On March 8, 2018, President Trump used his authority granted under the
Trade Expansion Act of 1962 to impose a 25 percent tariff on steel
imports and a 10 percent tariff on aluminum imports, effective March
28, 2018. Initially, Canada, Mexico, and members of the European Union
were exempt from these tariffs, but this exemption was taken away on
June 1. Tariffs, or taxes on imported goods, are the most widely used
type of trade barrier and are often considered economically
inefficient. Do some research on these tariffs and then address the
following:
- What official reason was given for the implementation of these
tariffs?
- Who will receive the most benefit from these tariffs and who will
be harmed by them?
- Relate these tariffs to the economic principle of comparative
advantage and discuss what will happen to production and prices of
those products that use steel and aluminum.
- Explain why some American companies might be opposed to these
tariffs.
- What do you think will be the economic consequences of these
tariffs, both domestically and globally?
- Do you believe the implementation of these tariffs was a good idea?
Why or why not?
Sample Solution
