Ib Economics Commentary
China to put duties on US chicken imports The article centers around anti-dumping tariffs on United States chicken imports. The duties were introduced by China, which claims that American poultry firms are exporting the meat at unfairly low prices. The effects are growing trade disputes and accuses between the two countries. Tariffs can be explained as a tax levied on imported goods. Tariffs are a form of protectionism. Tariffs can be ad valorem (percentage of the value of the good that is being imported) or specific (tax based on a measurable unit as tonnes ). Protectionism is any form of action taken by a country to decrease the ratio of domestic goods to imported goods. The aim of protectionism is to make domestic goods more competitive.
The article mentions that the demand for chicken wings and feet is higher in China than in United States. American poultry companies, knowing that chickens are considered to be delicacies in China, prefer to sell them on the Chinese market. The graph above explains the situation. Since the poultry is not so popular in America as in China, the demand for chickens in America is labelled as D US and the demand in China for chickens as D China. When American poultry companies are operating at point A, they can only sell Q0 for the price P0. When they decided
to export their goods to China and started operating at point B, they automatically increased the production from Q0 to Q1. Also the price has moved upwards as the Chinese demand is higher. Hence, there is no wonder why US companies prefer to sell their goods abroad.
China in order to protect the domestic market sets tariffs on imported American poultry. The graphs above and on the next page present how the situation looks like before and after setting tariffs. Earlier US could supplied goods from Q1 to Q2 at a price P1, while the domestic producers were able to sell Q1tonnes per year. After the tariff from P1 to P2 was levied on imported poultry, the imports decreased
The article mentions that the demand for chicken wings and feet is higher in China than in United States. American poultry companies, knowing that chickens are considered to be delicacies in China, prefer to sell them on the Chinese market. The graph above explains the situation. Since the poultry is not so popular in America as in China, the demand for chickens in America is labelled as D US and the demand in China for chickens as D China. When American poultry companies are operating at point A, they can only sell Q0 for the price P0. When they decided
to export their goods to China and started operating at point B, they automatically increased the production from Q0 to Q1. Also the price has moved upwards as the Chinese demand is higher. Hence, there is no wonder why US companies prefer to sell their goods abroad.
China in order to protect the domestic market sets tariffs on imported American poultry. The graphs above and on the next page present how the situation looks like before and after setting tariffs. Earlier US could supplied goods from Q1 to Q2 at a price P1, while the domestic producers were able to sell Q1tonnes per year. After the tariff from P1 to P2 was levied on imported poultry, the imports decreased