It is often inferred that the large countries like the United State has greater incentives than small countries in using the trade restrictions. The large economy which is generally signified by their large market size like the USA has a dominance in setting the international price which latter acts as a base price for other countries in trading the products. Further strong currency has also supported the USA in international trade.
The impact of import tariff, quota, export tax and subsidy by the small country rarely happens in the international market, but sometime it may proliferate to the nearest neighboring country, for example, subsidized agriculture fertilizer and the increased price of oil by India has impacted Nepal. But whenever the trade restriction or protections measures is incorporated by the large economies like USA, the impact is influential creating substantial turmoil in the world economy
Whenever the USA imposes a tariff on the import, it leads to the oversupply of importing products in the global market which ultimately reduces the global price of the product. And interestingly, it is seen, USA latter enjoys the reduced price of the imported goods as the importer attempts to maintain the same amount of trade at the lower price. The USA increases its social welfare by extracting the revenue as tariff which is generally more than the value of the deadweight loss it had incurred.
Similarly, when the quota in import if levied by the USA, the demand for the product declines drastically leading to decrease in the price, here the USA can enjoy a quota rent which it can use to offset the deadweight loss. The tariff in the export by the USA reduces the global supply of the export and leads to an increase in the international price. Due to the increase in the export tax, the government earns the revenue which helps to reduce the deadweight loss manifested by the export tax in the domestic market.
The protectionist move i.e. tariff or non-tariff by the U.S. has a significant impact in the small economics but if they reciprocate back the impact they have on the USA is relatively less. Hence it could be inferred that the USA due to its large market size, stronger currency, advancement in technology with enhanced productivity has a dominance in using trade restrictions as these supports the USA to increase its social welfare in comparison to other small economics.
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