After the US imposed 25% tariffs on Chinese goods like furniture and footwear, imports of those goods from China fell sharply. Which outcome would confirm that the tariffs achieved their intended industrial policy goal - and which outcome actually materialized?

Question

BlackTom AI · Accepted Answer

Industrial policy’s objective was to boost US domestic production so that higher-cost foreign suppliers are replaced by domestic firms producing furniture and footwear.

1. Relevant concepts
- Tariff: a tax on imports raises the foreign-good price to domestic buyers by the tariff rate.  
- Import substitution vs. trade diversion: tariffs can either stimulate domestic production (import substitution) or cause buyers to switch to other foreign suppliers (trade diversion).  
- Relative prices and capacity: if non-Chinese suppliers can sell below the tariff-inflated Chinese price, imports will shift rather than domestic production expanding.

2. Step-by-step reasoning
- Suppose a Chinese good has world price P_c. A 25% tariff raises the price faced by US buyers to P_c × 1.25.  
- If suppliers in Vietnam, Mexico, India offer price P_o such that P_o < P_c × 1.25, then US buyers will switch to those suppliers.  
- Domestic producers will expand only if their marginal cost ≤ P_c × 1.25 and they have spare capacity / can invest quickly. If domestic firms face higher costs or cannot scale, they won’t fill the gap.

3. Intermediate calculation example
- Example: P_c = $100 → tariff raises to $125. If Vietnam sells at $110, US importers switch to Vietnam because $110 < $125. Domestic producer with cost $140 cannot compete, so production stays low.

4. Why the correct answer is correct
- The intended outcome (industrial policy goal) is that US domestic production rises to fill the gap. The actual observed outcome was trade diversion: imports from China fell but were largely replaced by imports from Vietnam, Mexico, and India; US domestic production did not substantially expand. That matches the logic above: alternative low-cost foreign suppliers filled demand.

5. Why other options are incorrect
- Option A: merely reducing US imports from China is not the industrial-policy goal; it’s a means, not the intended domestic production increase.  
- Option C: tariffs do not necessarily narrow the trade deficit; they can change bilateral flows but overall deficit depends on many factors.  
- Option D: the statement that China would lower its tariffs is wrong—China mostly retaliated rather than lowering barriers; retaliation is not the intended domestic-production outcome.

6. Conclusion
The intended outcome was higher US domestic production; the actual outcome was import diversion to Vietnam, Mexico, and India with little domestic expansion. This confirms the provided answer.

After the US imposed 25% tariffs on Chinese goods like furniture and footwear, imports of those goods from China fell sharply. Which outcome would confirm that the tariffs achieved their intended industrial policy goal - and which outcome actually materialized?Single choice

Similar Questions

The implementation and loading phase of the Database Life Cycle (DBLC) involves _____.

Which of the following parameters is used to determine the concentration of protein in a spectrophotometer?

What are the units of absorbance?

What is the concentration of protein in the stock solution of BSA used for the standard curve?

When dissolved in water, hydrogen bromide (HBr) forms hydrobromic acid. Determine the hydroxide ion concentration in a 4,500 mL solution containing 3.78 g hydrogen bromide; K = 1.00 x 10¯14.

UVA radiation has a wavelength of approximately 390. nm. What is the energy of a photon of this light? (Planck's constant is 6.626 x 10 − 34 J s)

A student wants to prepare exactly 350. mL of a 0.2750 M aqueous potassium nitrate solution. What mass of potassium nitrate (molar mass = 101.11 g/mol) must the student dissolve in the 350. mL of solution?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler