Question

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Discuss all the four effects of tariff imposition. Explain the reasons that a tariff can be harmful. However, explicate how not everyone loses as a result of it. Specify who loses and who gains from it. Thank you!

Answer 1

Answer- The four effects of tariff imposition - 1. Revenue Effect - This revenge from tariff obtained by the Government is "essentially a transfer of income from the wnsumer to goverment.and does not represent any met change in the nation's well being. 2. Terms of Trade Effect - When a comtry imposes a toveiff duty its willingness to receive imports is reduced. I 3. Balance of payments Effect - The price effect caused by tarent on the one handi reduwes imports theom other counteles and on the other hand, cawes increased production and puelhase of home pecoduced goods. 4. Income effect - The expenditure on imported goods is reduced. This will inceease the export surplus of the country and thereby the income from poreign teade. The reasons that tatiff can be harmful – They rise the prices of imports giving way to a decreerse in consumer sumplus. What's more, a tariff discourage competition making local industries less efficient, leading to decrease in product quality. Moreover, high tariff may result in trade wares between nations due to the fact, / exporting countries counter with their own tariff on importa products, - Losers Winners and losers of tariff - Winners Domestic industries-uncompe ) Foreign exporters titive on world markets. Domestic consumers who pay workers in these domestic higher prices. Industries. Ho Domestic exporters cecho experience Government tax revenue incre Yetaliatory tariff. - asas by small amount: