Provide an example of government economic intervention designed to influence, regulate, or control trade for a specific
Question:
Provide an example of government economic intervention designed to influence, regulate, or control trade for a specific industry from one of the articles and summarize the government's reasons for the interventions.
Article
Now the future of that market is uncertain. This month, India imposed tariffs on almonds and 27 other U.S. products, including apples and walnuts, in retaliation for the United States ending India's preferential trade status. Those tariffs, which took effect June 16, come on top of significant tariffs China placed on almonds last year. California supplies 82% of the world's almonds and has almost 7,000 growers. The Almond Board of California estimates the industry generates about 104,000 jobs in the state, and the effect of the tariffs might ripple outward. India is such an important market that the almond board, whose members engage in market research and promotion overseas, has an office in New Delhi with a $6-million annual advertising budget. The tariffs add about 12 cents a pound for shelled almonds, a 20% increase, and about 4 cents a pound for those still in their shells, a rise of 17%. "That doesn't sound like a large number, but India was an important alternative to exports that would've gone into China," The hit from China's tariffs was much harder: That country imposed 50% tariffs on U.S. almonds in an escalating trade war. Exports to China decreased by about one-third, according to the almond board.
Bhupesh Gupta, a grocery store owner in New Delhi, believes higher prices will cut into sales. Although India is one of the world's largest consumer markets, it also has huge income disparities; and hundreds of millions of its people live in poverty. Even a small increase in cost could have a large ripple effect on what people buy.
Still, other sellers say Indians are so passionate about almonds that they will figure out a way to deal with price hikes.
"Anyone who needs almonds will buy no matter what the price," Delhi grocer Virender Kaneja said.
For California farmers, most immediately the tariffs mean planning difficulties as the harvest season approaches. For example, some may need to take on more of the shipping costs to make up for the increased prices, which will be negotiated in the contracts. The handlers then may absorb the increased costs or force growers to accept less for their crops.
To cope, growers may cut down on spending on equipment and fertilizer, perhaps making the choice to forgo replacing a tractor or other big-ticket item. If the Indian tariffs slow the flow of inventory, as happened after the Chinese tariffs, the capacity of storage facilities may be stretched. Countries may also turn to other producers, such as Australia, whose free-trade agreement with China enables it to replace U.S. almonds that now carry tariffs.
Ultimately, the almond industry will need to make inroads in other markets, which is no small task.
Taxes And Business Strategy A Planning Approach
ISBN: 9780132752671
5th Edition
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon