One of the important events in world trade in recent months has been the escalation of a trade war between the USA and China. This trade war has increased tariffs in both the USA and in China. For concreteness, let's consider what happens to welfare in the USA economy from the USA imposing tariffs on Chinese goods. Are there any individuals that gain from the imposition of tariffs? If so, identify these individuals and explain why. Are there any individuals that lose from the imposition of tariffs? If so, identify these individuals and explain why. On aggregate, economists advocate that trade is welfare improving. If that is the case, why would politicians such as Trump advocate a policy that damages the economy and why would voters support such a politician?
One of the important events in world trade in recent months has been the escalation of a trade war between the USA and China. This trade war has increased tariffs in both the USA and in China. For concreteness, let's consider what happens to welfare in the USA economy from the USA imposing tariffs on Chinese goods.
Are there any individuals that gain from the imposition of tariffs? If so, identify these individuals and explain why.
Are there any individuals that lose from the imposition of tariffs? If so, identify these individuals and explain why. On aggregate, economists advocate that trade is welfare improving.
If that is the case, why would politicians such as Trump advocate a policy that damages the economy and why would voters support such a politician?
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