Question

Which of the following are potentially valid arguments for tariffs or export subsidies, and which are not (explain your answers)?

A. "The more oil the United States imports, the higher the price of oil will go in the next world shortage."
B. "The growing exports of off-season fruit from Chile, which now accounts for 80 percent of the U.S. supply of such produce as winter grapes, are contributing to sharply falling prices of these former luxury goods."
C. "U.S. farm exports don't just mean higher incomes for farmers-they mean higher income for everyone who sells goods and services to the U.S. farm sector."
D. "Semiconductors are the crude oil to technology; if we don't produce our own chips, the flow of information that is crucial to every industry that uses microelectronics will be impaired."
E. "The real price of timber has fallen 40 percent, and thousands of timber workers have been forced to look for other jobs."

Answer 1

Arguments for tariffs and export subsidies vary in validity: Argument D about semiconductors may support protection due to national security concerns, while others, like Argument B regarding Chilean fruit imports, highlight the benefits of free trade rather than justifying tariffs.

Step-by-step explanation:

When examining arguments for tariffs and export subsidies, it is important to analyze each on merit and in context:

• Argument A does not provide a valid reasoning for tariffs or export subsidies. The assumption that importing more oil will drive up global prices does not account for the complexities of the oil market and how prices are determined on a global scale.
• Argument B, regarding the import of off-season fruits from Chile, shows a benefit of imports, as they help reduce the prices of these goods, potentially to the consumers' advantage. This does not support an argument for tariffs; instead, it highlights the benefits of free trade.
• Argument C suggests that farm exports boost incomes not only for farmers but also for those related to the farm sector. While this highlights a benefit of exports, it does not necessarily justify subsidies unless a spillover effect to the broader economy can be clearly shown.
• Argument D implies a national security and strategic interest in producing semiconductors domestically. This can be a valid argument for tariffs and subsidies if it's demonstrated that reliance on foreign chips could impair critical industries.
• Argument E points out the job losses in the timber industry due to falling prices. This may support the use of tariffs or subsidies if it is to protect jobs, but it should be balanced against the potentially higher costs for consumers and other industries that use timber.

In conclusion, not all arguments presented are equally valid, and they hi-nge upon factors such as national security, economic impact, and the balance between consumer and producer interests.

Answer 2

Some arguments for tariffs or export subsidies are potentially valid, such as protecting critical industries like semiconductors or preserving jobs in competitive sectors like timber. However, arguments that only consider the effect of import prices on domestic markets, such as oil prices or the cost of imported fruit, do not provide a strong justification for these trade measures.

Step-by-step explanation:

When examining the arguments for tariffs or export subsidies, we must consider the economic implications and the goals of these trade policies. Let's analyze each statement provided:

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• A. This argument is not valid because higher oil imports do not necessarily lead to higher prices during a shortage. In fact, dependency on domestic sources might deplete them faster.
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• B. This argument is not valid as a justification for tariffs or subsidies. Lower prices for consumers from imports like Chilean off-season fruit are typically seen as a benefit of free trade.
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• C. While U.S. farm exports may result in higher incomes within the farm sector, this does not inherently justify tariffs or subsidies and it oversimplifies the broader economic impact on all sectors.
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• D. The argument is potentially valid. Protecting the semiconductor industry could be seen as necessary for national security and ensuring a stable supply for critical technology sectors.
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• E. This argument is potentially valid. Tariffs or subsidies might be used to protect jobs in industries facing significant import competition and price drops, like timber.

Arguments that focus on national security, critical industry protection, and job preservation in sectors under severe competition can provide a potential rationale for tariffs or subsidies. However, those that only highlight the price effects of imports may not sufficiently justify such trade measures.