Question

Steel producers in the United States observe that foreign sales of U.S. steel have drastically declined due to stringent trade policies adopted by foreign governments. The lobbying efforts of U.S. steel manufacturers induced the domestic government to introduce a tax on the import of steel and help stimulate the domestic sales of​ locally-produced steel.Which of the following examples describes a similar government​ policy?A.A tariff introduced by the Mexican government on tobacco imports from Brazil in retaliation for unfair treatment of Mexican tobacco exports to Brazil.B.A tariff imposed by the Sri Lankan government on the import of cotton textiles from China in order to protect domestic producers from foreign competition.C.A production subsidy provided by the South African government to stimulate domestic production of a​ high-technology good with positive spillover effects.D.A production subsidy provided by the Indian government to an industry that generates substantial employment opportunities.E.A tariff applied on toy imports from China in reaction to incidents that certain Chinese firms were unable to meet international safety standards.

Answer 1

Answer:

A. A tariff introduced by the Mexican government on tobacco imports from Brazil in retaliation for unfair treatment of Mexican tobacco exports to Brazil.

Explanation:

In the current scenario the Government of United States imposes taxes on import of steels as because the country was earning low revenue on foreign sales which were because of foreign trade policies of various other governments, and to assure revenue for domestic produce, imports were taxed.

Now, for this in statement A the Mexican Government imposes taxes on imports so that the unfair practice with exports of tobacco from Mexico do not create a problem in revenue of the country.

So to mitigate this scenario, the tobacoo import was taxed to assure domestic viability of the product.

Therefore, Mexican government follows the same strategy as of US Government.