Figure 9.6 The Winners and Losers from a Tariff The world price of a T-shirt is $5. With free trade, 1 the United States imports 40 million T-shirts. 2 Consumer surplus, 3 producer surplus, and 4 the gains from free international trade are as large as possible. 5 A tariff of $2 per T-shirt raises the price of a T-shirt to $7. 6 The quantity imported decreases. 7 Consumer surplus shrinks by the areas B, C, and D.

8 Producer surplus expands by area B. 9 The government’s tariff revenue is area C, and 10 a deadweight loss equal to the two areas D is created.

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