Trade Penalties Squeeze US Dry Cleaners The article, “Trade Penalties Squeeze US Dry Cleaners “, talks about the effect the tariff that the US government is applying on imported wire hangers, and its repercussions on the American dry cleaners and suppliers. The article focuses on showing the reader how tariffs work and who are the winners and the losers. Based on Macroeconomics Fourth edition by Anthony O’Brien and R. Hubbard, I will explain how tariffs operate and who benefits from them. The tariff on the Vietnamese hangers what it does is decreases the profit of US Cleaners or suppliers and reduces the efficiency. By creating the tariff, the market is no longer at equilibrium and creates a shortage, reducing the amount of the consumer surplus and creates what is called a deadweight loss, “The reduction in economic surplus resulting from a market no longer being in competitive equilibrium.” (Hubbard, O’Brien 108). The Vietnamese companies that supply the hangers aren’t affected by the tariff but the US Cleaners and suppliers lead them into purchasing wire hangers from local distributers. Even though this helps reduce the amount of our net exports, it still reduces the margin of profit for owners of US cleaners and suppliers which causes them to increase their prices to make sure they are still making the same margin as it was before the tariff. For tariffs everybody either wins or loses. The winners are the US government, because they generate revenue from the tariff placed
