Political Economy in International Trade

CASE 1

1.United States tire producers because U.S. production increased more than 15%, in addition,
the union claimed that U.S. producers were making plans to add additional capacity. Thailand,
Indonesia and Mexico are also the countries who benefited, suggesting that low-cost producers
in other countries were taking advantage of the tariffs on Chinese tires to increase their exports
to the United States.

China suffered for the tariff imposed. Sales of Chinese company is greatly affected; they
also argued that the tariff cost jobs in the U.S. sales sector, causing some small and medium-
size wholesalers and dealers to go out of business. Tariffs may be beneficial to the producers
but definitely not to the public (in general) especially the consumers.

2. It would have the same scenario since tariffs are generally a burden to another country and
that US might limit their export due to the said policy.

3. The rise of imports adds great value to the mentioned countries.

4. It is not on their best interest. U.S. producers did not act on capacity. Several U.S. tire makers
have factories in China which have been exporting from them. Although the tariffs have big
success for the first six months after the tariffs were imposed, this did not last long. Thailand,
Indonesia and Mexico also had the advantage on such tariff

CASE 2

1.a. U.S. Magnesium and the company’s employees.

b. Foreign companies who can import magnesium and sell it at a lower price and the
consumers of that product.

c. It doesn’t seem to be at best national interest of the U.S., given that this may lead to
inefficiency and loss on foreign companies, which may cause misunderstanding and wars
between countries. Moreover, this duty does not promote globalization.