OXFORD IB DIPLOMA PROGRAMME ECONOMICS

WORKSHEET

Chapter 24: Free trade and protectionism Yolanda Sec 4A

As part of his ‘America First’ trade policy to try to increase employment, US President
Donald Trump imposed a 20% tariff on imported washing machines. One year later,
research showed that US households were paying around $90 more on all new washing
machines.
Using a tariff diagram, explain how the tariff on washing machines could be expected to
increase employment.

Since imported washing

When government impose tariffs, it machines are more expensive,
would generate revenue, and those demand for domestic washing
revenue could be used to improve machines will increase. Intense
infrastructure in the country and as competition among domestic
a result would hire more workers. washing machines firm may
drive some firms to go out of
When washing machines are more business and more
expensive, consumers may switch unemployment.
to cheaper alternatives like
domestic services (washing
manually). Retaliation from other countries
might decrease the demand of
US goods and that may create
Demand for domestic washing
unemployment in US
machines will increase if imported
washing machines are more
expensive. This could motivate
new firms to join the industry and
thus, will increase unemployment
in the US

[4 marks]

Key term
The word in bold in the question is a key term. You should be able to define it. Write your
own definition.
tariff
a tax that is put on goods imported from other countries
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