Throughout the ages countries have implemented impediments to trade. a. What is

Question

Throughout the ages countries have implemented impediments to trade. a. What is a tariff?

b. Why would the U.S. impose steep tariffs on Chinese solar panels? ii. Explain how this would work to accomplish the U.S. objective.

c. What is an import quota?

d. Identify 3 cases where the U.S. has imposed import quotas on another country and explain why they were implemented. i. Google can help you.

e. What are non-tariff barriers?

f. Identify 3 examples of non-tariff barriers imposed by the U.S., why they were implemented, and their impact on the U.S. and other countries. i. Google can help you.

g. What could happen to the domestic economy of a country when trade barriers are eliminated and why? i. Explain what would happen to GDP, employment, and national income, and why.

Explanation / Answer

a. A tariff is a tax imposed by the government on all the goods and services imported from foreign nations / economies.

b. The tariffs were imposed in order to reduce the import of solar panels from China and provide a boost to the domestic solar panels producing firms. Another reason was to reduce the trade bill incurred on trading with China.

Implementation of tariffs result in increase in the prices of goods imported from China relative to the domestic prices. This increase in prices deter the consumers from demanding Chinese solar panels and make them shift to domestic solar panels. This increases demand for domestic solar panels and hence increase its production.

c. Import quota is a type of trade restriction which puts a limit on the amount of a good or service that can be imported from a foreign nation.

d.

1. Quota on the import of textiles from China - to prevent flooding of Chinese textile products in US market.

2. Quota on import of sugar - to curb the amount of sugar imported and boost domestic production.

3. Quota on import of steel from Brazil.

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