Assume that the United States imports VCRs from South Korea at a price of $200 per unit and that these VCRs are subject to an import tariff of 20 percent.Also assume that U.S.components are used in the VCRs assembled by South Korea and that these components have a value of $100.Under the Offshore Assembly Provision of U.S.tariff policy,the price of an imported VCR to the U.S.consumer after the tariff has been levied is $220.

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The Offshore Assembly Provision allows U.S. components to be excluded from the tariff calculation, so the tariff is only applied to the remaining $200 of the VCR's value. 20% of $200 is $40, which results in a price of $240. However, since the U.S. components have a value of $100, the final price to the U.S. consumer is $240 - $100 = $140, which is lower than the original price of $200.

Assume That the United States Imports VCRs from South Korea