Visual 3

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.

QUESTIONS FOR DISCUSSION

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.

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United States History: Focus on Economics, Lesson 7

Can Business Profit from Tariffs: Economics Lesson