ALTERNATIVE TRADE POLICIES



ties would.suffer a loss in income if we introduced new trade
restrictions. Foreign countries cannot continue to buy from us
unless they obtain loans or earn dollars by selling goods and
services to us. If, for example, Switzerland could no longer
sell watch movements and cheese in this country because of
an increase in tariffs or other import restrictions, she would be
forced to reduce purchases of American goods. A loss of foreign
demand for American products would mean price-depressing
surpluses of tobacco, cotton, and wheat in this country and un-
employment in many of our industries.

Foreign trade is a much more vital factor in the economic
health of most countries we count as our allies than it is in
the case of the United States. A reduction in the volume of
United States imports would have very serious repercussions on
the economies of such countries as Canada, England, Switzer-
land, Italy, Germany, and Brazil. If additional trade restric-
tions were put into effect by us, the economies of nearly all
non-communist countries would be weakened and, of course,
a weakening of the economic strength of our allies would
play into the hands of Russia. Loans and gifts from the United
States might prevent this, but additional appropriations for
direct economic aid would mean either higher taxes or more
inflation at home.

An increase in tariffs or the extension of import quotas to
new products would obviously benefit certain types of domestic
producers but at the expense of consumers who would have
to pay higher prices for the protected products. The housewife
would be forced to do without some of the things she now
enjoys such as fine woolens, china, and pottery while the
farmer would pay more for a number of items used in farm
production. Under a protectionist policy, the United States
consumer would be paying the equivalent of a subsidy to high-
cost domestic producers.

By restricting trade, countries forego the economic advan-
tages which exist under a system of international specialization.
We would have fewer goods in this country today than we
actually have if each state tried to protect all its own industries
by restricting importations of goods from other states. The
same thing would occur on an international scale if trade
barriers between nations were increased.

39



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