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You're reading: Ukraine’s lost trade war

This step could eventually backfire, leading to zero or even negative economic results for the country. Furthermore, the benefits to the protected car industry are likely to be short lived. 

In early 2013 Ukraine increased car import duties, which World Trade Organization members have decried as being unjustified and implemented with procedural violations. Ukraine is now facing sanctions from the European Union, Japan, Russia, South Korea and Turkey in retaliation. Turkey has already imposed duties on Ukraine’s walnut exports. 

There are two possible outcomes. First, Ukraine would “trade” protection of its car sector for worse terms of trade for a number of exporting sectors. This would likely adversely impact the food industry (food products are sensitive export items that importing countries specifically like to target). It is very possible that the damage exporters would face from those sanctions could end up being higher than benefits to the car producers. And yes, domestic consumers are those who pay the price for more expensive imports. 

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