HAWASSA UNIVERSITY

Assignment-1 (10%)

This assignment will be done individually.

NAME: TEKLEHYMANOT BIREGA

DEPARTMENT: AGRICULTURAL ECONOMICS

ID: 2370/13

ASSIGNMENT: INTERNATIONAL TRADE

SUBMITTED TO :Mrs. MOLALIGN ANDARGE

SUBMISSION DATE: 20/02/2024

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1. China has taking the lion share of international market by devaluing its national currency.
As a counter active measure, USA has now considering the imposition of non-tariff
barriers on the goods coming from China. What are the likely impact of both tariff and
non-tariff barriers in smoothing/&hindering the volume of trade between China and USA?
(6%)

 Both tariff and non-tariff barriers can have significant impacts on the volume of
trade between China and the USA.
o Tariff barriers: Imposing tariffs on goods coming from China would make
these goods more expensive for American consumers, potentially reducing
the demand for Chinese products. This could lead to a decrease in the
volume of trade between the two countries as Chinese exports become less
competitive in the US market. On the other hand, China may retaliate by
imposing tariffs on American goods, which could further reduce US
exports to China.

o Non-tariff barriers: Non-tariff barriers, such as regulations, standards, and

quotas, can also hinder the volume of trade between China and the USA.
These barriers can make it more difficult for Chinese goods to enter the
US market, leading to a decrease in trade. However, non-tariff barriers can
also be used strategically to protect domestic industries and ensure fair
competition.

o Overall, both tariff and non-tariff barriers have the potential to disrupt the
volume of trade between China and the USA. The imposition of these
barriers could lead to a decrease in trade between the two countries,
impacting businesses and consumers on both sides.

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2. Discuss the effect of tariff on a small and large countries. (4%)

o Tariffs can have different effects on small and large countries due to their
varying economic structures, resources and trading partners. Here are
some key points to consider:

 Small countries:
o Small countries are often more dependent on international trade for
economic growth and development. Therefore, tariffs imposed by larger
trading partners can have a significant impact on their economies.
o Small countries may not have as much bargaining power as larger
countries in negotiating trade agreements or retaliating against tariffs
imposed on them.
o Tariffs can lead to higher prices for imported goods, which can hurt
consumers in small countries who rely on affordable imports for their
daily needs.
o Small countries may also face challenges in diversifying their export
markets and reducing their dependence on a single trading partner, making
them more vulnerable to trade disruptions caused by tariffs.

 Large countries:
o Large countries typically have more diversified economies and a larger
domestic market, which can help mitigate the impact of tariffs
compared to small countries.
o Large countries may have more leverage in negotiations with trading
partners and can use tariffs strategically to protect domestic industries or
address trade imbalances.
o Tariffs imposed by large countries can have ripple effects on global supply
chains and trade flows, impacting smaller countries that are part of these
networks.
o Large countries may also face retaliation from trading partners if they
impose tariffs, leading to potential trade wars and disruptions in global
trade.

o In summary, while tariffs can affect both small and large countries, the
extent of the impact will vary based on the country's size, economic
structure, and ability to navigate the complex dynamics of international
trade.