U.S. country's tariffs have pushed foreign exporters to lower their prices. who actually bears the burden...

U.S. country's tariffs have pushed foreign exporters to lower their prices. who actually bears the burden of the tariff?

a. U.S.government

b. The U.S. buyers of imports

c. The U.S.firms that compete with imports

d. The foreign exporters that are required to pay the tariffs to u.s. government

Expert Solution

Option B The US buyers of imports

A tariff is a tax imposed on imported goods. Due to this tax imposed on imported goods the price of imported goods becomes higher. As a result the demand of imported goods decreases. This in turn raises the demand for domestically produced goods.Since domestic goods compete with foreign goods of the same type, a tariff increases demand for the domestic goods. As a result the firms producing these goods and their workers are benefitted.

But the consumers loose due to these tariffs. Consumers are hurt due to tariffs. This is because tariffs raises the price of imported goods that consumers are willing to buy. As a result the pressure on domestic producers to lower the price of their products is reduced. So, ultimately consumers loose because of high prices. So, finally US consumers lose but domestic producers gain when a tariff is imposed.

Rahul Sunny answered 2 years ago

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