Preview

International Trade and Tariff

Good Essays
Open Document
Open Document
726 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
International Trade and Tariff
Tariffs
Explain the various impacts of an import tariff in small nations vs. large nations. The impact of an import tariff in a small nation is entirely unlike then an import tariff from a larger nation. When smaller nations imposes a tariff, it does not affect world prices, however the price of the importable commodity will start to rise, usually by the amount of the tariff for manufacturers and trade in the small nation. When large nations impose a tariff, it will reduce the volume of trade. Large nation tariffs also improve terms of the nation’s trade. Since the volume of trade is being reduced, it tends to lesson the nation’s welfare. However it also can improve the nation’s welfare. It depends on the welfare of the nation to if it actually rises or falls depending on the two conflicting forces.

What are the three main reasons governments prefer using a tariff to restrict imports versus quotas?
A few reasons why tariffs are better option than import quotas is because, tariffs can generate revenue for the Government, import quotas can lead to administrative corruption, and import quotas can cause smuggling. The reason the government can make money off of tariffs is because there can be a percentage put on imported goods that will generate extra money. There are millions of different things that are imported into a country and the small percentage of tariffs generates a lot of revenue that would be lost of the government unless their trade had an authorizing fee on goods being imported. This can lead to administrative corruption, if there are no restrictions on importing goods then the government has the ability to pick and choose who can import and who cannot. This can give the custom officials a lot of power since they would have the ability to favor and only allow certain corporations. Tariff system helps to rid the possibility of corruptions. This not just the price, but also the quantity sold through supply and demand. Smuggling can occur with an


Bibliography: "Finance & Development, December 2011 - Trade in East Africa." Finance and Development. Web. 27 May 2012. . "The Basic Analysis of a Tariff." The Basic Analysis of a Tariff. Web. 27 May 2012. . "The Dark Side Of The WTO." Investopedia. Web. 27 May 2012. http://www.investopedia.com/articles/economics/dark-side-of-the-wto.asp. "Why Are Tariffs Preferable To Quotas?" About.com Economics. Web. 27 May 2012. .
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    PA 315 Final study guide
    • 1283 Words
    • 7 Pages

    PA 315 Final study guide

    Tariffs, import quotas, and regulatory barriers are forms of protectionism that “unfairly” promote domestic goods in foreign markets.…

    • 1283 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Harvey N M2 A2
    • 621 Words
    • 2 Pages

    Harvey N M2 A2

    Peter Hann describes free trade as, “generally considered by economists to be beneficial to international trade by encouraging competition, innovation, efficient production and consumer choice” (Hann, 2011 para. 1). Free trade allows freedom of international exchanges; with this there are advantages as well as disadvantages. Some advantages consist of cost advantages, factor earnings, cheaper imports, and an enlarged market (Chand, 2015). Cost advantage allows free trade to warrant a portion of possessions and resources. This in turn leads free trade into the most efficient conduct of economic affairs. Factor earnings and cheaper imports allow production factors to increase while import rates decrease. Enlarging the market is an advantage of free trade because it increases the market allowing labor to be possible. The disadvantages of free trade consist of all countries being in conjunction and working together. Meaning it will only work and be productive if all countries participate, if there is one country that decides not to partake in free trade, it will not work. It is also unfair to and creates a disadvantage to countries for those countries that are unable to compete with larger, advanced countries (Chand, 2015).…

    • 621 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Chapter 7 Marketing
    • 275 Words
    • 2 Pages

    Chapter 7 Marketing

    3. What are the two different classifications of tariffs? What is each designed to do?…

    • 275 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Eco 372 International Trade And Finance Speech
    • 940 Words
    • 4 Pages

    Eco 372 International Trade And Finance Speech

    Choosing the appropriate tariffs or quotas is a delicate balancing act because the country is imposing the tariffs and/or quotas as a means to protect the domestic business sector. An example of this is, if the United States produces a technology and the same technology is imported from foreign soil at a cheaper rate, a tariff or quota would be introduced to ensure the cost of the foreign technology is up to the cost of the domestically produced technology. These tariffs and quotas are important because in the event that the scales become unbalance, international relations as well as trade are strained. When international relations and trade become strained, the foreign trade partner will initiate its own counterbalancing tariffs and quotas. For this vary reason the United States will not restrict all goods coming in from China as this move would initiate a trade war. This attack on each countries’ trade is accomplished by imposing high tariffs or quota restrictions. It is unfeasible for the United States to minimize imports coming in from all countries because of the various trade agreements the United States shares with these country’s varies. For example, a small developing country could only have one or two products it produces and trades; while a larger more developed country will have an abundance of products it…

    • 940 Words
    • 4 Pages
    Good Essays
    Read More
  • Good Essays

    Global Financing and Exchange Rate Mechanisms
    • 749 Words
    • 3 Pages

    Global Financing and Exchange Rate Mechanisms

    Tariffs are taxes on imports or goods into a country or region. This is one of the oldest forms of government involvement in trading activities. Tariffs are implemented for two clear economic purposes. They provide revenue for the government and they improve economic returns for firms and suppliers of domestic industries that face competition from foreign imports. This protection comes at an economic cost to consumers who pay higher prices for imported goods and to the economy as a whole through the unproductive allocation of resources to the import competing domestic industry. Therefore, "since 1948, when average tariffs on manufactured goods exceeded 30 percent in most developed economies, those economies have sought to reduce tariffs on manufactured goods through several rounds of negotiations under the General Agreement on Tariffs Trade (GATT)." (Carbaugh, 2000) When coupled with other barriers to trade they have often constituted formidable barriers to market access from foreign producers. Tariffs, that are set high enough, can block all trade and act just like import bans. Non-Tariff Barriers (NTB) are also a tactics that are used to regulate the amounts of imports. Voluntary export restraint (VER) "allows…

    • 749 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Eco 212 Week 8 Cp
    • 344 Words
    • 2 Pages

    Eco 212 Week 8 Cp

    One of the main benefits, in my opinion, of tariffs is the money that they help bring into the country. Not only are we helping the economy by the sale of the products, but also by allowing these other countries to bring in their goods.…

    • 344 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Worksheet On The American Revolution
    • 4900 Words
    • 20 Pages

    Worksheet On The American Revolution

    A tariff a.lowers the domestic price of the exported good below the world price.b.keeps the domestic price of the exported good the same as the world price.c.raises the domestic price of the imported good above the world price.d.lowers the domestic price of the imported good below the world price. Figure 9-14 ____…

    • 4900 Words
    • 20 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Trade Restrictions In The United States
    • 249 Words
    • 1 Page

    Trade Restrictions In The United States

    The United States has to set high tariffs and quotas to restrict trade with foreign countries. Tariffs are the tax that one country sets on imported goods and services of another nation. And a quota is the restriction of trade of the amount of goods and services over a fixed period of time to maintain the country’s interest on imported goods. Tariffs and quotas set by the United States have control over the amount of goods that come into the United States to help the economy while continuing to keep healthy trade and relationships with other countries. The United States uses these trade restrictions to find suitable trade opportunities from other countries. And there put in place to safe guard and protect the country’s economic interest. Some…

    • 249 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Better Essays

    Discuss the effects of protectionist policies on the global economy
    • 1222 Words
    • 4 Pages

    Discuss the effects of protectionist policies on the global economy

    There are many methods that a government can provide to protect domestic producers from international trade. The first method of protection is a tariff which is a tax imposed on imported goods. This method has been used by governments to increase the price of imports to allow domestic producers to be able to produce goods and sell it without such high competition. They can increase their supply of goods in the market and also charge a higher price. There is one main effect from this protectionist policy in the global economy and numerous effects on the domestic economy. Since the price of the imported good is higher within the domestic economy, consumers pay higher prices and will be less likely to purchase the imported good. This will lead to lower supplies of imports and less trade within the global economy. As Fig.1 shows, when imports are introduced, the quantity supplies by domestic producers significantly falls however the tariff raises the price of the imports and domestic producers can supply more.…

    • 1222 Words
    • 4 Pages
    Better Essays
    Read More
  • Powerful Essays

    History Study Notes
    • 1472 Words
    • 6 Pages

    History Study Notes

    4. What argument do protectionists make in favor of a protective tariff? How do opponents of a protective tariff respond?…

    • 1472 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Benefits of Tariff
    • 467 Words
    • 2 Pages

    Benefits of Tariff

    1. Government-Not setting quotas would make it difficult for the government to control the number of imports coming in.…

    • 467 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Internal and External Factors at Starbucks
    • 443 Words
    • 2 Pages

    Internal and External Factors at Starbucks

    Consumers of a particular country oftentimes benefit greatly from the products of a foreign country through international trade. However, sometimes domestic firms are at a disadvantage in producing the same or similar product because of tense competition from foreign counterparts. Two of the international tools that governments use are quotas and tariffs. These tools have strong support by domestic firms and their employees, and allow them to be more competitive with their foreign counterparts. A tariff is a tax imposed on imports by the government. Tariffs increase the cost of selling a good, therefore a foreign country will export less of a product because it will cost more to do so. A quota is a numerical limit imposed by a government on the quantity on foreign goods or imports into the country. Quotas allow domestic firms to produce more of a good for its consumers and also allow these firms…

    • 443 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Against Tariffs
    • 373 Words
    • 2 Pages

    Against Tariffs

    I am going to start off by giving you a little information on tariffs. "According to our text there are two kinds of tariffs. The first is protective tariffs (import taxes), designed to raise retail price of imported products so that domestic goods will be competitively priced. The second is revenue tariffs, which are used by developing countries to help infant industries compete in the global market."(P.87)…

    • 373 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Macroeconomics
    • 774 Words
    • 4 Pages

    Macroeconomics

    What is an import tariff? A quota? Dumping? How might a country use import tariffs and quotas to control its balance of trade and payments? Why can dumping result in the imposition of tariffs and quotas?An import tariff is a tax made by the nation on goods imported into the country. A quota limits the amount of products that can be imported into a country. Dumping is a country selling products at less than what it costs to produce them. A country uses import tariffs to protect domestic products by raising the price of imported ones. A country uses quotas by voluntary agreement or by government decree. Dumping can result in the imposition of tariffs and quotas because it permits quick entry into the market or a firm's product is too small to have a certain level of…

    • 774 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    Mercantilist and Modern Use of Tariffs
    • 1598 Words
    • 5 Pages

    Mercantilist and Modern Use of Tariffs

    The Mercantilist concept of high, protective, exclusionary tariffs on imports allows domestic businesses and national economies to enjoy a monopoly without foreign competition. As it is believed in Mercantilist theory, a country could be financially stronger if they were to rid themselves of foreign competition and they are able to do that by placing high taxes on the goods that are coming into their country from others. By incurring higher taxes and making foreign goods more expensive, a domestic consumer would have an incentive to buy domestic goods since they are cheaper. Although this is how the consumer behaves, a producer would have less incentive to create high quality goods as they do not have any competition. Because they are in a monopoly, they can create sub-par products and expect them to be purchased because that is all the consumer has to decide from. Now that you have seen how the Mercantilist’s high tariffs work in theory, let’s look at how they have worked in history.…

    • 1598 Words
    • 5 Pages
    Powerful Essays
    Read More

Related Topics