PROTECTIONISM IN THE 1980s
From 1981 to 1985, the U.S. automobile industry was shielded
from Japanese competition by "voluntar y import restraints." During
that time the following changes took place:
- Average price of a Japanese car sold in the United States
rose by $2,500.
- Average price of a United States car sold in the United
States rose by $1,000.
- Extra costs of car purchases for U.S. consumers in 1984
were approximately $13 billion.
- Trade pr otection in 31 other industries cost U.S. consumers
in 1984 $53 billion.
- 1. Who gains from import quotas on automobiles?
- 2. Who loses as a result of import quotas?
- 3. There are many more auto buyers than auto producers.
Why would the U.S. government negotiate a deal with Japan to reduce the
purchasing power of the U.S. consumer?
Information taken from A. Blinder, Hard Heads, Soft Hearts
(Reading, Mass.: Addison-Wesley, 1987), pp. 11618.
Council for Economic Education
United States History: Focus on Economics, Lesson 7
Can Business Profit from Tariffs: Economics Lesson