Eureka Case 25 min Economics

Three Memos, One Tariff

You are Marisol Quintero-Abad, Prime Minister of Costaria. On Monday, March 2, 2026, neighbouring Boravia announced a 25% tariff on every Costarian mango, effective in thirty days. At 15:00 on Thursday you must tell Parliament how Costaria answers.

The situation

Costaria, a tropical country of 18 million people, sells Boravia about US$850 million of mangoes a year. The sector employs 140,000 people directly, almost all in three northern provinces that decided the last two elections; you carried two of them by fewer than four points. The other way, Costaria buys about US$1.0 billion a year of Boravian enterprise software and IT services: its banks, hospitals, ministries and supermarkets run on Boravian systems that would take years to replace. That trade supports some 12,000 jobs in two Boravian districts. Costaria's own software sector is about thirty small firms.

Boravia calls it an anti-dumping measure against a Costarian export-support programme from 2024. Nobody in either capital believes it: Boravia's software industry wants leverage, and mangoes are the only Costarian export large and visible enough to supply it. The Finance Ministry estimates the tariff will cost exporters about US$210 million a year, a little over US$50 million a quarter, with nothing inside Costaria to offset it.

Your cabinet is split. The Trade Minister, Rodrigo Ferrán-Ibarra, wants a 25% tariff on Boravian software. The Finance Minister, Lucía Montalvo-Reyes, wants a WTO complaint and patience, although her advisers put a panel report well over a year away. The Foreign Minister, Andrés Peñalver, wants a quiet channel to Boravia for a managed-trade deal, and knows it will look weak at home. Tomás Arriaga Velasco, president of the growers' federation, wants retaliation and an emergency subsidy, and has already called the tariff "an act of economic aggression that requires an answer, not a seminar".

Your party's strategists track a political-capital index that stands at 100 today; below 50 they read it as an election in trouble, and the next one is due in early 2028. You will decide again every quarter for eighteen months, and Boravia's cabinet will be deciding at the same time.

Your job in this case: look at what flows each way and what each quarter costs, run the numbers on a tariff of your own, and choose the answer you take to Parliament on Thursday: which tariff and which line of action.

The decision

What answer do you take to Parliament at 15:00 on Thursday?

  • A · Match Boravia: 25% on software and hold
  • B · No tariff; file a WTO complaint and wait
  • C · No tariff; open a quiet channel to Boravia

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