Statistics of Foreign Car Imports into the USA

Abstract
 American consumers take many factors into consideration when choosing a product. One of them being the origin of where a product is made. This case study will observe the statistical number of foreign car imports into the U.S.A during the years of 1969 to 2009. Careful examination will be made of the correlation between the year and the amount of foreign car imports. It will be determined if a precise projection will be possible with the present data.
Key terms: Scatter Plot, Least Square Lines, Linear Relationship, Imports
Is It Made in the U.S.A?
 It is uncertain who first coined the phrase “Made in the USA,” but the American Automotive Industry fully adopted the phrase and turned it into movement. Commercials from car manufacturers promote the idea of buying American made vehicles, and lead people to believe that made in the USA vehicles are superior to imported vehicles. However, that has not always been the case. There was once a time where foreign car imports dominated the US automobile industry due to their reliability and their cost effectiveness. In this study we will analyze data and determine if there was a distinguishable pattern in the number of foreign car imports in relationship to the year sold. (Mend pg. 482)

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Scatter Plot
To begin, data will be analyzed using a scatterplot for years 1969-1988. This data shows there is no discernible linear correlation among the year and the amount of foreign cars imported. This scatterplot gives us a unique visualization of the relationship between date and number of imports. There is a clear upward linear line that shows a gradual increase in the amount of cars per year with the occasional dip. (Mend pg. 485)
Relationship between X & Y
Least- Squares
Secondly, another way to analyze the data will be in the form of least-squares to predict the number of imported vehicles. The formula 1.1671 + 0.9087 is inputted into the program to make the proper calculations. The results show that there was a linear correlation between the year and the amount of imported vehicles. Numerical data given from 1969-1988 show an upward trend that exhibits a pattern of growth; clearly displaying a linear correlation. (Mend pg. 486)

Prediction
Thirdly, the program is used to forecast the number of vehicles that are to be imported for the years, 2007, 2008 and 2009 using 95% prediction intervals.  Applying the same formula used in the least-squares for the years 1969-1988, in theory the data would show substantial growth. However, that information is unreliable and there is a chance that those results will prove inaccurate. Many factors must be taken into consideration, and there is no way of knowing if those predictions will actually be valid. Other data models are better suited for these kinds of predictions. (Mend pg. 496)
Real Data
The real results from the 2007-2009 data prove that those previous predictions were inaccurate and confirms that the forecast from 1988-2009 were unreliable. This was largely due to the fact that between 1993 and 1999 there was a decrease in foreign car imports into the U.S.A.  A 40-year prediction proved unreliable due to changing trends in the market. After computing the data between 1969-2009, the results show an affect on the regression line. The standard error grew and there was a decline in the slope because of the length of time being calculated. The changes caused a significant difference in the plots and graphs.  (Mend pg. 489)
Residual Plot
There are better ways to analyze data from 1969-2009 than a scatter plot since it did not precisely display the data. The scatter plot was able to showcase minor changes in the data but enough to give a completely accurate presentation. A residual plot would be a better option because it shows detailed changes in import patterns that are not displayed in a scatterplot. On a residual plot the data flows differently because it is able to overlap to some degree and has greater flexibility in displaying information. (Mend pg. 403)

 In closing, there are a variety of ways to visually analyze statistical data. Different methods may prove better than others in certain situations and different factors should be taken into consideration. The “Made in the USA” slogan isn’t going away anytime soon despite of the large success that foreign imported vehicles are having. American car manufacturers have gained a large percentage of the market share since the 1970’s even with its ups and downs. Furthermore, the market for imported cars has changed significantly since 1969 and we will continue to see changes in trends in the automobile industry as time goes on.
References

Mendenhall, W., Beaver, R. J., & Beaver, B. M. (2013). Introduction to probability and statistics. Boston, MA: Cengage 

 

Issue of Tariffs on Sugar Imports in China

China sugar industry to obby government on extension on hefty tarrifs on sugar imports
The plan to request an extension of the tariffs was discussed at a meeting organized by the China Sugar Association on Thursday.
Beijing’s trade measures on sugar imports, set to expire on May 21, 2020, “have played an effective role in safeguarding the interest of the domestic industry, and promoting healthy and stable development of the sector,” said the draft document that was dated Sept. 5.
China’s domestic sugar sector has struggled to compete with foreign rivals due to higher production costs. Chinese white sugar prices CSRc1 also plunged in 2018, amid a global supply surplus, pushing many producers into the red.
The Guangxi Sugar Association, in China’s top producing region for the sweetener, will submit the application for the extension of the tariffs on behalf of the entire domestic sugar industry, according to the document.
A source familiar with the matter confirmed that the industry group is consulting lawyers and experts, and drafting the application to be submitted to the government.
It is not clear when the Guangxi association will submit the plan or what Beijing’s response will be, as other major sugar exporters continue to pressure China to drop the trade measure to curb imports.
“The safeguard measures are a very complicated issue. Application is still only an plan. It is not easy to extend (the measures),” said one of the sources who was briefed on the plan.
Separately, China Sugar Association will also look into the possibility of an anti-dumping and anti-subsidy investigation into imported sugar products, according to a second draft document discussed at the Thursday meeting.
Some sugar exporting countries and regions have exported sugar products at below cost prices, or with subsidies, which has damaged China’s domestic sugar industry, the document said.
The draft does not outline proposed tariff rates if the safeguard measures are extended.
China in May 2017 hit major exporting nations with hefty tariffs on sugar shipments after years of lobbying by domestic mills. Beijing started to levy extra tariffs on out-of-quota sugar imports from all origins last August.
China’s sugar industry plans to request the Chinese government to extend the 2017 hefty tariffs on sugar imports. Due to a global supply surplus in 2018, Chinese white sugar prices decreased drastically, which has negatively impacted many domestic producers. A tariff is defined as an import duty, a tax levied per unit on the price of imported goods and are considered the most common form of trade restriction. Tariffs are used to protect a domestic industry from competition (protective tariff) or to raise revenue for the government (a revenue tariff).

Figure 1, shows that under free trade, China accepts the world price Pw, where it produces quantity Q1 , demands Q4 ,and imports Q4 – Q1. With imposed tariffs from 2017, the price of imported goods rises to P w +T, causing the domestic price of goods to rise above the world price by the amount of the tariff, to P w +T.

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At P w +T, the domestic quantity supplied increases from Q1 to Q2, domestic quantity demanded falls from Q4 to Q3, and the quantity of imports falls to Q3 – Q2. The impact of the tariffs is negative on both the Chinese consumers and foreign producers. However, it is beneficial for domestic producers, as they receive a higher price, P w +T, and sell a larger quantity Q2(rather than Q1). The government also gains tariff revenues as per the yellow box. However, the decrease in consumption and the shift of production away from more efficient foreign producers, to more inefficient domestic producers indicate that there is an increase in misallocation of resources both domestically and globally (represented by the orange Deadweight loss triangles in figure 1).
 
Figure 2 shows that some countries, are producing more than their domestic consumption due to subsidies. Before the subsidy, domestic production is at Q1, domestic consumption is at Q2, and import are Q2 – Q1. The subsidy shifts the domestic supply curve from Sd to S ds. Hence, the new quantity of domestic production is Q3 which is greater than Q2. As the excess capacity produced, Q3 – Q2 cannot be absorbed by the local markets, it is dumped on international markets by the producers, i.e. sold at a price which is below the cost of production. The effect of dumping has dire consequences on the Chinese sugar industry, as local producers cannot  compete with these low prices. Dumping is considered ‘unfair’ by the World Trade Organization (WTO). This  organization promotes fair trade competition as one of its main functions.
Hence, it is highly recommended that China involves the WTO to investigate these low prices and resolve this issue, by imposing an anti-dumping tariffs in order to limit imports of the subsidized, or dumped goods.
Moreover, it is recommended that the sugar industry evaluates subsidies from the government. Subsidies in the case of trade protection are the payments per unit of sugar output granted by the government to domestic firms that compete with imports.

Figure 3 shows that under free trade, China produces Q1 of sugar, the quantity demanded is Q2. The excess demand is Q2 – Q1 will be catered to by imports. By granting subsidies (a determinant of supply) to the local producers, the domestic supply Sd will shift to S ds. The sugar domestic production moves from Q1 to Q3 and continue to sell at Pw. This will reduce the imports from Q2 – Q1 to Q2 – Q3, Thus, under this scenario, the consumption of sugar will remain unchanged at Q2, at price Pw.  Consumers will purchase more local sugar, which is beneficial  for the local economy in the short term. Therefore, in the long term, it will ensure a steady circular flow of economic activity. Hence, the domestic producers will sell locally at Pw (per unit), but they will receive Ps (per unit) as the government will subsidize their cost of production per unit. The production will increase from Q1 to Q3, which will benefit the producers in the short term. For the long term this shift of production from efficient to inefficient producers will affect negatively economies due to the misallocation of resources. Moreover, the downside of these subsidies in the short term, will have a negative effect on the government budget as the amount of the subsidy (Ps – Pw) multiplied by Q3 must be paid by tax revenues that could have been used in merit goods. Therefore, in the long term will allow an increase in domestic employment as the quantity produced expands from Q1 to Q3 keeping the consumption unaffected which is beneficial for the local economy.
References