US: P* = 16 Q = 8 ROW: P* = 7 Q = 7 @$10 US Supply =5 US Demand = 1, Imports = 11 - 5 = 6 @$10 ROW Supply = 10 ROW Demand = 4, Exports = 10 - 4 = 6 Now consider the U.S. only and assume that the U.S. is a small country. If the U.S. imposes a tariff of $2.00/lb of sugar, what is the price that U.S consumers pay? How does trade (imports) change and what is U.S. government tariff revenue? How does the tariff affect the welfare of U.S. consumers and producers of sugar? What is the overall welfare impact US Price = World Price + Tariff = $10 + $2