Additional Application
Prior to 2001 Canada annually exported billions of board feet of lumber to the U.S.tariff-free.The two countries had followed an agreement in which there would be no restrictions on the lumber from Canadian companies.In March 2001 the agreement ended and in 2002 the U.S.imposed tariffs and duties on imported Canadian lumber.What were the effects of these changes and who gained and who lost?
The forestry workers of Canada were hurt.About 15,000 workers lost their jobs in British Columbia and many Canadian towns suffered from the loss of income from lumber sales and related industries.Exports to the U.S.fell from 14.7 billion board feet in 2000 to 20.9 million board feet in 2004.When the lumber prices rose in the U.S. ,the costs of production for home building firms increased.
The U.S.government has realized $3.5 billion from the tariffs and that is sitting in the Treasury awaiting resolution of legal disputes.Lumber companies in the U.S.have seen their prices rise with less competition.
James Thayer,"Soft Wood,Hard Dispute," The Weekly Standard,November 18,2005.Online
-According to this application about the U.S.imposing tariffs on lumber from Canada,the effects of the U.S.tariffs will ________ the price of lumber in the U.S.and ________ the quantity of imports from Canada.

Question

Quizplus · Accepted Answer

The imposition of tariffs on Canadian lumber by the US will increase the price of lumber in the US and decrease the quantity of imports from Canada. This is because Canadian lumber will become more expensive due to the added tariff costs, and US firms may seek alternative sources or reduce their demand for Canadian lumber.

Additional Application Prior to 2001 Canada Annually Exported Billions of Board Feet