International Economics - Assignment Sample
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Added on 2021-04-17
International Economics - Assignment Sample
Added on 2021-04-17
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Running head: INTERNATIONAL ECONOMICS International EconomicsName of the StudentName of the UniversityAuthor Note
INTERNATIONAL ECONOMICS 1The economy of a country as well as the overall global economic dynamics areconsiderably effected by the policy frameworks of the countries. With the increasingintegration of the economies across the globe, owing to the phenomena like Globalization,Liberalization of the commercial sectors of the economies across the world and technologicaland infrastructural innovations, trade and commerce linkages have developed significantlyamong different countries, thereby having considerable implications on the productive,industrial as well as the overall economic wellbeing of the countries specifically and of theworld as a whole. However, inter country trading activities may have positive as well as negativeimplications on the trading economies. On the positive side, while it gives rise to an overallcost effectiveness, efficiency and increase in the global production of different goods andservices, on the negative sides, the import export activities often threaten the domesticindustries to some extent. Keeping this into consideration, the essay tries to discuss theimplications of the recent policy of increasing import tariff on steel and aluminium in theUSA, as has been signed by the President of the country in March, 2018, on the overalleconomy of the country, taking reference of the news article titled “3 More Ways You MayNot Realize That Tariffs Will Hurt Jobs”, published in Forbes on March 6, 2018 (Sherman,2018). The concerned article by Erik Sherman, tries to discuss the overall economicimplications of the recent policy taken by the government of the USA. Under the frameworkof the said policy, the government has imposed 25% import tariff on steel and 10% on thealuminium resources which are imported by the country from all the trading partner countriesexcept Canada and Mexico. The main objective, as has been stated by the President of theUnited States of America, behind the implication of such a restricted trade policy, has beenthe agenda of the government of the country to protect the domestic producers of steel and
INTERNATIONAL ECONOMICS 2aluminium, who have been facing immense competition from the other global producers ofsteel and aluminium, in terms of competitive efficiency and price of the products. Thesespecifically had threatened the jobs in the metal producing industries in Pennsylvania and theiron mining industry in Minnesota. However, the impacts of the increased import tariff policy, though may be to someextent positive for the concerned industry operating in the domestic framework, may havegreater and more serious long term negative implications on the overall economic scenario ofthe country, which can be explained with the help of the pivotal concepts of price elasticity ofdemand of goods and services and that of production cost in economic theories. In terms of economic theories, the concept of price elasticity of demand refers to thedegree of responsiveness of the demand of any kind of commodity or service, due to a unitchange in the price levels of the commodity itself or of the related commodities or services("Essential Foundations of Economics", 2018). On the other hand, in economics, the cost ofproduction of any goods or services considerably depend on the price of the inputs requiredfor the same, which in turn reflects towards the efficiency and competitiveness in theproduction process of the commodities. In this context, as argues by the concerned article, there remains 80 jobs in differentcompanies in the USA, using steel or aluminium in their production to every single job inthose companies in the country which manufacture steel or aluminium. This indicatestowards the fact that steel and aluminium are heavily used as raw materials for the productionof different commodities in the country itself and an increase in the import tariff of the sameleading to an increase in the price, is expected to contribute significantly in increasing thecost of production of those companies, thereby decreasing their supply (Baumol & Blinder,2015).
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