After all, tariffs are mere shadows of their former selves. World Bank economists Jim de Melo and David Tarr built a model of U.S. trade to find out. Tariffs may be way down, but quantitative restrictions and other nontariff barriers are way up, now covering about a fifth of U.S. imports. To some extent, this cost can be viewed as the unavoidable price of doing business outside GATT, since foreign exporters must somehow be compensated for agreeing to sign these bilateral deals. The imputed rent extraction from protection-lobbying activity is very high indeed.
Economies of scale do, however, dampen the estimates, but only marginally.
If it is recognized that wage demands are likely to be related to the tightness of the labor market, the wage distortion from labor union activity is reduced when protection is removed. If anything, de Melo and Tarr's estimates suggest that wage distortions do not provide support for an active industrial policy. An alternative is to try to reproduce what was achieved through the multilateral tariff negotiations, which have tended to lower tariffs proportionately. It is thus no exaggeration to say that protection through quantitative restrictions is setting freer trade back several decades.