6.2 More About Tariffs
Kenrick H. Jordan
Introduction
In this chapter, we will see that an import tariff affects the economic well-being of a nation as well as the economic well-being of different groups within the economy. It can also affect the economic well-being of the world. We will evaluate which groups gain and which groups lose from an import tariff, as well as consider its effect on a small country, a large country, and the world.
Learning Objectives
After reading this chapter, you should be able to
- Discuss the meaning, importance, and types of import tariffs.
- Describe the economic effects of a tariff in a small importing country.
- Describe the economic effects of a tariff in a large importing country.
- Explain the terms of trade effect and a nationally optimal tariff.
Trade & Tariffs
Before reading this chapter, watch these videos outlining the basics of how tariffs affect the economy.
Source: Khan Academy. (2018, December 7). Trade and tariffs | AP Microeconomics | Khan Academy
How do tariffs affect the economy?
Source: Free Econ Help. (2018, June 26). How do tariffs affect the economy?
Reflection Questions
Before getting into the discussion, we encourage you to reflect on the following questions:
- How does an import tariff affect the price of the imported good on the domestic market?
- What impact do you think the import tariff will have on domestic producers of the import good?
- What impact do you think the import tariff will have on domestic consumers?
- Does the import tariff benefit the nation that imposes it? If not, why do you think nations impose import tariffs?
