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​IB Economics—Internal Assessment

 
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​Candidate
name
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Teache
r

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article

Source of the
article

Asia and Europe set to bear the burden of US
trade protectionism

https://www
...
com/content/77581366-4f15-1
1e7-bfb8-997009366969

June 12, 2017
Date the article was
published

Full source of the article including weblink
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(full APA format)

Jaler, K
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Asia and Europe set to bear the
burden of US trade protectionism
...
ft
...

Donald Trump has repeatedly promised to take on China and its trade practices
...

The study released on Monday by a leading expert on trade disputes and protectionism comes as US
Commerce Secretary Wilbur Ross hurries to deliver within days a plan to impose new restrictions on
steel imports, arguing that the country’s national security is at stake
...
At that summit Angela Merkel is expected to again try to push Mr Trump to
renounce protectionism
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Working their way through the US trade system are moves against
aluminium imports, Canadian aircraft and lumber, and Chinese solar cell and panel producers, among
others
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By his calculations, the percentage of US imports covered by special tariffs is poised to almost double
from 3
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4 per cent, based on cases launched in Mr Trump’s
first 100 days in office
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2 to 10
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But the amount of US imports from the rest of the world subject to new restrictions is
expected to triple from 2
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4 per cent, according to Mr Brown
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The new data highlight the power Mr Trump still has to enact his “America First” trade agenda even as
he tries to shake off a scandal relating to alleged Russian interference in last year’s election and
struggles to advance tax and other reforms through Congress
...

But the most concrete change so far has come in the area of trade enforcement
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But the Trump administration is seen as encouraging new anti-dumping and other trade cases and has
been dusting off dormant statutes to take new actions itself
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The steel investigation and a similar one relating to aluminium were launched under a 1962 law that
allows presidents to restrict imports in the name of national security
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None has resulted in the imposition of restrictions since the 1980s
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Both Mr Trump and Mr Ross have in recent days foreshadowed a dramatic move
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Testifying in Congress on Thursday, Mr Ross said the steel investigation was examining “a genuine
national security issue”
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But discussions were still under way as recently as Friday over just how to
present the recommendations and how quickly Mr Trump would act on them
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Protectionist restrictions refer to a set different
policies implemented by the government in order to restrict the flow of goods and services into the
country
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Tariffs which essentially represent a tax on imported goods This has been one
of the most significant protectionist actions taken by the US government because it has significantly
increased the percentage of US imports covered by special tariffs
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8 to 7
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2 to 10
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Protectionist
restrictions usually have both a negative and positive consequences, what will be the impact of these
new protectionist tariffs on the different stakeholders?
Diagram 1: Tariff on Chinese steel imports

According to this diagram, the US government has placed a tariff on imported chinese steel and the
world price has increased from P1 to P2
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This tariff not only benefits domestic US steel producers but it affects different
stakeholders such as consumers, government, and Chinese steel producers
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Prior to the tariff, domestic producers were only supplying at the quantity of Q1
multiplied by the price world which is P1
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This created the opportunity for domestic producers to supply
a larger quantity of domestic steel because with the price increase of imported Chinese steel, the
demand for this import decreases
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The placement of the tariff brings benefits to the government as well as the domestic producers, as the
price of the Chinese steel imports increases
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This is because as the imported goods become more expensive,
these domestic producers are more inefficient because their products are highly demanded
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The tariff could also lead to a decline in disposable income and net loss of economic welfare which
would cause indirect falls in tax revenue in the economy
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The tariffs could also cause an effect of retaliation from other countries, if the US places too many tariffs
on Chinese steel imports and products, then China could start placing tariffs on US imports which would
also cause a decline on employment on export industries which are internationally active
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Generally these
protectionist barriers have both positive and negative effects on the different stakeholders so they
aren't good alternatives, however, out of all the protectionist barriers, tariffs are the best alternative
because they can be changed easily and they don't trigger violent changes in trade as other protectionist
measures do
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(2017)
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Retrieved from
https://www
...
com/content/77581366-4f15-11e7-bfb8-997009366969



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