In 2007, European Union EU) negotiators have offered to cut tariffs for Latin American bananas to avoid ʺbanana wars.ʺ What are the effects of a cut in tariffs?

Question

Quizplus · Accepted Answer

A cut in tariffs would make it cheaper for Latin American banana producers to export their products to the EU, resulting in an increase in the quantity of bananas imported into the EU. This would not necessarily lead to an increase in price for consumers since a larger supply could result in lower prices due to increased competition. Tariff revenue would decrease rather than increase as tariffs are reduced. The quantity of bananas produced in the EU is unlikely to increase due to a cut in tariffs.

In 2007, European Union EU) Negotiators Have Offered to Cut