Suppose that in response to huge job losses in the U.S. textle industry, the Con

Question

Suppose that in response to huge job losses in the U.S. textle industry, the Congress imposes a 100 percent tarif on imports of textiles from China. With the increased tarif, US. gains form trade wil and Chinese gains from trade will O A. decrease; increase OB increase, increase O C. decrease; decroase O D. increase; decrease In the United States,will gainandos. A. all consumers; producers of goods other than textiles B. only textile workers and owners of textile firms; tode consumers O C. producers of goods other than textiles; all consumers O D. texile workers and owners of textile firms and the U.S. government; textile consumers

Explanation / Answer

when US imposes a 100% tariff on import of textiles, the price of the goods get doubled in the United state. Due to this the local textiles producers in the US will gain and consumers will have to bear the burden of increased prices. The government will also gain due to tariff revenues.

1. The gains of trade is US and china both decrease due to such a tariff hike because this policy will reduce the trade.option c

2. As explained above, the textile workers/ producers and the government gain but consumers losse. option d

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