Question

each) 2. Answer the following questions as briefly and precisely as possible. (5 points What are a. Trade war between China and the U.S. has been escalating in recent weeks. the main reasons for the trade war to start? Discuss at least two reasons b. Which countries (and groups within a country) most likely support international la standards? Explain why c. Explain why some countries prefer import quota instead of import tariff? d. Contrary to what trade theory predicts, some countries impose trade barriers like tariffs and quota. Discuss two reasons why these countries impose trade barriers.

Answer 1

(A) Reasons for US CHINA trade war:

• The imposition of tariffs by US is to punish Beijing for restricting US investment in China.
• " China has disrupted the international trading system through hidden subsidies, currency manipulation and, more recently, technology theft." as claimed by US.
• The U.S. trade deficit with China was $375 billion in 2017.
• US aimed at protectionist measures by China, especially its “Made in China 2025” programme —an initiative to transform China into an advanced manufacturing powerhouse.

(C) Import Quota:

          Restriction of import and limiting it to a fixed quantity. This means that imports will only upto a certain amount not more than that.

Import Tariff:

        This means charging money on the quantity imported. Usually it is fixed per unit.

This gives government a chance to earn revenue.

CONCLUSION:

Although tariff produces revenue but still some countries prefer quota because it wants to save its domestic industry. Even after high tariff some quantities are import thus to reduce capital outflow and save domestic industries such practices are used.

On a negative side it may also be used to give power to bureaucracy and allow certain people to earn profits.