Over the decades trade volume has increased due to reduction in tariffs, increased trade agreements, and subsidies among other trade enhancing measures. Gerber (2018) observed that the trade system has established trading rules and reduced tariffs under the GATT and WTO umbrellas. Although there has been significant reduction in tariffs and trade barriers there are still advances to eliminate tariffs even further. One might argue that such a move would only have diminishing returns to trade negotiations and a minor impact on GDP. Why would nations then continue to desire further market openings?

1. Explain why costs to consumers of a tariff or quota are greater than the net welfare costs to nation.
2. Which industries are more heavily protected in the United States and Japan? Are high income or low income nations more affected by American and Japanese trade barriers? Explain.