1. The article Trump's Tariffs Couldn't Save the California Olive Industry appeared on the Bloomberg news website on March 17, 2023. The article discusses the imposition of tariffs by the United States on the importation of table olives from Spain. Under the assumption that the US is a large country and Spain is the only exporter of table olives, provide an explanation of how the import tariff will affect US producers of table olives. (This will follow the analysis of an import tariff by a large country deve10ped in lecture). The article mentions that the reduction in imports from Spain was offset, at least to some degree, by increased exports from Greece (not subject to a tariff) to the US. Make the following assumptions. 1. The US is a large country. 2. Exports are available from both Spain and Greece. 3. Spain is a lower cost country than Greece. (The graph of X8319Blin lies below X3Grcccc)_ 4. With free trade (no tariffs) the supply of exports to the US market will be the horizontal sum of X 38931\" and X S Groom. Free Trade: Show how the price and volume of trade is determined when no tariffs are placed on imports of table olives. Your analysis should identify the source of imports. Taris on Imports from Spain: Consider the imposition of tariffs on tables olives on imports from Spain but not Greece. Show how price and volume of trade is determined and identify the source of imports. Explain whether the predictions of your model regarding source of imports is consistent with the statement in the article. Discuss the impact on US producers when imports from one country are substituted by imports from another country. The withering away of Califomia's olive industry is a case study in how protectionist policies can backre, creating losers on both sidessomething to consider as the US and European Union gear up for a new subsidies race centered on semiconductors and electric vehicles. Olives have been growing in California since the 18th century, when Spanish missionaries planted groves alongside the 21 Catholic missions stretching from San Diego to San Francisco. Today, most of the cultivation is centered in the Central Valley, a 400-mile stretch of fertile land between the Pacic coast and the Sierra Nevada mountain range that's the source of almost half of all fruits, vegetables and nuts grown in the US. In recent years, it's become clear that Golden State producers of table olivesthe kind used as toppings for pizzas and saladscan't compete with low-priced imports from Spain, the world's largest olive producer. US ofcials allege that the Spanish government offers trade-distorting subsidies to farmers, who then sell olives in the US at below-market prices. California producers also say Spanish growers have been able to tap state aid to nance a shift to highdensity groves, which can be quickly harvested with machines that shake olives from their branches. It's a capital-intensive switch that requires growers to uproot old trees and plant new ones in tighter configurations that can take as long as seven years to reach commercial production. A decade ago, researchers at the University of California at Davis warned that if the state's table olive industry didn't upgrade to machine harvesting, \"it is only a matter of time before table olives are no longer produced in California.\" Cost pressures on California growers are compounded by rising wages, decades of drought and stiff water restrictions, which are forcing many family farms to uproot their trees and switch to more lucrative crops like almonds and walnuts. \"As the industry becomes more stressed and the profit margins become tighter, you will see a departure from table olives to other crops or solar farms,\" says Bart Hill, a second-generation olive grower in Bakerseld. \"I'd hate to think of putting solar panels on such beautiful, fertile soil in the best climate in the world.\" About two-thirds of California's table olive acreage has disappeared over the past 20 years, falling to 12,000 acres in 2022 from 36,000 in 2003, according to the US Department of Agriculture. In comparison, Spain boasts more than 6.7 million acres of olive groves, of which 500,000 are dedicated to growing table olives. California Table Olive Bearing Acreage 45k Tariff imposed on table olive 30 imports 15 O 2004 '06 '08 '10 '12 '14 '16 '18 '20 2022 Source: US Department of Agriculture Relief for the California's oil growers came in 2018 when Trump imposed an average 35.5% tariff rate on US imports of Spanish table olives, which totaled almost $70 million annually at the time. The effect of the dutiesiwhich Europe viewed as a slap in the face from a long standing allyiwas immediate, with shipments from Spain plunging 72% in the rst two months the tariffs were in place, according to the European Commission. \"The olives dispute was small but very important for Spain,\" says Cecilia Malmstrom, who was EU trade commissioner at the time. \"We always saw it as another example of policies that were creating tensions in the US and EU trade relationship.\" The US tariffs came after the two remaining American processors of ripe olivesBellCarter Foods Inc. and the Musco Family Olive Co.lobbied the Trump administration, arguing that Spain's subsidized olives were irreparably harming US producers. \"The pricing was well below what we could offer in California,\" says Tim Carter, the former chief executive ofcer of BellCarter Foods. While Trump's tariffs initially helped California growers preserve some market share, the trade conflict soon spiraled out of control and raised costs for table olive producers on both sides of the Atlantic. It also created an opening for Greek exporters of table olives, who quickly filled the market gap left by the falloff in Spanish imports. First, farmers in Spain persuaded the EU to file a complaint at the Geneva-based World Trade Organization, which largely ruled in the EU's favor. Then Trump hiked Spanish olive tariffs by an additional 25% again in 2019 as part of a transatlantic trade dispute over subsidies to aircraft makers Boeing Co. and Airbus SE. In response, Europe struck back with its own tariffs on tens of billions of dollars' worth of American goods-including California table olives. An olive grove in Cordoba, Spain. Photographer: Angel Garcia/Bloomberg When Joe Biden assumed the presidency in 2021, he shelved tariffs on transatlantic trade worth $11.5 billion and paused the Boeing-Airbus dispute as part of a broader effort to normalize trade relations with the EU. But the US duties on olives have remained in place, though they've been lowered slightly, to 28.4%, because US officials say Spain is still subsidizing growers, who are dumping olives on the US market. "The attitude of the Biden government, which is the same as that of the Trump government, does not help good relations with Spain or the EU at all," says Antonio de Mora, the secretary general of the Spanish Association of Table Olive Exporters & Industrialists.The fracas over table olives, which covers less than 0.01% of total transatlantic trade ows, is emblematic of the quandaries Biden faces: As his administration tries to \"friendshore\" supply chains away from China and Russia and toward US allies in Europe, it's also attempting to halt or even reverse the loss of American jobs caused by decades of trade liberalization. \"This case is not particularly helpful for Biden's transatlantic reset,\" says Malmstrom, who's now a senior fellow at the Washington-based Peterson Institute for International Economics. Trump once said that \"trade wars are good and easy to win,\" but the real winners in the olives dispute were lobbyists and trade lawyers on both sides of the Atlantic. Spanish growers acknowledge they paid more than $8.5 million in legal fees to argue their case before regulators in Washington and WTO panelists in Geneva