Question

Suppose that it could be demonstrated that a particular tariff on goods from developing countries would transfer benefits from rich Americans to poor Americans and increase total US social welfare. Why might it still be bad from a global social welfare perspective?

Answer 1

Answer and Explanation:

Even if tariffs on developing countries were to increase and better the welfare of poor Americans, increasing social welfare of Americans in general , it would still have a negative welfare impact globally since it would affect developing countries. Developing countries are poorer countries compared to the US, and if they are not able to export their goods to the US(a developed country) because of high tariffs, it would have a multiplier effect on the countries' economy and generally affect the welfare of individuals(even poorer people) in these countries consequently affecting global welfare.