Discussion Board 3

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Southern New Hampshire University *

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INT 220

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Economics

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Jan 9, 2024

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An example of government economic intervention that was implemented to influence, regulate, or control trade for a specific industry can be seen in the almond industry. There is a trade war between the United States and China due to an attempt by President Trump to decrease the trade deficit; Chinese goods imported into the US in 2018 equaled 539 billion dollars versus the 120 billion dollars worth of goods that were imported into China in 2018 (Palumbo, 2019). Therefore, the U.S. is facing a trade deficit of 419 billion dollars. In order to combat this deficit, the tariffs were implemented in order to make foreign countries’ imports more expensive than domestic products. This would stimulate the U.S. economy and limit its dependencies on other nations (Palumbo, 2019). However, these heavy tariffs were not just placed on Chinese goods, but many other countries as well. One of these countries was India, the largest importer of U.S. grown almonds. As retaliation, India increased their tariffs on almonds being exported from the United States. This governmental intervention would impact different parties and organizations such as the almond growers in California and the poverty-stricken population in India. There also would be an impact to the prices of almonds. Prices of almonds would increase due to the tariffs, which would decrease profits from the growers, as well as make it more difficult for the people of India to afford them (Maldonado, 2019). Overall, businesses in the industry need to know that the tariffs in India on U.S. exports will be increased by 20% on shelled almonds, and that there will be a 17% increase on unshelled almonds (Maldonado, 2019). This will cause the prices of almonds to increase in India, which will cut into sales. With a potential loss of profits, growers may need to limit their spending and also be wary of their storage capacity in case the tariffs cause a decrease in the flow of inventory (Maldonado, 2019). Additionally, they need to be aware that because of the Chinese tariff on almonds. This tariff puts a

50% increase of taxes on imported almonds, which means that China and India (two of the biggest consumer markets for almonds from the U.S.) may begin to look for other means of importing their almonds. For example, Australia has a free- trade agreement with China, which means the two can trade without tariffs on their goods (Maldonado, 2019). Lastly, almond growers will need to make progress in other markets in order to safeguard their businesses (Maldonado, 2019). Address whether the government accomplished its goals for the economic interventions and describe any unintended consequences of the government intervention. I do think that the U.S. government accomplished some of its goals, in terms of decreasing the trade deficit amongst China. It is important to have a nation that is minimally dependent on other countries. By imposing the tariffs on imported goods, Americans are more likely to buy American made products that are either the same price or less expensive than the foreign goods. However, I do believe that there are unintended consequences that arise due to the governmental intervention. For example, there can be many different entities that are affected than just the consumers and producers. Many stakeholders within both India and the U.S. will face adverse effects such as losses and difficulty acclimatizing to the volatile market dynamics. Supply chain issues can also arise from this governmental intervention.

References Maldonado, S. (2019, June 27). Trade tensions with India and China put california almond growers at risk . LA Times. https://www.latimes.com/business/la-fi-almonds-california- tariffs-india-china-20190627-story.html Palumbo, D., & Da Costa, A. N. (2019, May 10). Trade war: US-China Trade Battle in charts . BBC News. https://www.bbc.com/news/business-48196495

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