I.e. the bill does not magic up $300m worth of value, so without the bill, the $300m would have been used on something else. If so, what? And how much value do we place on that?
I think the $300m are gains from trade, and the US would also presumably benefit (although not as much). So, in a sense, yes, it would “magic up” $300m worth of value, because the status quo is the prevention of mutually beneficial trades.
I think the $300m comes from an article in the Hindu Business Line, which says that “Trump’s decision [to end preferential trade status for India] will cost American businesses over USD 300 million in additional tariffs every year.” So this suggests that there is indeed an opportunity cost to the $300m; firstly because the $300m hasn’t been magicked up, the $300m could have been spent on something else. This opportunity cost doesn’t seem so bad, but another opportunity cost is that without the preferential treatment, the US may trade with other nations. We don’t know who those other nations are, so the value of the lost trade is not clear.
The $300m is the efficiency loss incurred by the U.S. which will need to either accept increased costs due to the new tariffs that result from the end of the Indian GSP status or pay more for the former imports from India by manufacturing them domestically (more expensively).
However, it is possible that other nations export to the U.S. in lieu of India. However, because these countries do not enjoy Indian efficiency, the $300,000 will be paid extra.
Yet, my argument neglects that other countries may be able to grow their industries and reach Indian efficiency. This may be possible especially for close competitors to India (maybe Indonesia?), who thus enjoy effective preferential market access.
I think the $300m are gains from trade, and the US would also presumably benefit (although not as much). So, in a sense, yes, it would “magic up” $300m worth of value, because the status quo is the prevention of mutually beneficial trades.
I think the $300m comes from an article in the Hindu Business Line, which says that “Trump’s decision [to end preferential trade status for India] will cost American businesses over USD 300 million in additional tariffs every year.” So this suggests that there is indeed an opportunity cost to the $300m; firstly because the $300m hasn’t been magicked up, the $300m could have been spent on something else. This opportunity cost doesn’t seem so bad, but another opportunity cost is that without the preferential treatment, the US may trade with other nations. We don’t know who those other nations are, so the value of the lost trade is not clear.
Hello!
Sanjay, for (1), see my reply to Matt above.
The $300m is the efficiency loss incurred by the U.S. which will need to either accept increased costs due to the new tariffs that result from the end of the Indian GSP status or pay more for the former imports from India by manufacturing them domestically (more expensively).
However, it is possible that other nations export to the U.S. in lieu of India. However, because these countries do not enjoy Indian efficiency, the $300,000 will be paid extra.
Yet, my argument neglects that other countries may be able to grow their industries and reach Indian efficiency. This may be possible especially for close competitors to India (maybe Indonesia?), who thus enjoy effective preferential market access.