A problem encountered when implementing an "infant industry" tariff is that:
A) Domestic consumers will purchase the foreign good regardless of the tariff
B) Political pressure may prevent the tariff's removal when the industry matures
C) Most industries require tariff protection when they are mature
D) Labor unions will capture the protective effect in higher wages

Question

Quizplus · Accepted Answer

Implementing a tariff to protect a nascent industry from foreign competition can be problematic as it may be difficult to remove the tariff once the industry matures. Political pressure from domestic producers and labor unions can increase, making it challenging to dismantle the tariff without facing domestic opposition. This can lead to a situation where an infant industry tariff becomes a permanent measure, even when it is no longer necessary, leading to inefficiencies and distortions in the market.

A Problem Encountered When Implementing an "Infant Industry" Tariff Is