costs/benefits of tariffs/quotas

• What is a common consequence of protectionist policies?

  Retaliation by trading partners
• What forms can retaliation by trading partners take?

  Reverse tariffs or quotas
• How do reverse tariffs or quotas affect exports?

  They decrease the level of exports
• What is a potential outcome of implementing protectionist policies?

  It may offset any improvement to the deficit
• If a country imposes tariffs, what might happen to its exports?

  Exports may decrease due to retaliation
• What are the effects of protectionist policies on trade balances?

  • Protectionist policies can lead to retaliation.
  • Retaliation may include reverse tariffs or quotas.
  • This can decrease exports.
  • The decrease in exports may offset any improvement to the trade deficit.
• What positive effect do tariffs or quotas have on imports?

  They reduce the attractiveness of imports.
• What is a potential consequence of implementing tariffs or quotas?

  They may cause trade wars as other countries implement protectionist policies.
• How might tariffs or quotas affect the trade deficit?

  They may worsen the deficit.
• Why are tariffs or quotas difficult to implement?

  They are almost impossible to implement due to trading blocs and WTO laws.