Question

Why might a large country like the United States have a greater incentive than a small country to use trade restrictions?

Answer 1

A country large enough to affect international prices, like the United states, may improve its terms of trade by levying a tariff. The price it pays to foreigners fall, domestic producer's profits and government tariff revenue rises. Although there may be some loss to consumers due to higher domestic prices, but the overall welfare gains are higher in large countries.

If a small country levys a tariff, ut reduces its national income by encouraging too much domestuc production and discouraging domestic consumption.