Military Self-Sufficiency Argument:
Argument: Protective tariffs are needed to preseve or strengthen industries that produce materials that are needed for national defense. Relying on other (potentially hostile) nations for military equipment is not desired.

• Political-military self-sufficiency may take precedence over economic efficiency.

Counterargument: Tariffs increase the domestic prices of military products; thus, only those consumers who buy the industry's products shoulder the cost of greater military security. A direct subsidy to strategic industries, financed out of general tax revenues, would distribute those costs more equitably.

Increased domestic employment argument:
Argument: Reducing imports will divert spending from imports to domestic products. As a result, AD goes up, GDP goes up, and domestic employment increases.
Counterargument:
(1) Imports may have eliminated many jobs in the competed industry, but it creates new jobs that complements the trading process, such as jobs unloading ships and selling imported products. Thus, import restrictions may not necessarily increase the volume of employment rather than simply altering its compostition.
(2) Importing less products from other countries lowers their GDPs, which make them relatively poorer. Hence, these foreign countries have less money to spend on U.S exports. As exports are a part of AD, AD shifts to the left.
(3) Nations adversely affected by import restrictions may retaliate in a similar manner. As a result international trade declines significantly, lowering the income and output of all nations.

Diversification-for-stability argument:
Argument: Countries dependent on international markets (i.e. Saudi Arabia's oil industry and Cuba's sugar industry) will be able to create more industries within their respective borders which will increase social stability.
Counterargument:
1) The argument contains no relevance to other advanced economies
2) The economic costs of diversification may be high

Infant industry argument:
Argument: Tariffs allow new domestic industries to establish a place for themselves in a competitive economy. It gives them room to achieve greater efficiency. Strategic trade policy

• Protected firms eventually dominate world markets w/ lower costs → return high profits
• Problem – retaliatory tariffs → world trade ↓

Counterargument:
In the developing nations it's difficult to determine which industries are "infants" that deserve protection; also, there are better means for subsidizing infant industries than through tariffs. For example, direct subsides can make explicit which industries are being aided and to what degree.

Protection against dumping argument:
Argument: Dumping is the selling of excess goods in foreign market at a price below the cost.

• Dumping abroad → sell at below domestic market price → drives out domestic competitors → monopoly power
• Price discrimination – high price in monopolized markets + low price for surplus
• Surplus needed for per-unit cost saving from large-scale production

Counterargument:
This forces firms to be more efficient in order to challenge the lower prices of foreign firms. In fact, dumping is considered an unfair trade practice and as such, most nations have banned it.

Cheap foreign labor argument:
Argument: Domestic firms and workers must be shielded from the ruinous competition of countries where wages are lower.

• If protection is not provided, cheap imports will flood U.S. markets and the prices of U.S. goods and wages for U.S. workers will be pulled down.
• U.S. workers may lose jobs because they're increasingly outsourced by workers in other countries who are willing to work for lower wages.
• Cause exports to decrease, causing a trade deficit.

Counterargument:

• The argument suggests that it is not mutually benificial for rich and poor countries to trade with each other. However, this is not true, since a low income farmworker may work for a rich landowner which ends up with both the farmworker and the landowner benefiting. US consumers and Chinese workers gain when athletic shoes cost $30, rather than the $60 it would cost with extremely high tarrifs.
• By not trading with a poorer country, both countries' standards of living falls; i.e. Brazil cannot develop its labor force while the price of goods in the United States rises.