US Government Calls for Continued Tariffs on Solar Imports

EconEye Admin

4 years ago

The Solar Energy Industries Association (SEIA) estimates that tariffs on solar modules could decrease U.S. solar installations by half over last year. SEIA estimates that tariffs could put 70,000 US solar jobs at risk. A small U.S. solar module supplier supports the tariff.—pv-magazine.com

Answer the following questions to check your understanding of the story.

Why does the tariff decrease new solar installations in the United States?

The tariff ____________ the price of solar modules, which decreases ____________.

a) raises; imports and increases U.S. production by less than U.S. consumption increases

b) raises; imports and decreases the quantity bought by U.S. consumers

c) lowers; the incentive for U.S. producers to supply solar modules

d) lowers; imports and decreases U.S. production by more than U.S. consumption decreases

Wrong! - How does the price of solar modules change when a tariff is applied? Does the price rise or fall? How does a tariff change U.S. production and U.S. consumption?

Correct! - The tariff raises the price of solar modules to the world price plus tariff. At the higher price, U.S. production increases, U.S. consumption decreases, and imports decrease. With fewer solar modules available, solar installations in the United States decrease.

Who gains and who loses from the U.S. tariff on solar modules?

____________ of solar modules gain and ____________ lose.

a) U.S. producers; U.S. consumers

b) U.S. consumers; U.S. producers

c) Foreign producers; U.S. consumers

d) U.S. producers; foreign consumers

Wrong! - With a tariff, the price in the United States rises. How do U.S. producers of solar modules respond to the price change? Does producer surplus increase or decrease? How do U.S. consumers respond to the price change? Does consumer surplus increase or decrease?

Well Done! - With a tariff, the price in the United States rises. U.S. producers of solar modules increase production and receive a higher price. Producer surplus increases. U.S. consumers buy fewer solar modules at a higher price. Consumer surplus decreases.

Share this: