Protectionism Blog
In the article below by Chris Isidore , it talks about how Mexico imposed a valued $3 billion in tariffs on US exported goods, such as bourbon, different types of cheese, pork, apples, potatoes, and a variety of steel products. These tariffs cost between 15% and 25%, which could increase the prices of US exports by the percent they will have to pay in tariffs ( Isidore ). For simplicity purposes, I chose to model just the tariffs on apples that Mexico imposed on the US. If the Mexican government decides to impose a tariff of around 15-25% on imported apples from the US, that will cause S(world) to shift up to S(world) + tariff. Now the price of apples is at Pw + T. Further, since there is a price increase, quantity demanded falls from Q2 to Q4 (people don’t want to pay such high prices). This prompts domestic producers in Mexico to increase the production of apples to Q3 from Q1, which makes it so their revenue i...