Economics – International trade and globalisation - Globalisation and trade restrictions | e-Consult

Impact on Country X:

• Domestic Steel Producers: The tariff protects domestic steel producers from competition from cheaper steel imports. This can lead to increased domestic production, higher profits for domestic firms, and potentially more jobs in the steel industry.
• Consumers in Country X: Consumers in Country X will likely face higher prices for steel products due to the tariff. This is because the tariff increases the cost of imported steel, which domestic producers pass on to consumers.
• Government Revenue: The government of Country X will generate revenue from the tariff on steel imports. This revenue can be used to fund public services.
• Retaliation: Country Y may retaliate by imposing tariffs on goods imported from Country X. This could harm other sectors of the X economy.

Impact on Country Y:

• Steel Producers in Country Y: Steel producers in Country Y will experience reduced demand for their steel exports to Country X. This could lead to lower profits, reduced production, and potential job losses.
• Consumers in Country Y: Consumers in Country Y may benefit from lower prices for goods that use steel, as domestic producers face less competition from Country X.

Overall: While the tariff benefits domestic steel producers and generates government revenue for Country X, it harms consumers in Country X and steel producers in Country Y. The potential for retaliation also poses a risk to the X economy.