Preview: ... from tariffs, so it plays an important role in international relations. The government is able to control trade with other countries by raising or lowering tariffs. For example, if the government wanted to promote trade with an underdeveloped economy, such as Ghana, it could lower tariffs on imports from this country. This would give businesses an incentive to conduct trade with Ghana because of the lower costs of importing goods. Likewise, the government sets quotas on certain commodities that can be imported. What happens when there is a surplus of imports brought into the U.S.? A surplus of imports simply means that the U.S. is importing more than exporting. For example, if the U.S. imports from China, but it do not export to China we would experience a trade deficit. To offset trade deficits most countries have tariffs. Let us recall what NAFTA is. “NAFTA ( North American Free Trade Agreement)” Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994. This agreement will remove most barriers to trade and investment among the United States, Canada, and Mexico.  5) Why doesn’t the U.S. simply restrict all goods coming in from China? Why can’t the U.S. just minimize the amount of imports coming in from all other countries? Why doesn’t the U.S. simply restrict all good coming in from China? This is very difficult question and an excellent question. We have to realize that most manufacturing that we lost to China (U.S. manufacturers since the 1970 went abroad and produce their goods in China due to cheap labor, materials, etc.) Most of these jobs have indirectly gone to China, which since 1986 has moved ...