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farm406
Let's start with a brief overview of the economics underlying
a tariff imposed on exported U.S. goods, similar to the
retaliatory tariffs placed by China. e figure below shows the
classic supply and demand diagram with the initial price (in
black) under "free trade" (it's not truly free, but it represents
the price before the retaliatory tariffs). At this price, U.S.
farmers produce a certain amount of food, with part of it sold
domestically and the rest exported. Aer the retaliatory tariffs,
the price drops (shown in red). As a result, U.S. farmers would
be worse off, indicated by the fact that they produce a lower
quantity and sell at a lower price, while U.S. consumers would
be somewhat beer off, because they would face lower prices
and increase their quantity demanded.
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