Impact of Foreign Trade on American Economy

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ANSWER 1
The ability of an economy to produce more gods and services at a much low cost than
the trade partners can be termed as comparative advantage. On the other hand the marginal
opportunity cost is an economic term which examines the impact of selling any additional
units of a product on the costs of the business (Aaronson, 2015). The marginal opportunity
cost also analyses the opportunities that the companies give up in order to produce more
products. Importation can also help in creating more jobs on a large scale. Imports will also
increase economic activity which also helps in supporting millions of jobs in the United
States of America. Increase in imports means introducing new products to the market.
Therefore, American consumers faces advantage in the sense that there is an availability of
new products for them in the market. Another advantage of import is it also reduces the
manufacturing cost.
Answer 2
Tariff is a type of custom taxes which the government levies on the imported goods.
In case of United States, the U.S Congress sets the tariffs on imports. Tariffs works in a way
by rising the price of the imports. However, tariffs can also act as a barrier to the international
trade. When the American government places a tariff on an imported good, it helps in
promoting American products (Mastel, 2016). The reason behind this is that when similar
products of similar price are produced by the American companies the foreign products
become quite expensive. Then the consumers opt for the cheaper option of the American
product. Tariff can also help in the revenue of the government. The government collects
revenue by implementing tariff so that it economically support the function. Therefore, tariff
helps the government to collect government revenue.