You own Steelco, a U.S.-based company that produces steel. You and other U.S.-based steel producers have been losing customers to Chinese producers, who charge a lower price for their steel. One of the other steel companies convinced the U.S. government to impose a tariff on Chinese steel and you want to identify how the tariff will impact how much steel you should produce.

Information:

• Chinese Steel
  • Current price of Chinese steel per metric ton = $600
  • Tariff = $500 added per metric ton of Chinese steel imported into the United States
  • Price of Chinese steel per metric ton after the tariff = $1,100
  • The current quantity of Chinese steel imported from China to the United States each year = 2 million metric tons
• All other U.S. steel producers
  • Without the tariff and with China producing 2 million metric tons of steel at $600 all other steel manufacturers would produce = 1 million metric tons of steel.
  • Without China in the market, it is estimated that all other U.S. steel manufacturers will produce 2.5 million metric tons of steel at an equilibrium price of $900/metric ton of steel.

Identify and explain who will make and lose money from this tariff.

Identify the people and organizations that will benefit from the tariff.

Identify the people and organizations that will suffer because of the tariff.

How will the tariff impact your company?