Question

Cheap goods from China are destroying the American economy. If we are going to reduce the unemployment rate and maintain our living standard, we must stop the Chinese from selling goods at such low prices in the United States. If I am elected, I will fight hard for a 50 percent tariff that will save American jobs for American workers. Evaluate this statement. Explain why you either agree or disagree with it.

Answer 1

Answer:

I disagree with this policy as it will likely have a negative effect.

Explanation:

I disagree with this statement. In fact, such a policy will most likely have the opposite effect to the one intended - that is, living standards would plummet. This is due to the fact that a 50 percent tariff will mean prices of goods imported from China would skyrocket, which in turn would force consumers to either buy more expensive products produced in the United States or elsewhere, or refrain from buying said goods. In any case, this means a reduced level of consumption, which slows down the economy. This would trigger effects such as massive layoffs as enterprises try to keep their profits amidst the reduced consumption, meaning higher unemployment and lower wages being offered, which will in turn slow down the economy even more, in a ever worsening vicious cycle that could lead to an economic crisis.