International Trade* On the Iron Range in Northern Minnesota, about 2,000 miners
ID: 1127025 • Letter: I
Question
International Trade*
On the Iron Range in Northern Minnesota, about 2,000 miners have been laid off over the last couple years. These miners worked in taconite mines. Taconite is used to make steel. Currently the world has an excess of steel capacity due primarily to the slowdown in the Chinese economy. As China has shifted away from building more industry and focused more on building a consumer economy, their need for steel has dropped dramatically. As a result, the demand for taconite and iron ore has also dropped. With the drop in demand, miners are laid off. The miners have been aggressively pushing the national legislators from Minnesota to increase tariffs on imported steel and set import quotas.
If you were a senator from Minnesota, would you support the increased trade barriers? Explain
*”In any case, cheap imports were a windfall for American consumers. Excluding food and energy, prices of goods have fallen almost every year since NAFTA. Clothes now cost the same as they did in 1986; furnishing a house is as cheap as it was 35 years ago. More trade brought more choice, too. Robert Lawrence and Lawrence Edwards, two economists, estimate that trade with China alone put $250 a year into the pocket of every American by 2008. The gains from cheap stuff flowed disproportionately to the less well-off, because the poor spend more of their incomes on goods than the rich.”
“Trade at what price,” The Economist, April 2-8, 2016
Explanation / Answer
As a senator from minnesota it is my duty to safeguard the interests of the local taconite miners, with imports of steel in this low demand duration the price of steel is decresing constantly, thus creating unemployement in the state. Thus, with the increase in tariffs on the imports, the steel prices are to be maintained at the certain rate, thus safeguarding the jobs and incomes of the mine workers. Although increasing tariffs and rising quotas are against the norms of globalization and world trade organisations, but also preventing the local market due to international volatility is necessary, so thus it is ethically justified.
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