Reference no: EM133081167

France primarily exports agricultural products (including barley) while importing raw materials. Analyze the impact of the following event on France's terms of trade?

China has imposed a massive 80 percent tariff on Australian barley imports from today, saying the product has been imported against trade rules. The import tax will remain in place for five years and is expected to wipe out Australian sales into the lucrative market. Typically, at least half of Australia's barley exports would be bound for China, trade that was estimated to be worth $1.5 billion in 2018 but due to drought fell to $600 million in 2019. In a statement announcing the decision, China's Ministry of Commerce said its "domestic industry had suffered substantial damage". "The Ministry of Commerce conducted an investigation in strict accordance with China's relevant laws and regulations." It said the anti-dumping tariff would be 73.6 percent, while the anti-subsidy tariff would be 6.9 percent. Barley is considered one of Australia's top three agricultural exports to China but since 2018 has been at the center of dumping allegations.