http://www.computerworld.com/article/2874816/us-to-impose-big-tariffs-on-china-and-taiwan-for-dumping-solar-panels-on-market.html
The U.S. ITC (International Trade Commission) and DOC (Department of Commerce) have found that China and Taiwan have been saturating the market for solar panels, and plan to impose a tariff of 70% on Chinese solar panels entering the U.S. A tariff ranging from 11.45% to 27.55% will be imposed on Taiwanese solar panels. In 2012, tariffs between 31% to 250% were imposed on Chinese solar panels, however, the current situation will be discussed.
Just to be clear, the product market is solar panels. The country of interest is the United States. The form of protectionism is a tariff. According to Google, a tariff is a tax or duty to be paid on a particular class of imports or exports.
Here's an illustration of the solar panel market in the U.S:*
*Diagram not to scale.
As we can see on the graph to the left, before the tariff on Chinese solar panels imported in the U.S, domestic suppliers supplied a quantity of Q1 at a price of PC (Price of Chinese solar panels before tariff). The Chinese supplied a quantity of Q2 solar panels at a price of PC.
Presumably due to dumping, China was able to supply solar panels at a price of PC, and as such had a lot of market power. According to Google, dumping is to send (goods unsaleable in the home market) to a foreign market for sale at a low price.
After a tariff of 70% on Chinese solar panels imported in the U.S, domestic suppliers supply a quantity of Q3 at a price of PC+tariff 70%. Chinese solar panel suppliers supply a quantity of Q4 at a price of PC+tariff 70%.
The winners in this situation are domestic producers in the U.S. and the U.S. government. The domestic producers win, because they are now able to supply an amount (Q3-Q1) more than before the imposition of the tariff. Their price goes from PC to PC+tariff 70%, increasing domestic producer's revenue from g to g+h+b+a. The government wins because the 70% tariff revenue will go to them. According to Google, revenue is income, especially when of an organization and of a substantial nature. The government will receive a tariff revenue of d+e.
The losers in this situation are the consumers and foreign producers. The consumers lose because solar panels became more expensive for them (from PC to PC+tariff 70%). Foreign producers lose because due to the 70% tariff, they are able to supply less. c+f represent the overall dead-weight loss in this situation. According to Wikipedia, deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is not achievable.
The U.S. ITC (International Trade Commission) and DOC (Department of Commerce) have found that China and Taiwan have been saturating the market for solar panels, and plan to impose a tariff of 70% on Chinese solar panels entering the U.S. A tariff ranging from 11.45% to 27.55% will be imposed on Taiwanese solar panels. In 2012, tariffs between 31% to 250% were imposed on Chinese solar panels, however, the current situation will be discussed.
Just to be clear, the product market is solar panels. The country of interest is the United States. The form of protectionism is a tariff. According to Google, a tariff is a tax or duty to be paid on a particular class of imports or exports.
Here's an illustration of the solar panel market in the U.S:*
*Diagram not to scale.
Presumably due to dumping, China was able to supply solar panels at a price of PC, and as such had a lot of market power. According to Google, dumping is to send (goods unsaleable in the home market) to a foreign market for sale at a low price.
After a tariff of 70% on Chinese solar panels imported in the U.S, domestic suppliers supply a quantity of Q3 at a price of PC+tariff 70%. Chinese solar panel suppliers supply a quantity of Q4 at a price of PC+tariff 70%.
The winners in this situation are domestic producers in the U.S. and the U.S. government. The domestic producers win, because they are now able to supply an amount (Q3-Q1) more than before the imposition of the tariff. Their price goes from PC to PC+tariff 70%, increasing domestic producer's revenue from g to g+h+b+a. The government wins because the 70% tariff revenue will go to them. According to Google, revenue is income, especially when of an organization and of a substantial nature. The government will receive a tariff revenue of d+e.
The losers in this situation are the consumers and foreign producers. The consumers lose because solar panels became more expensive for them (from PC to PC+tariff 70%). Foreign producers lose because due to the 70% tariff, they are able to supply less. c+f represent the overall dead-weight loss in this situation. According to Wikipedia, deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is not achievable.
