Why does the government sometimes support protectionist tariffs even when US consumers lose more than producers gain?

• The cost of protectionism are usually spread over millions of consumers while the benefits flow to a small number of producers

  • The cost to each consumer is small, but gain to each producer is large

• Ex: sugar quota costs every person in the US about $8 per year but it benefits a small number of sugar producers by millions of dollars per firm

  • The small cost per sugar consumer means that it’s not worth knowing about

• The US has a comparative advantage in goods and services produced by skilled workers, and a comparative disadvantage in goods and services produced by unskilled workers

  • Increase international trade increases the demand for skilled workers and decreases demand for unskilled workers

More educated workers tend to support free trade more than do less educated workers

When we combine a trade war with the fact that protectionism reduces world income by pushing countries away for their comparative advantage, it’s likely that even many low-skilled US workers will lose from greater protectionism

All change generates losers and winners

If we want the gains from a growing and dynamic economy, it’s better to adjust to shocks than to try to prevent change