Activity: The "Protect Our Industry" Debate
Introduction
The purpose of this activity is to help you analyze and evaluate the economic effects of
protectionist policies. You will work in groups to represent different stakeholders who are either
for or against a government proposal to protect a domestic industry. Your goal is to debate the
issue from your assigned perspective and use economic theory and real-world examples to
support your arguments.
The Scenario
The country of "Veridia" is a major producer of steel. However, foreign steel imports have been
flooding the market at a very low price, which has led to several Veridian steel factories closing
and thousands of workers losing their jobs. The government is considering implementing a 15%
tariff on all imported steel to protect the domestic industry.
Your class will be divided into four stakeholder groups. Each group must prepare a short
presentation and a series of arguments for a town hall meeting with the government.
Your Task
You will work in groups to develop a presentation that includes:
Part 1: Stakeholder Analysis
Your group will be assigned one of the following roles. For your role, you must identify the
potential benefits and drawbacks of the proposed tariff.
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Group 1: Domestic Steel Producers: You represent the owners and employees of
Veridia's steel companies. Your goal is to convince the government that the tariff is
necessary to save your industry and your jobs.
Group 2: Consumers & Industries Using Steel: You represent the citizens of Veridia
who buy products made with steel (like cars, appliances, and construction materials), as
well as companies that rely on steel as a key input for their own production. Your goal is
to show the negative impacts of the tariff on prices, consumer choice, and the
competitiveness of your businesses.
Group 3: The Government & Treasury Department: You represent the government's
finance department. You must consider the revenue that the tariff will generate, but also
the broader economic impact on employment, potential retaliation from other countries,
and the overall welfare of the nation.
Group 4: Foreign Steel Exporters & The World Trade Organization (WTO): You
represent the foreign companies that export steel to Veridia. You also represent the
principles of free trade and the rules of the WTO. Your goal is to argue against the tariff,
citing its negative effects on international trade and economic efficiency.
Part 2: Economic Diagram
Each group should be prepared to draw and explain the tariff diagram on a whiteboard. This
diagram is crucial for illustrating the effects of the tariff on:
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Domestic Price and Quantity
Imports
Consumer Surplus (decrease)
Producer Surplus (increase)
Government Revenue
The two triangles of Deadweight Loss (allocative and productive inefficiency)
Part 3: Debate and Evaluation
After a brief presentation from each group, we will have a debate where each group can
challenge the others' arguments. You must be able to evaluate the claims of the other
stakeholders and defend your position with economic reasoning.
Debriefing Questions
After the debate, we will have a final discussion to synthesize the arguments. Consider these
questions:
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Which stakeholder group makes the most compelling argument from a purely economic
standpoint? Why?
Which group's arguments are most likely to win a political debate, even if they aren't the
most economically sound?
What are the long-term consequences of this tariff that might not be immediately
obvious?
Based on our debate, do you think the benefits of the tariff (e.g., protecting domestic
jobs) outweigh the costs (e.g., higher prices for consumers)?