Optimal-tariff Argument

Optimal-tariff argument in Global Commerce Policy

In this regard, optimal-tariff argument is: also called optimum-tariff argument. The entries on trade policy are here. An aspect of economic theory which postulates that a country large enough to affect import or export prices may maximize its gains by restricting trade to a carefully judged extent. The entries on trade policy are here. It can do this through imposing protection through import or export tariffs. Tariffs reduce welfare by distorting production and consumption, but they can sometimes increase welfare by improving the terms of trade. The risk in proceeding in this way is that it will afford unneeded protection to some sectors of the economy. Harry G Johnson noted that only the optimum-tariff argument provides an economic justification for tariffs, and that all other arguments for protection are arguments for subsidies. There is another view of the optimal tariff, not generally thought to be supported by evidence, which assumes that in some cases importing countries have such dominant buying power that the cost of a tariff imposed by them has to be absorbed by the exporting country.[1]

Optimal-tariff argumentin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Optimal-tariff argument” entry (OAS)

See Also