UPSC Prelims Practice Questions — Trump tariffs aren’t saving jobs at Whirlpool unit
Q1. In tariff policy, the 'nominal rate of protection' on a manufactured good is best defined as:
- A. The percentage tariff levied on the final product as it enters the country
- B. The percentage tariff levied on the imported raw-material inputs used to make the product
- C. The percentage increase in domestic value added relative to free-trade value added
- D. The output tariff minus the input tariff, expressed as a percentage of price
Q2. With reference to the economics of tariffs, consider the following statements:
1. A protective tariff shields domestic producers by raising the price of competing imports.
2. A revenue tariff is designed primarily to raise government revenue rather than to restrict imports.
3. The effective rate of protection accounts for tariffs on both inputs and the final product.
4. The nominal rate of protection measures the protection given to domestic value added rather than to the final-product price.
Which of the above is/are NOT correctly described?
- A protective tariff shields domestic producers by raising the price of competing imports.
- A revenue tariff is designed primarily to raise government revenue rather than to restrict imports.
- The effective rate of protection accounts for tariffs on both inputs and the final product.
- The nominal rate of protection measures the protection given to domestic value added rather than to the final-product price.
- A. 1 and 3
- B. 2 only
- C. 3 and 4
- D. 4 only
Q3. Section 232 of the U.S. Trade Expansion Act, 1962, empowers the President to impose import tariffs on the ground that the imports:
- A. Threaten to impair the national security of the United States
- B. Are being sold below their fair market value (dumping)
- C. Benefit from prohibited foreign government subsidies
- D. Have surged so as to cause serious injury to a competing domestic industry
Q4. The 'baseline tariff' element of the United States' April 2025 'Liberation Day' tariff package refers to:
- A. A flat 10% duty applied to imports from nearly all trading partners
- B. A 25% duty applied only to imported steel and aluminium
- C. A duty set to exactly match each partner's own tariff on U.S. goods
- D. A 50% duty on the single country with the largest trade surplus with the U.S.
Q5. Under the April 2025 'Liberation Day' package, approximately how many countries' imports were subjected to higher 'reciprocal' tariffs over and above the 10% baseline?
- A. About 90
- B. About 50
- C. About 180
- D. About 25
Q6. With reference to the WTO's 2025 trade projections, consider the following statements:
1. The WTO's April 2025 forecast projected world merchandise trade volume to decline by about 0.2% in 2025.
2. The 2025 estimate was nearly 3 percentage points lower than it would have been without the recent trade-policy shifts.
3. The WTO projected commercial services trade growth to slow to about 4.6% in 2025.
4. The WTO projected world merchandise trade volume to grow by 2.8% in 2025.
Which of the above is/are NOT correct?
- The WTO's April 2025 forecast projected world merchandise trade volume to decline by about 0.2% in 2025.
- The 2025 estimate was nearly 3 percentage points lower than it would have been without the recent trade-policy shifts.
- The WTO projected commercial services trade growth to slow to about 4.6% in 2025.
- The WTO projected world merchandise trade volume to grow by 2.8% in 2025.
- A. 1 and 2
- B. 3 only
- C. 1, 2 and 3
- D. 4 only
Q7. The projection that world merchandise trade volume would decline by about 0.2% in 2025 owing to rising tariffs was issued in the 'Global Trade Outlook and Statistics' of which institution?
- A. World Trade Organization
- B. International Monetary Fund
- C. World Bank
- D. United Nations Conference on Trade and Development
Q8. When tariffs on imported inputs raise a domestic producer's costs by more than the protection conferred by tariffs on its finished output, the industry is said to experience:
- A. Negative effective protection
- B. A positive nominal rate of protection
- C. Infant-industry protection
- D. A countervailing duty offset
Q9. With reference to the evolution of U.S. tariffs affecting appliance manufacturing, consider the following statements:
1. The 2018 Section 232 tariffs set duties of 25% on steel and 10% on aluminium, while by 2025 the steel and aluminium tariff had been raised to 50%.
2. The 2018 trade actions on appliances included a safeguard measure on imported large residential washing machines, pursued by Whirlpool against Samsung and LG.
3. Unlike the targeted 2018 measures, the April 2025 'Liberation Day' package imposed a 10% baseline tariff on imports from nearly all countries.
Which of the statements given above is/are correct?
- The 2018 Section 232 tariffs set duties of 25% on steel and 10% on aluminium, while by 2025 the steel and aluminium tariff had been raised to 50%.
- The 2018 trade actions on appliances included a safeguard measure on imported large residential washing machines, pursued by Whirlpool against Samsung and LG.
- Unlike the targeted 2018 measures, the April 2025 'Liberation Day' package imposed a 10% baseline tariff on imports from nearly all countries.
- A. 1 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q10. The Smoot-Hawley Tariff Act of 1930 is most frequently cited in trade economics as an example of:
- A. Protectionist tariffs provoking retaliation and a collapse in international trade
- B. A revenue tariff successfully funding the government during a depression
- C. Effective protection sharply raising domestic value added
- D. A multilaterally compliant safeguard measure
Q11. Under the WTO Agreement on Safeguards, the total period for which a safeguard measure may normally remain in force, including any extension, ordinarily must not exceed how many years?
- A. 8 years
- B. 4 years
- C. 6 years
- D. 10 years