Higher import tarriff could do less help than harm

After reading the essay, we can get an answer about this question. For extremely high tariff, if the import doesn’t decline, tariff also isn’t enough for annual deficit. In fact, there are several causes which will happen except the import decline if we raise the tariff.

When we raise the tariff, first we will find that our tariff income increased and we can use this money to fill our deficit, Medicare and social security. “What a smart idea!” In contrast, some other counties will also raise their tariff for us soon and our export will decline. Meanwhile, some export industries will close; others will reduce their comparative advantage , raise their price and loss a lot of customers in other countries. The government has to use their tariff which we raised to pay for the increasing deficit and to help export industries. For domestic industries, when competitors have to raise their price, they will get more customers first. However, they will find their import resource price increased, so they raise their price. Some of them will think that why don’t raise their price to their foreign competitors level to earn more money. Therefore, all things price will go up and Government costs will go up. In the meantime, domestic industries loss their competitive power in competition of foreign industries. It's just a beginning.

In conclusion, if we raise our tariff to pay Medicare and social security, we will find the amount which also increased a lot. However, our industries and economy will get hurt.

 

“In one word, a non-starter.”