Example of zero-tariff free trade policies, International Economics

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Q. Presumably, since the United States is a large country in many of its international markets, a positive optimum tariff exists for this country. It follows thus that when any legislator or government official who promotes zero-tariff free trade policies, is by definition not operating in the public's best interest. Discuss.

Answer: Theoretically this is true and conversely this is true only within the context of a usually myopic view of international relations. If the tariff impressive country is large enough to make a substantial difference in its welfare by seeking an optimum tariff subsequently it can't hope to remain invisible as its policies are substantially harming its trade partners. Foreign repercussions are nearly a certainty. In such a "game" it isn't at all certain that seeking the optimal tariff dominates alternative strategies.


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