Read the Wall Street Journal opinion article titled “Billions Start Flowing to Chip Makers for New U.S. Factories” before answering the following questions: *The article will be attatched
- According to the article, why does the current presidential administration want to subsidize the U.S. chip-making industry?
- Why do some critics view this industrial policy as potentially problematic?
- Overall, what is your opinion? Do you think the federal government should directly subsize our chip manufacturers? Could there be any negative consequences from a national welfare perspective? (Refer to some of the topics we’ve discussed in class to defend your position.)
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Subsidies: Financial support extended by the government to an industry for promoting economic and social policy.
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Industrial Policy: Government efforts aimed at improving the competitiveness and capabilities of domestic industries.
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National Security: The protection and preservation of a nation’s health and economic stability.
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Global Supply Chain: A network between a company and its suppliers to produce and distribute a specific product to the final buyer.
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Semiconductor Industry: A sector involved in the manufacturing of semiconductor devices essential for a wide range of electronic devices.
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Trade-Offs: The compromise between the benefits of the subsidies against the potential market distortions and inefficiencies they might cause.
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Market Distortions: When government intervention in the market disrupts the free operation of the market forces of supply and demand.
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Competitiveness: The ability of a country or firm to provide products and services that meet the quality standards of the global markets at prices that are competitive.
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Retaliatory Tariffs: Taxes imposed by one country in response to tariffs placed on its goods by another country, often leading to a trade war.
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Trade Wars: Economic conflict resulting from extreme protectionist measures by countries against each other.
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Countervailing Duties: Tariffs levied on imported goods that have benefited from subsidies in the exporting country, aimed at leveling the playing field for domestic producers.
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Antidumping Duties: A protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
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World Trade Organization (WTO): An international organization that regulates international trade.
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National Treatment Principle (NTP): A principle in international law that ensures imported goods are treated no less favorably than domestically produced goods.
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Most-Favored-Nation (MFN) Status: A level of treatment accorded by one state to another in international trade.
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Trade Adjustment Assistance (TAA): A federal program of the United States that provides aid to workers who lose their jobs or whose hours of work and wages are reduced as a result of increased imports.
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Strategic Trade Policy: Government policies that attempt to use subsidies to support industry sectors with potential for significant spillover benefits to the economy.