Question

Countries impose tariffs on imports for many reasons such as to protect domestic industries, revenue stream and to balance trade. The US is discussing a tariff on some products from China, Mexico and other low cost countries where it appears "un-fair" trade practices are occuring. Answer the following questions assuming the US decides to impose a tariff on products such as cars and smart phones/computers?

1. Where has tarifffs worked and benefited a country and where they have failed?

2. What has happened to US based manufacturing of solar panels? What has occurred with China and US with this product such as "anti Dumping"

3. What products currently have tariffs and where?

4. How does tariffs impact the overall trade?

5. Other issues that could develop?

Answer 1

Meaning of Tariffs:

Tariff is a form of tax levied upon goods when they are imported or exported from a country. Its primary motive is to generate revenue from the government.

Benefits of Tariffs:

Mainly the countries benefited from tariffs are

Following benefits are mainly experienced by these countries:

1- Mainly tariffs are much beneficial for the local traders which is protect the local industries.

2- A tariff increases the price of imported goods or moreover tariffs may be used to increase the price of imported goods.

3- The policy of tariffs may give a chance to rival industry to develop to a greater sense.

4- Tariffs may also be used to discourage the export of goods that are deemed as vital asset .

ANTIDUMPING IN US:

It has also been a greater challenge in which solar panels have been facing greater tariffs which have been a irrecomendable job.

Reasons for failure of Tariffs :

1- As discussed above in the benefits that tariffs promote the local trade , thus it allows free trade to allow market to set prices on the basis of supply, demand. Because of this high value products may find native industries with less expensive competitors.

2- Tariffs have also been diplomatic weapons to punish nations. Import tariffs may hurt consumers who are interested in buying goods made in another nations.Industries promoting high standards are ignored.

Products that have tariffs and place:

1- Paper Clips: United States at the rate 126.94%.

2-Canned Tuna: United States at the rate 35%

3- Tobacco: India at the rate 35%

4- Sneakers: United States at the rate 48% and many more.

Impact of tariffs on overall trade:

The impact of tariffs on overall trade shifts over the time, in the short run higher prices of goods can reduce consumption by individual consumers and by the business.Also it may help in raising higher revenues, and also enhance protectionism.

Other issues that could develop :

Trade liberalisation involves removing barriers on imports, whereas it also affects the customer unions.also they have chances to gain welfare gains from free trades.