Archive fortrade

Donald Trump’s proposal to interfere free international trade: a 45% tariff on Chinese exports

When Donald Trump was being interviewed by the New York Times in January 2016, he said that he would add a 45 percent tariff on Chinese exports to the United States. However, are benefits from the market with this tariff more than those from market without tariff?

Chinese low-priced goods producers are indeed strong competitors for the local American producers. According to tariff shifting figure, the price of Chinese goods will be much larger so that it would be easier for American companies to compete. In addition, the money gone to government’s pocket can be used to create more manufacturing jobs for local people.

However, as Chinese goods becoming more expensive, low-income Americans who usually purchase these goods have to raise their consumption. In addition, according to the concept we learned in the beginning of this semester (If cost goes up, supply curve will shift up which causes price going up), prices of productions that are made from Chinese materials are also going to increase. Moreover, as the former journal states, China also holds a significant amount of stock of US Treasury bonds, so that China could push back from dumping those. If not, China can also impress a tariff in exports from the United states. Therefore, from the perspective of American residents and market participants, these disadvantages are more crucial than the benefit of inserting a 45% tariff on Chinese exports.

http://www.politifact.com/truth-o-meter/article/2016/jun/21/donald-trump-has-floated-big-tariffs-what-could-im/
http://www.nytimes.com/politics/first-draft/2016/01/07/donald-trump-says-he-favors-big-tariffs-on-chinese-exports/?_r=1

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Pacific trade deal cuts U.S. tariffs on light vehicles, sets new duty-free benchmark for local content

In this article, the expected effects of the Trans-Pacific Partnership, known as TPP, on the auto industry are described. TPP is a trade deal promoted by President Obama that would effect the NAFTA countries (USA, Canada, and Mexico) as well as Japan. It furthers the free-trade sentiment of NAFTA, and is currently being debated in the senate. If passed, the TPP would lower protectionist tariffs on many imported goods to America in exchange for the lowering of foreign tariffs on American exports. Specifically, this article talks about the elimination of the current 2.5% tariff on Japanese cars and 25% tariff on trucks that would be caused by ratification of TPP. Lobbyists who are lobbying to keep the current protectionist tariffs argue that the deal would not be good for American auto-workers, as imports of cars will undoubtably increase, whereas auto exports will likely remain stagnant. These protectionist tariffs, which have existed for more than 50 years, have boosted the US auto industry, allowing them to compete with an advantage against the cheaper-to-produce cars of Japan. Without the tariff, the Japanese car companies will increase their exports to America, increasing the supply of foreign cars in the US and lowering their prices as well. Although the American consumer would likely benefit from this trade agreement, as the prices of foreign cars will decrease, this will put strain on the US auto manufacturing industry, and layoffs will likely ensue as the US auto industry will lose some of its influence in the US and global economy.

 

http://www.autonews.com/article/20151005/GLOBAL/151009920/pacific-trade-deal-cuts-u.s.-tariffs-on-light-vehicles-sets-new-duty

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Ecuador economy shrinks 2.2pc in Q2 on lower non-oil exports

By: Domenica Romo

QUITO: Ecuador’s economy shrank 2.2 percent in the second quarter of 2016 from the same period the previous year, due to a stronger dollar that hit non-oil exports, the OPEC country’s central bank said on Monday.

Ecuador’s economy is dollarized and an appreciation of the US dollar this year has hit the Andean country’s exports of bananas, cocoa, flowers and tuna.

But the central bank said an increase in bank deposits, expectations of stronger consumption and a small recovery in oil prices would boost the economy of crude-producing Ecuador in the second half of the year.

“There are very positive expectations for the third and fourth quarter,” central bank President Diego Martinez told reporters in Quito, adding the bank may maintain its forecast of 1.7 percent economic expansion this year.

The oil sector grew 7.4 percent in the second quarter year-on-year, boosted by the ramp-up of new projects, Martinez added.

Ecuador suffered a 7.8-magnitude earthquake that killed more than 660 people in April.

Authorities had said that would likely knock 0.7 percent off gross domestic product this year, as $3.344 billion would be required for reconstruction.

http://www.brecorder.com/world/global-business-a-economy/321283-ecuador-economy-shrinks-22pc-in-q2-on-lower-non-oil-exports.html

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US Inches Toward Energy Independence in America

https://lms.dickinson.edu/pluginfile.php/915416/mod_resource/content/1/Krauss_US%20Inches%20Towards%20Energy%20Independence%20in%20America%20-%20The%20New%20York%20Times.pdf

This article (from 2012) talks about the rising prices of oil and how the rising prices has increased supply. Interestingly, consumption has decreased due to the high prices. What does that mean is being done with the oil so much more is being produced?

The article mentions that supply of AMERICAN oil has increased, and that the US is importing less of it. Certainly it is possible that more oil is being extracted now than ever, but we simply need to realize that this exists where we are pursuing a sort of national energy independence.

The article continues to question the way that President Obama had handled the pressing issue of climate change thus far. Sustainability is social, economic, and environmental, and it appears that the environmental aspect has been forgone for an increase in economic success among producers.

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Maersk previously Monopolized Trade; now Separating and Specializing

http://www.bbc.com/news/uk-scotland-scotland-business-37441698

Maersk being one of the largest shipping companies in the country has monopolized the shipping industry in Denmark for 11 years. The country worries that the company has decreased in trade. In order to counterbalance their decrees in trade, the 112 year old company is breaking up its  590 ships large and 500 smaller ships. The company currently  is the operator of one of the biggest gas field developments in the UK waters, along with monopolized production in  Denmark, Qatar, Kazakhstan, the US Gulf of Mexico and Algeria. Additionally, further development is currently underway in half a dozen other countries.

They have decided to split form their oil, drilling,  and offshore services, as profits in that division have come in far below their predicted expectations. The companies decision to separate businesses will allow them to focus on their most profitable markets. The company has decided to focus on its transport and logistics business. Their decision to shrink back from the global market will allow then to specialize in the areas where they can make the greatest profit.

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WSJ Coffee Substitute Prices

The Wall Street Journal  has an article about how the price of the one kind of coffee bean, robusta coffee beans, is increasing, and the price of another, the arabica coffee bean, is decreasing. As of right now the price of the robusta coffee been is less than the price of the arabica coffee bean. This means that the two prices of the coffee beans are growing closer, and therefore many producers of coffee and investors are closely watching and waiting for the prices to potentially be equal or pass each other. In that case, people will switch over to the arabica, as it would be the cheap of the two coffee beans.  This example shows the changing prices of substitutes (as we have talked about in class) and how it affects the supply and demand curves of each kind of coffee bean.

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China – Kenya gains from trade

Some news articles have suggested that China has moved into Kenya with a view to exploiting the country’s natural resources but without bringing benefits for Kenyans. This Brookings Institution blog post argues that Chinese firms are bringing new jobs and consumers goods to Kenya. The involvement of Chinese firms in many sectors has resulted in net gains from trade in foreign direct investment (FDI). By reducing barriers to domestic production, Kenya could help domestic firms play a larger role in domestic and international trade.

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