Projected Percent Change in Agricultural Production and Market Price under Tariff-Elimination Scenario
| Country | Percent change in total production | Percent change in market prices |
|---|---|---|
| Argentina | +0.90 | +1.02 |
| India | −1.34 | −1.98 |
| Russia | −3.48 | −0.99 |
| United States | +1.76 | +0.44 |
A tariff is a tax on imported goods intended to protect domestic producers of similar goods from international competition. Eliminating tariffs can lead to an influx of cheaper imported goods, lowering prices; in a place where domestic production is relatively expensive, this influx can suppress domestic production, as the country’s consumers favor more cheaply produced imported goods over domestically produced ones. A student consults a table showing projected changes in production and average market prices of agricultural commodities in four countries in a tariff-elimination scenario. Based on the data, the student claims that compared with India and Russia, agricultural production in Argentina and the United States is likely relatively inexpensive.