How do higher tariffs on exports imposed by a country affect its trade with the United States?

• A. They increase imports from the United States by lowering domestic prices.
• B. They tend to decrease the country's exports to the United States, reducing overall trade volume.
• C. They increase the country's exports to the United States by making its goods more competitive.
• D. They have no effect on trade with the United States.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand what an export tariff is — it is a tax imposed by a country on goods that it sells to other countries, in this case, exports to the United States.
2. Step 2: Recognize that when a country imposes higher tariffs on its exports, the cost of those exported goods increases for buyers in the United States because exporters pass on some or all of the tariff cost.
3. Step 3: Analyze the effect of higher export tariffs on the competitiveness of the country's goods in the U.S. market — higher prices generally make goods less competitive compared to alternatives from other countries or domestic U.S. producers.
4. Step 4: Conclude that as a result of reduced competitiveness, the quantity of exports from the country to the United States tends to decrease, leading to a reduction in overall trade volume between the two countries.
5. Step 5: Summarize that higher export tariffs do not increase exports or imports; instead, they tend to reduce exports to the U.S. and thus reduce trade volume.