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Trade War between China and the US

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Added on  2022-11-10

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This economics assignment discusses the impact of the trade war between China and the US on the prices of handbags and steel, consumer and producer surplus, and government revenue. It explains how the imposition of tariffs has affected the equilibrium price and quantity of handbags and steel in the US market, and how it has shifted the supply curve. The assignment also discusses the elasticity of demand for US-made cars and how it affects the price of cars in the market. The reference section includes sources on the tropical timber trade, world steel trade, and quantitative international economics.

Trade War between China and the US

   Added on 2022-11-10

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1
ECONOMICS ASSIGNMENT
TRADE WAR BETWEEN CHINA AND THE US
Trade War between China and the US_1
2
Contents
Question 1.1...............................................................................................................................3
Question 1.2...............................................................................................................................4
Reference....................................................................................................................................7
Trade War between China and the US_2
3
Question 1.1
Leather handbags exported from China are among the products that have been imposed with
high tariff in order to protect the domestic handbag producers of the US. Now, the market for
a handbag is a normal market with a downward sloping demand curve and upward sloping
supply curve. The equilibrium price for leather handbag in the US market is P0 which is
higher than the price of handbags in the Chinese market. The Chinese supply curve is
horizontal as any decrease in the price of handbags the supply will reduce to zero.
Figure 1: The import of handbags from the Chinese market
(Source: Presse, 2019)
Now as the US government has imposed a tariff on the handbags imported from china, the
effective price for the Chinese handbag has increased. Therefore the supply curve of China
has shifted upward equal to the value of the tariff imposed by the government of the US on
the handbags. P2 shows the increased price for handbag import from the market of China.
Trade War between China and the US_3

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