Question

Donald Trump proposed steep tariffs on imports to the US. He described trade promotion authority and the Trans-Pacific Partnership as “bad, bad deal[s] for American businesses, for workers, for taxpayers.” Discuss how in a large capital abundant country (such as the US) levying a tariff on the labour-intensive imports affects:

(a) Domestic (US) real wages and domestic real return to capital.

(b) The US wellbeing (welfare) as a whole.

(c) The US job market.

Answer 1

a). Domestic (U.S.) Real wages and Domestic Real Return to Capital.

As Donald Trump proposed steep tariffs on imports to minimise imports in the country, so the import will become lower and it helps in the Economic Growth of the country and also give rises to the chance of Increase in wages in the U.S., as good wages gives higher standard of living to the people of the country and the Domestic Real Return to Capital will increase, as productivity runs efficiently and effectively.