SMH Peter Martin 7 March 2018
The idea is simple enough. When nations come together to exchange goods and
services everyone does better under a situation of free trade by producing
the goods and services l that they have natural advantage in., idea of free
trade, that is, the free exchange goods and services without government
intervention in the form tariffs, quotas and subsidies, has been an
important part of Australian economy for decades./ The fact that
Australia,n, consumers and firms have benefited from lower levels of
protection/ is not a coincidence. Cheaper consumer goods — everything from
the kids' school shoes to a new car — have given households extra resources
to use elsewhere. Firms that had to pay higher local prices for protected
inputs have also benefited. So while the loss of jobs in protected
industries was painful and significant, new jobs came along that did not
rely on government support to sustain them.
The tariffs on steel and aluminium announced last week by US President Donald Trump are, if not a threat, certainly a challenge to the idea of free-trade that has dominated the last 40 years and has benefited Australian workers since the reduction of tariffs in the early 1980s. if Mr Trump's actions trigger a global trade war, with trade retaliation resulting in steeper trade barriers erected against more imports, as a trading nation Australia and the rest of the world are bound to be affected by slower global economic growth, a less efficient allocation of resources and higher prices for goods and services.
When Mr Trump declares that "Trade wars are good and easy to win", he seeks to overturn several centuries' worth of economic wisdom and economic experience, in a single tweet. Trade wars may initially look good, because they create an illusion that a nation is striking a blow against overseas competitors. In fact, the losers are mostly part of the domestic economy. Tariffs reward firms and workers with the ability to influence governments politically, punishing those firms in other sectors that do not receive tariff assistance, along with all their workers and domestic consumers generally. It is too soon to hit the panic button as Mr Trump's tweet is could simply be political ei, posturing before he settles down to serious trade negotiations. Nevertheless, he may find the politics of protectionism and imposing tariffs in cheaper overseas imported goods are more complicated and the effects more far reaching than they first appear — with far more Us workers employed in industries that use steel, than in making steel.
1. Define the term 'tariff'.
2. Outline the impact of United States (US) steel tariffs on all affected
• US steel firms • US consumers of steel products • US firms that use steel as an input to production • US non-steel firms that may subject to trade retaliation • Overseas steel firms that export steel to the US • US Government
In your answer:
•apply economic terms, concepts, relationships and theory • express your
ideas in a well organised and clear way • refer to the diagram in Section A
• refer to examples from the article provided • use quotations from the
article provided to support your answer
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