A Game of Trade Chicken

Danielle Everton

Due: October 11, 2010

A Game of Trade Chicken

Why would the Chinese government choose to retaliate to U.S. subsidies of its chicken industry? Would this retaliation make Chinese consumers better off?

Chinese government would choose to retaliate because it would raise the prices of their food, and worsen their economy. This retaliation would not make Chinese consumers better off, it would hurt them because the cost would increase, and therefore everyone would lose.

Why are U.S. House of Representatives members calling for China to revalue the yen against the dollar?

Chinese must raise the value of their currency for the sake of the global economy recovery. They have an unfair trading advantage because it’s cheaper for labor, and cheaper to make products in their market.

Why does everyone lose by a trade war?

Everyone will lose in a trade war because all prices will rise. If the U.S. applies duties to the Chinese products that are imported into our company they will charge a higher duty to the products we export to their company. Therefore, the prices of products coming from China will rise, and the prices of products we sale in China will also rise. This will cause us to sell less exports, and Americans to pay more for the products they buy.

“We’re told that a full-scale trade war similar to the 1930s can’t break out again because everyone knows better.” What was the name of the U.S. tariffs imposed during the 1930s? Are these tariffs in part responsible for extending the length of the Great Depression?

Smoot-Hawley Tariff Act added to the collapse of global trade. This extended the length of the Great Depression because it raised the prices of products and increased the amount of money it took to make prices. Therefore, it contributed to companies shutting down because they could not afford operation expenses, caused unemployment to raise, and caused families not to be able to afford the products that were rising in...