Question

A tariff on imports of a product hurts domestic consumers of this product more than it benefits domestic producers of this product." Do you agree or disagree? Why? 250 words pplease

Answer 1

I agree with the statement that a tariff imposed on the imports hurt the consumer more than it benefits the domestic producer of the product.

If the country is allowing the imports at a zero tariff the demand and consumer welfare in the local country is much more than the loss to the producers. If the country imposes a tariff the consumer surplus suffer but the producer in the nation didn't gain that much to mitigate that loss leading to a deadweight loss and wastage of resources. The following graph will explain it better.

In the above graph, the Autarky price in the nation is P, at that price the country is consuming at Q. At eh world price Pw the consumption increased to Q1 and country is locally producing the Q2 amount of it. The consumer benefit at this price is a+b+c+d+e+f+g+h+i.

If the country imposes a tariff the new price will be Pw and at this price, the demand will decrease to Qt and local production will increase to Qt1. The total loss to consumer surplus will be e+f+g+h+i and the producer gain will be the only e. This is much less than the loss incurred by the consumers.

Therefore the statement given above is right. If a tariff is imposed the loss to the consumer is much more than the gain to the producer.