Hey guys, just need some help on these questions... just the main points will be
ID: 1155816 • Letter: H
Question
Hey guys, just need some help on these questions... just the main points will be sufficient so that I can draft an essay.
Thanks!
The US has finally decided to impose trade tariffs on EU steel industry. Trump has also imposed tariffs on Canadian industries.
a) What can be the consequences for the EU firms?
b) What could be the consequences if the EU decides to go to a trade war?
c) Could you think of an alternative reaction from firms in the EU (without trade war)?
d) What could be the consequences of such alternative reaction?
Explanation / Answer
A) The exports from the EU to USA will get costlier. The exporters have to raise their prices in the US market and this may cause them with incresing prices of their goods compared to US manufactures and they may start losing their market share with more prices than US manufacturers.
B) If EU goes for a trade war and which is most likely scenario, then the most hurt prople will be the consumers of imported goods of both countries. The respective goverments will make their hefty money but the producers of both the countries will face challenges and it may lead to less employment in those sectors in coming years in both US and EU.
C) The alternative reaction can be of boycotting the US imported goods in the EU. Due to non buying and boycotting of US goods, the demand for their goods will decrease and ultimately it will help the domestic manufactureres to capture the market share of US products.
D) The alternate reaction will have much more bad consequences for US producers who will not be able to sell their products in the EU markets because no one will be willing to buy it. This boycutting of US goods will ultimately hit US producers so hard that they will have to force government to change its protectionism policy.