International Trade Agreements
{"Image DocumentName": "International Trade Agreements", "Image ImageDescription": "Trade Creation. Assume there is a 20% tariff. After NAFTA, the U.S. will import from Mexico for  20, since it costs more to import from Asia ( 22.80) or to make it themselves ( 22). The U.S. clearly gains from the lower cost of the part, Mexico gains through exports to the U.S., and Asia is unaffected since it was not exporting at that tariff level anyway. Trade Diversion. Now suppose the tariff was 10% instead. Before NAFTA, the U.S. imported the part from Asia for   After NAFTA, it will import from Mexico at a price of  20. What about the U.S.? Although they gain  0.90 on each part, they lose  1.90 in tariff revenue from each import from Asia.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}