A coalition of domestic goods manufacturers argues that higher tariffs on imported raw materials will revive local production because firms will switch from cheaper imports to marginally costlier but now tariff-free domestic inputs. However, many of these manufacturers currently depend on imported inputs because they are cheaper and more readily available. Which of the following is an assumption on which the coalition’s argument depends? A. Higher domestic production costs will not reduce the competitiveness of local firms in international markets. B. Manufacturers will regard domestic suppliers as reliable enough to restructure their sourcing arrangements around them. C. The higher tariffs will not prompt foreign governments to retaliate in ways that substantially reduce external demand for domestically manufactured goods. D. Any short term disruptions caused by switching suppliers will not permanently diminish the willingness of manufacturers to produce goods domestically. E. Replacing imported raw materials with domestic ones will not reduce the quality of the products local firms manufacture. V40-21

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Bunuel

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Bunuel

GMAT Club Official Explanation:

The argument says that raising tariffs on imported raw materials will revive local production because firms will switch from foreign inputs to domestic suppliers. But we are also told that imported materials are currently cheaper and more available, which explains why manufacturers prefer them today.

For the coalition’s plan to make sense, something must happen after tariffs go up that actually causes this switch. Without the switch, there is no revival. So the assumption we are looking for is the one that keeps this switching mechanism alive.

A. Higher domestic production costs will not reduce the competitiveness of local firms in international markets.

This may sound important at first, since competitiveness seems like a big factor. But the argument is not talking about export competitiveness at all. It is focused only on whether local production increases. Even if local firms struggle internationally, domestic production could still rise if firms start sourcing locally.

Not required. Remove this.

B. Manufacturers will regard domestic suppliers as reliable enough to restructure their sourcing arrangements around them.

This is the key assumption. The entire plan depends on manufacturers choosing to switch away from imports after tariffs rise. That choice will only happen if firms feel domestic suppliers are reliable enough to depend on. Reliability here means consistent delivery, the ability to meet demand, and a stable working relationship.

If manufacturers doubt domestic suppliers, they will not switch, even if imports become more expensive. And if they do not switch, the plan to revive local production falls apart.

C. The higher tariffs will not cause foreign governments to retaliate in ways that reduce external demand for domestically manufactured goods.

This brings up international retaliation, but the argument is not about exports. It is about increasing production inside the country. Even if foreign demand falls, firms can still produce more at home if they start sourcing locally.

D. Any short term disruptions caused by switching suppliers will not permanently reduce the willingness of manufacturers to produce goods domestically.

This sounds relevant because disruptions can affect decisions, but the wording makes it too strong. Even if some firms hesitate or are discouraged for a while, others may still switch. Revival does not require every single firm to remain fully willing or unaffected. It only requires enough firms to switch for local production to rise.

E. Replacing imported materials with domestic ones will not reduce the quality of products produced by local firms.

This is another trap. It focuses on product quality, but quality is not what the argument is about. The argument only claims that production will revive. Even if quality suffers a little, firms could still increase production volumes by switching to domestic inputs. Quality is not a required condition for revival.

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24 Dec 2025, 10:03

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B when negated tells that manufacturers will not regard dom. suppliers as reliable enough, calling switch into doubt, if they don't find it worth enough they might not switch eventually challenging the core of the argument itself. Hence B

Bunuel

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A - International market hasn't been explicitly discussed. Domestic market may be the major market for this and hence this isn't necessary
B - This is required. If manufacturers do not trust the domestic suppliers, they won't switch and the plan will fail
C - this needs an assumption that all the manufacturing or atleast most of it is for international market
D - Willingness is not a key factor. If local supply is the better option, manufacturers might still go for it because of cost
E - quality can reduce but still it could be a better option. Say quality reduces by 0.01%

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24 Dec 2025, 10:23

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A coalition of domestic goods manufacturers argues that higher tariffs on imported raw materials will revive local production because firms will switch from cheaper imports to marginally costlier but now tariff-free domestic inputs. However, many of these manufacturers currently depend on imported inputs because they are cheaper and more readily available.

Coalition of domestic goods mfg argue that higher tariff on imported raw materials will revive local production as firms will switch to domestic goods...
imported goods are cheaper and readily available..

use negation technique and weaken conclusion

Which of the following is an assumption on which the coalition’s argument depends?

A. Higher domestic production costs will reduce the competitiveness of local firms in international markets.
this is not discussed in argument ; irrelevant to argument

B. Manufacturers will disregard domestic suppliers as reliable enough to restructure their sourcing arrangements around them.
if mfg have to restructure their sourcing arragnements then it will increase costs and domestic suppliers are un reliable then good will not be available readily
correct option

C. The higher tariffs will prompt foreign governments to retaliate in ways that substantially reduce external demand for domestically manufactured goods.
this does not weaken the conclusion

D. Any short term disruptions caused by switching suppliers will permanently diminish the willingness of manufacturers to produce goods domestically.
option does not address impact and weaken the conclusion

E. Replacing imported raw materials with domestic ones will reduce the quality of the products local firms manufacture.
quality of goods is not discussed in argument, does not weaken the conclusion....

OPTION B is correct

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Option A - competitiveness of international markets? out of scope - eliminate
Option B - this is a necessary assumption because the negation of it makes the conclusion fall apart - hold on
Option C - demand about domestic goods are not in the scope - eliminate
Option D - willingness? - eliminate
Option e - this is not necessary assumption - eliminate

Final choice Option B

Bunuel

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24 Dec 2025, 10:46

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Answer Choice: B

The argument's conclusion depends on whether higher tariffs will actually cause manufacturers to change their sourcing behaviour.

Why B: Unless domestic suppliers are viewed as reliable enough to prompt manufacturers who currently depend on imported inputs to change their sourcing behaviour, firm's will not switch regardless of tariffs, making this a necessary assumption for the argument's logic to work.

Why not the others:
A: Discusses competitiveness in international markets, which the argument never addresses and is not required for increased domestic sourcing.
C: Introduces foreign retaliation, which is a possible consequence of tariffs but not a required assumption or manufacturers to switch inputs.
D. Speculates about long-term willingness after disruption, which goes beyond the argument's immediate claim.
E. Focuses on product quality, which is not mentioned and hence is not necessary for the argument's logic.

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the argument was that manufacturers depend on imported inputs which are cheaper and readily available

but it was advocating for boosting domestic products, hence assumption shall be short term disrutpions will not effect the motive to produce goods domestically hence the answer is D

Bunuel

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A. The argument is not about international markets competitiveness hence incorrect
B. Correct. If the domestic suppliers are not reliable then the manufacturers will be unwilling to switch even with the new tarrifs
C. We have no idea if this will happen or not
D. Again we also do not know about this and even if it does happen in the short run it should not affect the long terms
E. Product quality has nothing to do with the argument at hand
Ans B

Bunuel

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B
A. incorrect. The competitiveness in international markets is irrelevant to the revival of local production.
B. correct. To work at the argument assume the manufacturers will switch to domestic inputs after tariffs. If manufacturers still don't consider domestic companies good enough (maybe not reliable for price, quantity, etc), they will continue to import despite the tariffs.
C. Incorrect. The argument does not rely the export market staying stable. This is irrelevant whether not the companies decide to change to domestic inputs.
D. incorrect. The argument does not depend on long-term disruption being irrelevant.
E. incorrect. The quality of materials is irrelevant to the argument.

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A. Higher domestic production costs will not reduce the competitiveness of local firms in international markets. Context is reviving local production & not international market success.
B. Manufacturers will regard domestic suppliers as reliable enough to restructure their sourcing arrangements around them. Even if they don't find the suppliers reliable, the tariff free items will be procured.
C. The higher tariffs will not prompt foreign governments to retaliate in ways that substantially reduce external demand for domestically manufactured goods. Context is about reviving local production. Local market can help sustain the production.
D. Any short term disruptions caused by switching suppliers will not permanently diminish the willingness of manufacturers to produce goods domestically. Correct. If the disruption in supply damages the willingness of domestic production, the plan would fail
E. Replacing imported raw materials with domestic ones will not reduce the quality of the products local firms manufacture. While quality may affect the market, the tariff free may offset this effect

Ans D

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For assumption questions always negate and see which breaks the argument.

A - Higher domestic production costs will reduce the competitiveness of local firms in international markets. Not relevant to whether domestic production will increase.

B - Manufacturers will not regard domestic suppliers are reliable enough to restructure their sourcing arrangements around them. This directly suggests that domestic production will not increase because manufacturers are unlikely to switch away from imported inputs, which suggests that tariffs ultimately would not drive increased production.

C - The higher tariffs will prompt foreign governments to retaliate... even if they do, and demand is reduced, the main point of the argument that manufactuers would start producing from locally sourced materials still stands.

D - Any short term disruptions caused by switching suppliers will permanently diminish the willingness of manufacturers to produce goods domestically. Trap answer because this does not actually confirm that short term disruptions WILL occur, it just says that IF they do occur, then the production will go down.

E - Replacing imported raw materials with domestic ones will reduce the quality of the products local firms... doesn't matter if quality is poor in this case; argument that local production will increase due to tariffs still holds.

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Bunuel

A- we are not concerned with the competitiveness of local firms in international market- Irrelevant
B-Negation- manufacturers will not regard domestic suppliers as reliable enough to restructure their sourcing arrangements around them--- this affects our conclusion and local production might not revive- Correct
C-External demand is none of our concern here, we cant say if local production increases or not from this- Irrelevant
D-We are not concerned with short term disruption, will it be major or minor and will it affect local production overall ,we don't know- OUT
E-We are not concerned with quality but the local production level-Irrelevant

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24 Dec 2025, 13:56

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Bunuel

Going through the passage, it says:

S1: Tarriffing imported raw materials = local production revival because domestic inputs will be cheaper than imported.
S2: But manufacturers currently use imported inputs because they're cheaper and easier to source.

Now going through the options to find the assumption:
Option A: We're not really talking about what the product would sell at, we're talking about switching suppliers. Eliminate.
Option B: This is relevant - if domestic suppliers aren't reliable or accessible, then this plan of tariffing to switch won't work. Hold onto this.
Option C: Like option A, we're not really talking about the product selling, we're only talking about the raw material inputs for the product. Eliminate.
Option D: This is super tricky and seems right, but note the end: "willingness to product goods domestically", which gives this answer away. We're not talking about whether manufacturers want to make goods locally, we're talking about whether they'll source raw inputs locally.
Option E: Quality isn't in question here, sourcability and reliability is. Eliminate.

Thus B is our answer.

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A and C talks about international changes.
D is linking long term consequences whereas the coalition is making assumptions for immediate switch.

Between B and E , E is more specific about quality which cant be assumed because the domestic inputs are costlier.

So B is correct, that the producers don't have any other reason for NOT SWITCHING

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Argument
Dependence on imports because of cost and reliability
Costlier imports = cheaper or same cost domestic product = more domestic production

The cost effectiveness of the imports has been addressed through tariffs. Other factor for dependence on imports is the reliability. If this is addressed, domestic production will increase.

Options:
A. Competitiveness in exports is not a factor for considering increase in domestic production, hence no.
B. Addresses the issue of reliability. Argument could be based on this. Best option.
C. Retaliation from governments will effect exports and not domestic production, hence no.
D. Short-term disruptions may happen but the assumption does not consider no disruptions to happen. Switching to domestic suppliers to increase domestic production is the only concern. Hence no.
E. Quality of the product is not a concern since some may require inferior but cheaper quality product while others more expensive but higher quality. Argument only concerns the switch to domestic production. Hence no.

Best Answer Option B

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Looking for assumption for the conclusion that higher tariffs on imported raw materials will lead to increase in local production

A. Incorrect. Strengthener but not assumption. Even if it decreases the competition in international market, the local production might still increase if they are only targeting local consumption
B. Correct. If not, then manufacturers will not using local production then the argument falls apart
C. incorrect. same as A , talks about international consumption
D. incorrect. Let's say this is true but what if no short term disruptions happen, then the argument stays where it is.
E. Incorrect. Let's say quality does decrease but what if the quality is already very high and that decrease doesnt mean they will not do local production?

ans: option B

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A - Competitiveness in international market hasn't been discussed
B - Even if not regarded reliable sourcing can be done.
C - Even after retaliation local production can be revived.
D - Negate this and conclusion will fall apart. Hence correct option
E - Quality not discussed in premise

Bunuel

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Bunuel