Suppose that the United States is a large country. In fall 2009, the United States imposed tariffs on tires imported from China. The deadweight losses of these tariffs were larger than the terms-of-trade gains to the U.S. economy. Who was better off and who was worse off as a result of these tariffs?
A) U.S. tire workers were better off; U.S. consumers and Chinese tire producers were worse off.
B) U.S. tire workers, U.S. consumers, and Chinese tire producers were all worse off.
C) U.S. tire workers and Chinese tire producers were better off; U.S. consumers were worse off.
D) U.S. tire workers and U.S. consumers were better off; Chinese tire producers were worse off.

Question

Quizplus · Accepted Answer

U.S. tire workers benefited from reduced competition, leading to potentially higher wages or job security. U.S. consumers faced higher prices due to the tariffs, making them worse off. Chinese tire producers suffered from reduced access to the U.S. market, negatively impacting their business.

Suppose That the United States Is a Large Country