Question

The US imposes a tariff on the import of a computer chip that is also produced at higher cost by a US firm. The US firm is an important supplier to the US Navy. The US is probably using the _____ argument for protectionism.

Answer 1

Answer: d. Strategic industry

Explanation:

Sometimes countries will introduce a tariff in order to reduce the importation of a good or service that might be ruled as important for the security of the country and so would need to be produced by a company in the country. Goods related to national defense are especially more likely to fall under such tariffs.

The industry is therefore said to be strategic. This is what happened in the scenario above because the chip is used by the U.S. Navy which makes it national defense related.