Q3

From my view, a tariff have both positive and negative effect on the U.S. Undoubtedly, the U.S. should seek the nationally optimal tariff.

The U.S., has a large economic of scale in the world for its imports,which means it is more a price maker instead of being a totally price taker. If its demand increases, the price would rise, vice versa. Thus, foreign firms would compete and lower their export price if the U.S. place a tariff in order to protect domestic firms, meanwhile domestic consumer have to pay more to get the same product. However, the U.S. should seek the nationally optimal tariff because a too high tariff will greatly decrease total social welfare. Additionally, domestic firms wont compete aggressively so that they may not figure out a new invention to lower the cost.