Tariff on Chinese Solar Panels

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Introduction This critical thinking assignment will discuss an article concerning the US imposition of a tariff on Chinese solar panels. Under the Obama Administration, the federal trade panel found China responsible for the harm of the U.S. solar panel industry. China exports billions of dollars of solar products to the United States each year and will face tariffs of up to nearly 250 percent for a period of up to five years before reevaluation (Associated Press, 2012). The U.S. hopes that this will help to maintain a viable solar manufacturing base. The remainder of this assignment will discuss economic principles and explain how these tariffs could affect supply and demand. In this scenario, the U.S. government has imposed these tariffs in order to make Chinese solar products relatively costly. This increased prices on these products will in turn reduce the demand for Chinese made solar products in the United States. Also, with the tariffs and reduced supply, this will increase the equilibrium price of solar products in the United States. These increased prices will allow for more U.S. producers to compete in the U.S. solar products market. With this type of activity, the government is hopeful that this will help U.S. domestic producers become more competitive. And, hopefully this will create more jobs for U.S. workers. To illustrate this utilizing standard demand and supply, the graph at the end of this assignment can be viewed. The red line, noted as S1, indicates

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