Question

Suppose that the U.S. banned all imports in order to save American jobs. Explain the impacts of such a ban on American prosperity, based on “The Choice”. (you may use the example of an inability to buy bread at the store on household standard of living to illustrate your point).

Answer 1

US President had set in a rhetoric policy of imposition of taxes on imports as he feels lots of money is lost by the US in the form of jobs and imports policies which are not upto the mark.this decision itself clarifies that banning imports would cut down on inflow of goods.Among economists there is consensus that economic decisions such as an import ban provide for sub optimal resource allocation and develop welfare loss in aggregate. In theory at least, imports might impact workers in several different ways: fewer jobs, lower wages, or poor working conditions. Let’s consider these now.An import ban means making our domestic industries strong.However,if the other country has higher comparative advantage or absolute advantage,we end bearing more cost of production leading to inflation,thereby lowering the disposable income.Thus consumer has to choose between local products and imports.

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