Answer to Question #91902 in Macroeconomics for Lerato

Question

Who would benefit and who would lose if the south African government doubled the tariff on imported frozen chicken leg quarters from Brazil?

Answer 1

If the South African government doubles the tariff for imported frozen chicken legs from Brazil, then there will be a rise in price of imported chicken legs, and therefore a rise in prices for chicken legs of domestic production. Brazil will lose as most of the consumers would buy cheap chicken legs from the local producers. The introduction of a double tariff and the subsequent increase in prices leads to the fact that domestic production of chicken legs increases, domestic consumption decreases, and imports decrease. South Africa will benefit since the introduction of the customs tariff on imports is in the country’s interests to benefit domestic producers and also gain revenue from the customs tariff which enhances economic development.