Changes

==Tariffs==

==Tariffs==

Recall that a tariff is a tax on imports.  A tariff raises the price of imported goods, and the supplier must then reduce its received price to attain the same level where supply meets demand.  This has the effect of reducing supply, which is exactly what the protectionists want.  A tariff on Toyota cars, for example, would reduce the supply of Toyota cars in the market.  Ford and GM like that.

A tariff is a tax on imports.  A tariff raises the price of imported goods, and the supplier must then reduce its received price to attain the same level where supply meets demand.  This has the effect of reducing supply, which is exactly what the protectionists want.  A tariff on Toyota cars, for example, would reduce the supply of Toyota cars in the market.  Ford and GM like that.

   

   

But our government used ''quotas'' rather than a tariff to appease Ford and GM.  Instead of imposing a tariff on Toyota’s imports, our government negotiated an agreement with it so that it would not sell more than a fixed quota of certain types of cars each year.  This reduces supply also, but without any revenue to the government.  Many criticize these import quotas by observing that the effect is the same as a tariff, but without the benefits of the revenue that government would receive from a tariff.

But our government used ''quotas'' rather than a tariff to appease Ford and GM.  Instead of imposing a tariff on Toyota’s imports, our government negotiated an agreement with it so that it would not sell more than a fixed quota of certain types of cars each year.  This reduces supply also, but without any revenue to the government.  Many criticize these import quotas by observing that the effect is the same as a tariff, but without the benefits of the revenue that government would receive from a tariff.