he intertwined nature of politics, economics, and international trade is on full
ID: 1154627 • Letter: H
Question
he intertwined nature of politics, economics, and international trade is on full display in the most recent trade dispute between the U.S. and China. Several years ago, in fulfillment of a campaign promise to restrict imports that hurt American workers, President Barack Obama approved a 35% tariff on Chinese tires. In response, the Chinese government announced that they would launch an investigation into whether the U.S. was “dumping” (selling below cost) chicken and auto parts in China, a move that many experts believe will lead to tariffs.
Please do some research, answer the following questions
What are the costs and benefits of the U.S. tire tariff? What are the costs and benefits of China’s response? In your opinion, does the potential of saving some manufacturing jobs outweigh the risk of angering the U.S.’ largest trading partner?
Explanation / Answer
Ans
The benefits are increase in jobs in protected industries, less imports, less bop deficit. The costs are less consumer surplus, higher prices and deadweight loss of production and consumption
The costs of china's response are fall in employment in export oriented good, less exports and deficit in bop. The benefits of china's response are hardly any. No it doesn't outweight.There is loss in exports, net loss in consumer surplus is greater than gain in producer surplus and Govt revenue. Even net jobs might decrease
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