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Five countries engage in trade with each other. Each country levies import tariffs on the other countries. The import tariff levied by Country X on Country Y is calculated by multiplying the corresponding tariff percentage with the total imports of Country X from Country Y.
The radar chart below depicts different import tariff percentages charged by each of the five countries on the others. For example, US (the blue line in the chart) charges 20%, 40%, 30%, and 30% import tariff percentages on imports from France, India, Japan, and UK, respectively. The bar chart depicts the import tariffs levied by each county on other countries. For example, US charged import tariff of 3 billion USD on UK.
Assume that imports from one country to another equals the exports from the latter to the former.
The trade surplus of Country X with Country Y is defined as follows.
Trade surplus = Exports from Country X to Country Y - Imports to Country X from Country Y.
A negative trade surplus is called trade deficit.
The values given in both charts together are represented in the table below, with the import tariff percentages charged by each of the five countries on the others represented as a percentage, and the import tariffs levied by each country on other countries are represented in brackets(in billion USD).
For France - Trade surplus/trade deficit of France with the US = Exports from France to the US - Imports from the US to France
Exports by France to the US would be the same as the US's imports from France.
The US is charging a 20% tariff on India, and the tariff imposed by the US on France equals 6 billion USD.
So, 20% of the imports equals 6 billion USD.
$$\dfrac{20}{100}\ \times\ $$ Imports $$=\ 6$$
Imports $$=\ 6\ \times\ 5\ =\ 30$$ billion USD.
The value of imports by the US from France = France's export to the US = 30 billion USD.
Imports by France from the US can be calculated as,
France is charging a 30% tariff on the US, and the tariff imposed by France on the US equals 5.5 billion USD.
So, 30% of the imports equals 5.5 billion USD.
$$\dfrac{30}{100}\ \times\ $$ Imports $$=\ 5.5$$
Imports $$=\ 5.5\ \times\ 3.34\ =\ 18.34$$ billion USD.
The value of imports by France from the US = 18.34 billion USD.
We can clearly see that the Imports are less than the exports for France from the US. So, the trade surplus can be calculated as,
Trade surplus = Exports from France to the US - Imports from France to the US = 30 billion USD - 18.34 billion USD = 11.67 billion USD.
So, there is a surplus of 11.67 billion USD.
For the UK - The Trade surplus/trade deficit of the UK with the US = Exports from the UK to the US - Imports from the US to the UK
Exports by the UK to the US would be the same as the US's imports from the UK.
The US is charging a 30% tariff on the UK, and the tariff imposed by the US on the UK equals 3 billion USD.
So, 30% of the imports equals 3 billion USD.
$$\dfrac{30}{100}\ \times\ $$ Imports $$=\ 3$$
Imports $$=\ 1\ \times\ 10\ =\ 10$$ billion USD.
The value of imports by the US from the UK = The UK's export to the US = 10 billion USD.
Imports by the UK from the US can be calculated as,
The UK is charging a 20% tariff on the US, and the tariff imposed by the UK on the US equals 2.5 billion USD.
So, 20% of the imports equals 2.5 billion USD.
$$\dfrac{20}{100}\ \times\ $$ Imports $$=\ 2.5$$
Imports $$=\ 2.5\ \times\ 5\ =\ 12.5$$ billion USD.
The value of imports by the UK from the US = 12.5 billion USD.
We can clearly see that the Imports are greater than the exports for the UK from the US. So, the trade deficit can be calculated as,
Trade deficit = Exports from the UK to the US - Imports from the UK to the US = 10 billion USD - 12.5 billion USD = -2.5 billion USD.
So, there is a deficit of 2.5 billion USD.
We can see that France has a surplus and the UK has a deficit with the UK.
Hence, the correct answer is option D.
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