Suppose that the U.S.imposes a countervailing duty of 10% on
Coated paper imported from China to offset alleged Chinese subsidies.
Suppose further that the U.S.dutyfree price of Chinese coated paper
Imports is $500 per 1,000 meter roll and that the price of an
Equivalent roll of U.S.made coated paper is $600 per 1,000 meter
Roll.What is the U.S.government's estimate of the dollar value of the
Chinese subsidies?

Question

Suppose that the U.S.imposes a countervailing duty of 10% on
Coated paper imported from China to offset alleged Chinese subsidies.
Suppose further that the U.S.duty­free price of Chinese coated paper
Imports is $500 per 1,000 meter roll and that the price of an
Equivalent roll of U.S.­made coated paper is $600 per 1,000 meter
Roll.What is the U.S.government's estimate of the dollar value of the
Chinese subsidies?

Quizplus · Accepted Answer

If the U.S. duty-free price of Chinese coated paper imports is $500 and the price of an equivalent roll of U.S.-made coated paper is $600, then the subsidy per roll is $100. Since the countervailing duty is 10% of the duty-free price, the estimated value of the Chinese subsidies is $10, which is $50 per 1,000 meter roll. Therefore, the correct answer is A.

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