Nafta

International trade theorists conclude that free trade is normally in the best interests of the country; however, the U.S. steel firms and the industry’s main labor union put direct pressure on the government for more import restrictions (Hill, 194). These tariff barriers caused steel prices to raise, made the product less competitive and hurt the U.S. steel firms. Some group members agreed with Porter’s Theory of national competitive advantage stating that it would have been in the best interests of the U.S. steel firms and consumers to invest in improving advanced factors of production. (Hill, 195.)

The trade theory emphasizes that trade allows a nation to specialize in reaching scale economies with lower costs to a gain in market share (Hill, 187). Specialization concentrates on the production it can do best, rather than dividing its resources, causing inefficient allocation. A friendly discussion debated the usefulness of customization, citing the availability of customized U.S products abroad, at lower prices and with the same quality. However, we felt that consistent quality reinforced by strong brand recognition and specialized market position are significant competitive tools. In addition to specializing in the production of the goods that it produces most efficiently, the U.S. should also purchase goods from other countries that it produces less efficiently (Hill, 174).

For the U.S. steel industry, our group felt that the government did not play a positive role in national competitive advantage. The government imposed tariffs on imports hoping to give the steel mills time to upgrade, but the results were an increase in the price of steel for consumers and thousands of jobs lost. In our opinion, it seemed like the U.S. cut corners when their economy needed its staple industries assessed and infused with upgrades to ensure sustainability and market longevity. Instead of helping the situation, our group felt that the tariff’s caused an even bigger...