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Tariffs & Trade Barriers: Why are they Imposed?



Not every country is self sufficient in fulfilling all its needs and demands. There must be some things available in a country in abundance while there will be some products that it will need to import from some other country which is producing it more than its own demands. This is how international trade, import and export and similar things happen. One of the major advantages of international trade is that, there will be a lot of choices for the consumers and hence the products will be sold in lesser prices as there will be a lot of competition among domestic industries. They will produce products of quality so, as they can then export them to other countries and earn a lot of gains and profits. There is an overall positive effect of international trades on a country’s economy. Apart from all these good aspects countries still try to impose different barriers to secure themselves from many unwanted interventions and happenings.

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To be precise a tariff is a tax and one of those trade barriers which are imposed on imported goods to increase their costs. Usually, these tariffs are imposed in countries having underdeveloped domestic industries as if the foreign products will be made available in abundance those domestic industries will never get a chance to flourish and establish themselves. Developing countries mostly use these strategies in industries where they want growth. This way, not only the demand of those products is fulfilled but also domestic industries get a chance and time to get developed. Along with that, it gives a healthy competition to the domestic industries as well. Otherwise if only domestic industries are left to produce products without a competition, they will sacrifice the quality of products and will have their own monopoly in pricing. Even countries with established and strong domestic industries also apply tariffs and trade barriers to keep their domestic economy under control.

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One of the major reasons behind imposing tariffs and barriers on foreign trade especially on importing is that, the countries cannot afford domestic unemployment issues. In case if foreign imported products will not be controlled, the domestic industries will layout the labors and employees from their own organizations and will shift their manufacturing units abroad in search of cheap labor. To avoid such unwanted conditions from domestic industries imported products are kept under control to keep the level of employment in the country stable. In some cases, these tariffs and trade restrictions are also imposed where there is a threat to the health of consumers. Countries having danger, of their population getting infected of diseases from foreign imported goods, will not allow such products to be imported in their country. Responsible and nation oriented governments and country rulers usually make such policies to protect the health of their nation.

There is another situation where these trade restrictions are usually imposed when one trade partner fails to abide by the laws and treaties decided between them. If one partner tries to go against the stated regulations the other party will definitely ban them from intervening in their country in anyway. They will restrict them from any kind of activity unless they start following the regulations again. There are different kinds of tariffs that are employed on imports and n trades depending upon a country’s needs. There are specific tariffs, which are the taxes imposed on a single units of the products. An imported shoes may have a specific tariff of $20 per pair and on the other hand a computer system may have $500 per system. So, the specific tariffs are imposed on individual products and they can vary depending on a country’s own policies. Then we have some tariffs which are imposed on products depending on their value, if a percentage of some amount increases for that specific product the whole price will be changed.

Who takes the benefits from these tariffs and trade restrictions? Well, the answer varies for many people and entities to others. A government may think of increased revenues in case of import of products in the countries while the businesses and consumers may have different perspectives. The businesses will specify higher costs in case if they are using those imported goods in their manufacturing and a final consumer will get the finished products on higher prices. Domestic industries take a sigh of relief when these restrictions are imposed as the competition lessens in the industry and they get a chance to flourish their own industries. Hence, the benefits vary in nature and can be different in many means in long term and short term as well.



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