Governments have a significant role to play in protecting their people when engaged in international trade. It has to ensure that even in cases where there is free regional or international trade, the country’s businesses are protected from any possible exploitation. Additionally, to maintain a better balance of payment, governments will often ensure that its value obtained from exports is always higher than what the country imports. To achieve this, there are many measures that countries will put in place and one is using tariffs which can be defined as taxes imposed by the government on goods as well as services imported from other countries. The main idea is to increase the price of the imports to make such products less attractive/ less competitive in the local market as compared to the locally manufactured ones. Although effective, there are many advantages and disadvantages associated with this method as will be discussed herein.
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Write My Essay For MeAdvantages of using Tariffs
Many advantages can come with a government using tariffs in international trade. In the US, when a local industry feels threatened by external players, congress comes in handy in imposing taxes to any imports. This move helps protect the local industries from flourishing. Ideally, the government must ensure that it encourages production in the local market. Therefore, by imposing tariffs, the local industry players will feel protected and encouraged to produce even more as there will be a ready market for their products. The tariffs ensure that there is less competition and that the local industry players will often dominate the market.
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Besides reduced competition, use of tariffs encourages innovation in the local market. The local industry players will often look for the best way possible to optimize on the opportunity given by the government by reducing competition. To gain the confidence of the local market and reduce the notion that imported products/services are always the best, the local industry players will seek to be more innovative in establishing products that are of higher quality and can also compete favourably with other products from the competing countries. Mandelman & Waddle (2019) argues that most of the local industries may end up shutting down or show lack of innovativeness whenever the outside competition is too high. However, tariffs act as an assurance that when their quality increases, the market will reciprocate by buying more. Other than reducing competition and encouraging innovation in the local market, tariffs can also help create employment opportunities in the local market. The thriving of the local industries means that there are more employment opportunities for the youthful population. On the contrary, allowing imports to dominate the local market amounts to denying potential employers an opportunity to engage in business and hire people who can increase the production capacity. In the US, President Trump has made it his obligation to tax products from countries such as China in his quest to put Americans first in any business dealing. The idea is to ensure that the local industries have the ready market to produce and hence can employ more people to help to reduce the unemployment cases that have…
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