Question

Hello, please help me with this question: By applying international trade theories, present the effects of tax tariffs on steel imports in the US on Consumers, Producers and Government. Clearly indicate which Trade theories are applied please, thank you.

Answer 1

A tariff on imports of foreign steel would raise the price of imported steel and encourage US firms and consumers to buy domestically produced steel. According to international theory Global Strategic Rivalry Theory, the MNCs try to gain a competitive advantage against other global firms in their industry. Firms will encounter global competition in their industries and in order to prosper, they must develop competitive advantages.

Now effects of tariff on consumer :-

1. More expensive prices for US consumers.

2. Leading to chaos becuase of more and more competition.

3. Low purchasing capacity of consumer.

Effects on producers :-

1. US firms use imported steel in producing goods.
2. High cost of production
3. Domestic production of steel
4. Increase cost of raw material

Effects on Government :-

1. Trade war between countries.
2. Collection of uneven tax
3. Currency outflow
4. Leads to debt owning
5. Lower subsidies