• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Economics Article Commentary - The article deals with the raise of a tariff on Chinese solar panels and their impacts on the market, as well as general tensions between the U.S. and China.

Extracts from this document...

Introduction

COMMENTARY COVERSHEET Candidate Name André Libeaux Candidate Number 001122-025 Economics Commentary Number 3 Title of Extract US commerce department brings heavy tariffs against Chinese solar panels Source of Extract Guardian Date of Extract 17/5/12 Word Count 730 Date Commentary Written 25/12/12 Sections of the Syllabus to which 3 Commentary Refers Bibliography “Economics” Blink&Dorton ________________ US commerce department brings heavy tariffs against Chinese solar panels Investigation finds China kept prices low with subsidies, but some in US warn tariff will slow adoption of solar energy The Obama administration imposed heavy tariffs on Chinese solar panels on Thursday, after finding that China is flooding the market with government subsidised products. The preliminary decision, that China had dumped solar products on the US for less than the cost of manufacture, will result in tariffs of between 31% and 250% on Chinese imports. It was seen on Thursday as a mixed blessing. US solar panel makers, who brought the original complaint, are expected to benefit. But the tariffs, by forcing up prices, are expected to slow the adoption of solar power more generally. There were also fears the move could lead to a broader US-Chinese trade war. In its decision, the US commerce department said it would impose tariffs of about 31% on about 60 Chinese solar panel exporters which participated in the investigation, including Wuxi Suntech and Trina Solar. ...read more.

Middle

The article deals with the raise of a tariff on Chinese solar panels and their impacts on the market, as well as general tensions between the U.S. and China. A trade war is implied to be on the rise. The situation is, ?that China had dumped solar products on the US for less than the cost of manufacture, will result in tariffs of between 31% and 250% on Chinese imports.?(line 5-6) . The industry in the U.S. is protected because of ?? the advantage they have had as a result of their illegal trade practices," (line 24-25) As shown in Diagram 1, price increases from P to P+t, The share of the market from domestic producers increases from Q1 to Q3, shown by revenue g to a+b+c+g+h and the imported share decreases from Q2Q3 to Q3Q4 shown by a revenue decrease from h+i+j+k to i+j. US Government revenue of this tariff is d+e and there is a dead-weight loss of welfare, as consumer surplus f is lost. World efficiency decreases by c, due to less efficient competitors producing a greater share of the Quantity supplied to the market, which is a misallocation of resources, hence undesirable. ...read more.

Conclusion

factor, both spend their resources on this trade war, which is simply inefficiency and a misallocation of resources, hence a big threat to sustainability, because this trade war could in several years not only be about solar panels but a whole range of products, which affects a great number of people, seeing that the U.S. and China are the two biggest economies. This trade war is further reinforced by China wanting ?to take America to the international trade court or WTO? (line 35). So rather than producing what both countries have comparative advantages in, the U.S. commerce department tries to save a ?sunset? industry, as the demand in Europe declines and Chinese competitors produce at prices lower than the manufacturing cost. Concluding, both governments work against with counter-veiling protectionist measures, which must be critically evaluated as they slow down the economy. Although the U.S. can save more market share for them by using the measures, a lot of efficiency is lost and the resources could be allocated into sectors with comparative advantage, hence a problem of economic structure, as inefficient producers should close down. More importantly it is a threat to environmental sustainability, as it hinders the adoption of ?green energy? with higher prices,?precisely at the moment that solar power is becoming competitive,". (line 37-38). ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Extended Essay Economics

    These situations significantly increase the firm's costs and have led it to incur losses. V. Conclusion CADIVI complicates the currency exchange market in several ways. The ability to exchange Bolivares into dollars at the official exchange rate allows a firm to significantly reduce their costs.

  2. IB Economics IA Commentary. Title of Extract: EU imposes dumping tariffs on Chinese ...

    Facing pressure from the European Ceramic Tile Manufacturers' Federation (CET), an organization representing numerous European tile firms who suffer from cheap competition with Chinese firms, the Commission imposed these duties to drive up the

  1. Economics Extended Essay - To what extent has the market for paintings in South ...

    Effect On Contemporary Artists: Contemporary artists are artists who have been in the market for sometime but not so long that they are master artists. The collated data for these artists is shown below: Time Period Average Price Number of paintings Displayed at Exhibition Number Of Paintings Sold January-October 2008

  2. Economics IA Commentary - Market Failure. Household energy bills will increase by 50 ...

    Its scale makes it even more important that this money is used in the most efficient way possible." Warning about need to gain public support for measures to combat climate change, his report says that "raising taxation through energy bills, rather than, say, using income tax, is relatively regressive, because

  1. Demand-deficient Unemployment article commentary.

    Despite this, for the workers a low minimum wage which does not keep pace with inflation, decreasing the real value of money, may affect their standards of living. Also, the low minimum wage could 'affect the economy and jobs by depressing confidence and the purchasing power of the low-paid workers.'4

  2. Rising unemployment and inflation commentary. The above article Bah Humbug talks about the ...

    not be able to deal with the already ever-existing Natural unemployment like seasonal. The government of any country is solely responsible for the functioning of the economy and hence overcoming reduction in inflation is one of its main objectives. The presence of a rising inflation in an economy brings with it many externalities like: 1.

  1. 15 Historical Economic Questions on Mercatilism and the Development of European Countries.

    This reason is the implementation of knowledge towards accumulation of wealth; this isn?t possible with communist ideals. This arguably takes from the motivations of the entrepreneur and levels the playing field for everybody under the system. A distinction of classes will disappear with the communist structure, as classes no longer exist.

  2. Macroeconomics Article Commentary. The worst problems surrounding youth unemployment in Scotland are not ...

    At Qe, the labor market is at equilibrium as the demand for labor matches the supply. Though, in this case, the supply of labor has decreased causing the AS curve to shift leftwards. This shows that the market is not running at full efficiency as production is being hindered.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work