CH7B_Trade Policy Tariffs, Quotas and others 国际贸易理论政策与 及应用英文版本课件.pptVIP

* Trade Policy: Tariffs, Quotas and others Module 7B 1. Overview Questions What are different types of tariffs? What happens to terms of trade when a small country imposes a tariff? a large country? What is the effective rate of protection? What is the optimal tariff rate? 2. Basics of Tariff tax on import or export ad valorem tariff: P = P* (1+t) specific tariff: P = P* + t Basics of Tariff Tariff structures can be quite complicated wristwatches with case of precious metal or of metal clad with precious metal: with mechanical display only, having no jewels or only one jewel in the movement MFN: 51c each +6.25% on the case strap, band or bracelet +5.3% on the battery Non-MFN: $2.25 each +45% on the case+80% on strap, band or bracelet +35% on the battery Basics of Tariff Tariff Rates in China, 1995 3. Welfare of Import Duty small nation: its TOT is given tariff has no effect on its TOT gain or loss? P Q D S P* P*+ t a b f c d e - Welfare of Import Duty large nation: tariff affects its TOT gain or loss? P Q D S P* P*+ t P* a b c e d f i g h - Welfare of Import Duty Effects of tariff consumption effect production effect trade effect revenue effect redistribution effect terms of trade effect - Welfare of Import Duty tariff=consumption tax+production subsidy e.g. $10 shirt, 50% tariff = P = $15, government collects $5 This is equivalent to a 50% consumption tax + 50% production subsidy - Welfare of Import Duty Optimal tariff the tariff rate that maximizes the welfare of the tariff-imposing nation what is the optimal tariff of a small nation? what is the optimal tariff of a large nation? Why U.S. does not impose the optimal tariff? - Welfare of Import Duty A country has both tariffs on its car imports and auto engine imports. The country produces cars using imported auto engine. As the pressure of trade liberalization rises, the country pledges to move toward freer trade by eliminating the tariff on engine imports. Evaluate the country’s policy. - Welfare of Import