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2 weeks ago
Who bears the cost of protectionism and how?
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Business and Its Environment
Edition: 7th
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2 weeks ago
Ultimately, the cost of protectionism is borne by consumers. Hufbauer and Elliott (1}  estimated that in 1990 special trade protection cost consumers over $70 billion, or approximately $280 per capita. U.S. producers were estimated to have captured approximately 45 percent of that amount as additional profits. Of the 21 cases of protection they studied, the annual cost per job saved ranged from $3,000 to $256,000, with an average of $54,000 for the 192,000 jobs saved by the protection. Over 152,000 of those jobs were in the apparel industry, and the cost to consumers per job was over $50,000 per year. Although they bear the cost of protectionism, consumers are costly to organize, and individual consumers are unlikely to act politically on trade protection issues. Furthermore, organized consumer groups have largely been inactive in cases involving protection of domestic industries. This leaves the political arena open to domestic industries, with political opposition coming primarily from importers, U.S. exporters, and those in government who support free trade and economic efficiency. For example, in the Section 201 petition, the U.S. textile manufacturers and unions were opposed by the United States Association of Importers of Textiles and Apparel.
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