Answer and Explanation:
a) To determine which policy would be less damaging to the United States as a whole, we need to consider the potential impacts of each policy.
1. Imposing a tariff high enough to cut bulldozer imports by 60%:
- This policy would make imported bulldozers more expensive for US buyers, reducing their demand.
- It could protect domestic bulldozer manufacturers and potentially save American jobs in the industry.
- However, it may lead to retaliation from other countries, resulting in higher tariffs on US exports and harming other sectors of the economy.
- It may also create a shortage of bulldozers in the US market if domestic manufacturers cannot meet the demand.
2. Persuading foreign bulldozer manufacturers to set up a voluntary export restraint arrangement:
- This policy would involve reaching an agreement with foreign manufacturers to limit their exports of bulldozers to the US by 60% voluntarily.
- It may avoid direct trade conflicts and potential retaliation from other countries.
- However, it may still result in limited availability of bulldozers in the US market, impacting construction activities and related industries.
Considering these factors, both policies have potential drawbacks and could impact various sectors of the economy. It is challenging to determine definitively which policy would be less damaging to the United States as a whole.
b) To assess which policy would be less damaging to foreign bulldozer manufacturers, we need to consider the implications for their businesses.
1. Imposing a tariff high enough to cut bulldozer imports by 60%:
- This policy would likely reduce the demand for foreign bulldozers in the US market.
- It may lead to a decline in revenue and market share for foreign manufacturers.
- They may need to explore other markets to compensate for the reduced exports to the US.
2. Persuading foreign bulldozer manufacturers to set up a voluntary export restraint arrangement:
- This policy would involve foreign manufacturers voluntarily limiting their exports of bulldozers to the US by 60%.
- While it may still result in reduced exports, it could potentially allow foreign manufacturers to have some control over the situation.
- It may provide an opportunity for negotiation and cooperation between foreign manufacturers and the US government.
Considering these factors, the policy of persuading foreign bulldozer manufacturers to set up a voluntary export restraint arrangement may be less damaging to foreign bulldozer manufacturers compared to imposing a high tariff.
c) To determine which policy would be most beneficial for the United States' government, we need to consider the government's goals and objectives.
1. Imposing a tariff high enough to cut bulldozer imports by 60%:
- This policy would generate tariff revenue for the government.
- It may be seen as a protectionist measure to support domestic industries and jobs.
- However, it could lead to trade disputes, retaliation, and potential negative impacts on other sectors of the economy.
2. Persuading foreign bulldozer manufacturers to set up a voluntary export restraint arrangement:
- This policy may help maintain positive diplomatic relations with other countries.
- It could potentially avoid trade conflicts and the need for increased tariffs.
- However, it may not generate direct revenue for the government.
Considering these factors, the policy of imposing a tariff high enough to cut bulldozer imports by 60% may be more beneficial for the United States' government in terms of revenue generation and supporting domestic industries. However, it is important to consider the potential negative impacts on other sectors and potential trade disputes that may arise.