GEcon
Q2b
Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States?
Due to the violation of the NAFTA treat that opposed to letting Mexican truck enter the United States. Mexico has the rights to impose retaliatory tariffs to punish the United States as allowed for under NAFTA. The Mexican government in March, 2009 increased tariffs on 89 products, with a value of $2.4 billion. Among the states hit hardest by Mexico’s tariffs were California, Oregon, and Washington, which exported these products to Mexico.
It does not make economic sense regarding different aspects.
For firm, the production cost increases. First, higher transportation costs. Due to not letting Mexican trucks enter the United States, Mexican trucks stopped at the border, and goods had to be unloaded and reloaded onto American truck, a process that took time and cost money for both United State and Mexico. Second, heavy tariffs impose on the Imported good of United State. Tariffs ranged from 10 to 45 percent and covered a variety of products that included personal care, jewelry products, wine, almonds, pears, juices and so on. California is big exporter of agricultural products to Mexico was hot hard. Table grapes faced a 45% tariff. Wine, almonds, pears, juices, jewelry, personal hygiene products, etc. faced 20% tariffs
For firm, profit of some U.S. firms decreases because the selling prices of products increase. Since the tariffs decrease the supply of goods, quantity demanded decreased and quantity sold decreased. The revenue for US firm from exporting goods to Mexico decreased.
Sources: U.S. Department of Agriculture, Foreign Agricultural Service (2011)
According to the diagram about agricultural product, the amount of it has greatly decreased in the period facing tariffs.
For worker and customer, many worker in United State loss jobs. Due to heavy tariff, 25,600 jobs were
Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States?
Due to the violation of the NAFTA treat that opposed to letting Mexican truck enter the United States. Mexico has the rights to impose retaliatory tariffs to punish the United States as allowed for under NAFTA. The Mexican government in March, 2009 increased tariffs on 89 products, with a value of $2.4 billion. Among the states hit hardest by Mexico’s tariffs were California, Oregon, and Washington, which exported these products to Mexico.
It does not make economic sense regarding different aspects.
For firm, the production cost increases. First, higher transportation costs. Due to not letting Mexican trucks enter the United States, Mexican trucks stopped at the border, and goods had to be unloaded and reloaded onto American truck, a process that took time and cost money for both United State and Mexico. Second, heavy tariffs impose on the Imported good of United State. Tariffs ranged from 10 to 45 percent and covered a variety of products that included personal care, jewelry products, wine, almonds, pears, juices and so on. California is big exporter of agricultural products to Mexico was hot hard. Table grapes faced a 45% tariff. Wine, almonds, pears, juices, jewelry, personal hygiene products, etc. faced 20% tariffs
For firm, profit of some U.S. firms decreases because the selling prices of products increase. Since the tariffs decrease the supply of goods, quantity demanded decreased and quantity sold decreased. The revenue for US firm from exporting goods to Mexico decreased.
Sources: U.S. Department of Agriculture, Foreign Agricultural Service (2011)
According to the diagram about agricultural product, the amount of it has greatly decreased in the period facing tariffs.
For worker and customer, many worker in United State loss jobs. Due to heavy tariff, 25,600 jobs were