On the Iron Range in Northern Minnesota, about 2,000 miners have been laid off o

Question

On the Iron Range in Northern Minnesota, about 2,000 miners have been laid off over the last couple years. These miners worked in taconite mines. Taconite is used to make steel. Currently the world has an excess of steel capacity due primarily to the slowdown in the Chinese economy. As China has shifted away from building more industry and focused more on building a consumer economy, their need for steel has dropped dramatically. As a result, the demand for taconite and iron ore has also dropped. With the drop in demand, miners are laid off. The miners have been aggressively pushing the national legislators from Minnesota to increase tariffs on imported steel and set import quotas.

If the tariffs and the quotas were passed into law, who would be hurt? Explain

Explanation / Answer

If tariff and quotas were to be passed into law then definetely the seller of Taconite in norther minnesota would be better off But there are a couple of segments who will be hurt but this law.

Firly, the consumers in the Northern Minnesota will loose consumer surplus. As the tariffs and quotas will decrease the supply in the economy so domestic suppliers will charge a higher price resulting in decline in consumer surplus.

Secondly, the exporter's country will be hurt by this law. Due to excess steel supply and decline in china's demand, exporter wants to supply to other countries.But dueto the tariffs and quota the exporters of steel will suffer and there will be losses faced by them.

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