUSTRY ARE INFANT OR STILL IN THE ESE STAGES. VERY OFTEN THIS ARGUMENT IS USED TO PROTECT WELL ESTABLISHED AND DOMINANT INDUSTRIES.

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