Correct answers should mention or include the following:
A tariff or any other protectionist policy is designed to protect new industries in the early stages of their development and growth. A firm develops a missile and satellite system to help global and military communications. Other firms work to provide parts and supplies for this project.
- A tariff protects the young company and industry from competition of more mature and stronger competitors.
- This allows growth and time to develop a way to compete evenly in the marketplace.
- Once this occurs, the tariff and protectionist policy can be eliminated since competition should be even now.
- Difficulties occur with protecting infant industries.
- An industry or firm that is protected often lacks the desire to grow and become more efficient and then more competitive.
- Usually, once an industry is protected, it is tough to take that "label" off of the industry. So, it may never "improve" and be a more maure industry to compete in the global marketplace.