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Chapter 9: Problem 9

(Related to the Apply the Concept on page 312 ) According to an opinion column in the New York Times, because of attempts to make it more difficult to import catfish into the United States, many Vietnamese businesses that export catfish shifted from exporting to the United States to exporting to China. Briefly explain who gained and who lost as a result of this adjustment by Vietnamese businesses resulting from U.S. trade restrictions.

Short Answer

Expert verified
Vietnamese businesses faced initial challenges in adjusting to a new market but possibly benefitted from a potentially lesser restricted and large Chinese market. U.S. consumers are likely to have lost out due to reduced competition and potentially higher prices or lower availability of catfish. Chinese consumers gained from a larger variety of catfish and potentially lower prices due to increased competition, but local Chinese businesses faced more competition.

Step by step solution

01

Identify the Players Involved

Identify the participants who will be affected by the change in trade restrictions. In this exercise, they are the Vietnamese businesses exporting catfish, the U.S market, and the Chinese market.
02

Analyze the Effect on Vietnamese Exporters

Reflect on how the decision to shift exports from the United States to China affects Vietnamese businesses. They had to adapt to meet the demands and standards of a completely new market. This could pose initial challenges, but may also open up opportunities for new growth.
03

Analyze the Effect on the U.S. Market

Consider the consequences for the U.S market, especially consumers. Trade restrictions often lead to less competition and could possibly increase the prices for catfish in the United States. Consumers might face higher prices or lower product availability due to reduced imports.
04

Analyze the Effect on the Chinese Market

Assess how this change influences the Chinese market. The increase in catfish imports implies more choices for consumers and possibly lower prices due to increased competition. However, local businesses might face tougher competition from Vietnamese exporters.

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Most popular questions from this chapter

Does everyone gain from international trade? If not, explain which groups lose.

A columnist for bloomberg.com offered the following observation about economic legislation: "History shows that concentrated opposition beats diffuse support every time." a. Briefly explain what this columnist means. b. Does his observation apply to tariffs? Briefly explain.

A student makes the following argument: Tariffs on imports of foreign goods into the United States will cause the foreign companies to add the amount of the tariff to the prices they charge in the United States for those goods. Instead of putting a tariff on imported goods, we should ban importing them. Banning imported goods is better than putting tariffs on them because U.S. producers benefit from the reduced competition, and U.S. consumers don't have to pay the higher prices caused by tariffs. Briefly explain whether you agree with the student's reasoning.

The following data summarize the trade between Canada and the United States in 2015 and 2016 . In both years, the value of Canada's exports to the United States exceeded the value of U.S. exports to Canada. Can we conclude that foreign trade between the two countries benefited Canada more than it benefited the United States? Briefly explain.

An article in the New York Times quoted an economist as arguing that "global free trade and the European single market \(\ldots\) encourage countries to specialize in sectors where they enjoy comparative advantage. Germany's [comparative advantage] is in cars and machine tools." For the author's observation to be correct, must Germany be able to produce more cars and machine tools per hour worked than do France, Italy, Spain, and Germany's other trading partners? Briefly explain.
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