If a tariff reduces the quantity of Japanese autos imported by the United States, over time it reduces the ability of Japan to import goods from the United States.

Question

Quizplus · Accepted Answer

This is an example of a retaliation effect in international trade. If the US imposes a tariff on Japanese autos, Japan may respond with a tariff of their own on US goods. This would reduce the ability of the US to export goods to Japan, ultimately leading to a reduction in imports from the US over time.

If a Tariff Reduces the Quantity of Japanese Autos Imported