Question

In: Economics

* President Donald Trump has recently imposed significant tariffs on China’s products coming into the United...

* President Donald Trump has recently imposed significant tariffs on China’s products coming into the United States. Discuss TWO positive economic effects and TWO negative economic effects of this measure upon the U.S. economy.

- Discussion must be elaborate and well-written to earn full points.

Solutions

Expert Solution

Ans- The intent of a tariff, or a tax placed on imported goods, is to benefit domestic companies by making their product more affordable than a foreign alternative.

Two Positive economic effects on US economy are-

  1. Benefit to steel Industries- The US steel and aluminum manufacturing industries will have a short-term win. It removes most of their pressure to compete effectively, so long term benefits depend on investing the windfall to become more competitive rather than declaring a bigger profit.

2. Profit to US treasury- As US is having a huge market and it cannot be denied although applying such high tariffs, the china will still do a good amount of trade which will lead to more duties or tariff collection from china which will ultimately increase the treasury of US.

Two Negative economic effects on US economy are-

  1. Costly Farming Equipments-

    The American tariffs on Chinese goods affect various forms of farming machinery. Examples include poultry incubators and different types of dairy machines.If those tariffs make it more expensive for American farmers to operate, it could theoretically translate into price increases.

  2. Health care equipment:

America imposed tariffs on various forms of health care equipment from China, including CT scanners, EKGs and X- ray tubes.While American health care providers may not be immediately affected, any increase in prices for their equipment could eventually translate into higher medical costs.


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