Answer to Question #80765 in Economics of Enterprise for Ouma

Question

As a result of pressure from the south African clothing and textile workers union (SACTWU), the south African government has decided to increase the tariff on textiles. Explain who would gain and who would lose as a result of this decision taken by the South African government.

Answer 1

As a result of pressure from the south African clothing and textile workers union (SACTWU), the south African government has decided to increase the tariff on textiles. Textile firms and workers would gain, because their profits and salaries may rise, but foreign importers and consumers would lose as a result of this decision taken by the South African government, because the amount of imports would decrease and price of textile would rise.