We introduce a relative price change in this stylized model by adding a 25 percent tariff on Mexico global corn imports, which raises Mexico’s rural wage (table 7.9). Because corn Is relatively labor-intensive, this link between output prices and factor prices is consistent with the Stolper-Samuelson theorem. In the United States, conversely, corn output declines and rural wages fall.
A 50 percent tariff on U.S. global fruit and vegetable imports demonstrates a similar result: U.S. fruit and vegetable output rises, import fall, and the U.S. rural wage rises. In Mexico, fruit and vegetable output falls dramatically, reflecting that Mexican exports to the United States account for a large share of Mexican production, and Mexican rural wages decline.