Pros and cons of tarriffs
Week 3 Individual Project
According to Essentials of Economics, a tariff is a form of excise tax, one that is levied only on sales of imported goods (Krugman, Wells, and Graddy 538). Tariffs are generally imposed for two purposes, to protect domestic industries and as a source of revenue (Tariff). The effect of a tariff on a small or a large country would be higher domestic prices because the cost of the tariff is passed on to the consumer (The Basic Analysis of a Tariff). Consumers would be deterred from buying that particular import because of the cost factor. It would also cause there to be a surplus of that import. A high tariff on imports would have the effect of switching from imported goods to goods produced domestically; this would help a small nation’s economy.
Large nations generally have more resources and an ability to export more items. A high tariff on a large country would decrease exports and effect the economy in a negative way. A tarrif could also protect an aging and inefficient country’s domestic industries from foreign competition (Institute, The economic effect of tariffs: how tariffs effect the economy of international trade). In general though, regardless of the size of a country, tariffs hurt the country that imposes them, as their costs outweigh their benefits (Institute of International Trade, The Economic Effect of Tariffs: How Tariffs Effect the Economy).
Tariffs differ from quotas, in that a quota restricts the allowable quantity of an import. For example, the United States has set a quota on sugar imports since the early 1980’s. This allows for domestic producers of sugar to have access to the domestic marketplace (Import Quotas). According to About.com,
Governments prefer tariffs over quotas because tariffs actually generate revenue for the government. The United States collects 20 billion dollars a year in tariff revenue. This is revenue that would be lost to the government unless their import quota system charged a
According to Essentials of Economics, a tariff is a form of excise tax, one that is levied only on sales of imported goods (Krugman, Wells, and Graddy 538). Tariffs are generally imposed for two purposes, to protect domestic industries and as a source of revenue (Tariff). The effect of a tariff on a small or a large country would be higher domestic prices because the cost of the tariff is passed on to the consumer (The Basic Analysis of a Tariff). Consumers would be deterred from buying that particular import because of the cost factor. It would also cause there to be a surplus of that import. A high tariff on imports would have the effect of switching from imported goods to goods produced domestically; this would help a small nation’s economy.
Large nations generally have more resources and an ability to export more items. A high tariff on a large country would decrease exports and effect the economy in a negative way. A tarrif could also protect an aging and inefficient country’s domestic industries from foreign competition (Institute, The economic effect of tariffs: how tariffs effect the economy of international trade). In general though, regardless of the size of a country, tariffs hurt the country that imposes them, as their costs outweigh their benefits (Institute of International Trade, The Economic Effect of Tariffs: How Tariffs Effect the Economy).
Tariffs differ from quotas, in that a quota restricts the allowable quantity of an import. For example, the United States has set a quota on sugar imports since the early 1980’s. This allows for domestic producers of sugar to have access to the domestic marketplace (Import Quotas). According to About.com,
Governments prefer tariffs over quotas because tariffs actually generate revenue for the government. The United States collects 20 billion dollars a year in tariff revenue. This is revenue that would be lost to the government unless their import quota system charged a
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