Taxes And Tariffs In International Trade

Introduction This paper will deliberate on the effects of taxes and tariffs on international trade both in the aspects of size and composition of trade (exports and imports). It shall also focus on how some trade contemplations impact the appropriate design of tariffs and taxes. Tariffs which are also known as customs duties are taxes levied on as they cross the national borders and are usually imposed by the importing country’s government. Taxes on a general perspective are inclusive of tariffs and other duties that are levied on export and import goods by a particular state. International trade encompasses on the issues of imports and exports based on the different trade policies and agreements that are made between different countries.

Basing our research on Tariffs as being one of the most significant tax commodity we shall be able to analyze the different ways they impact the world trade (Bernhofen et. al 36). Tariffs in most cases limit or restrict imports through raising the prices of services and goods bought from overseas or other states, and thus this makes them less competitive on the domestic market. As mentioned earlier, governments from different countries can impose tariffs to increase revenues for protection of local industries from foreign competition. It is achieved through increases the prices of foreign-produced goods and thus prompting the consumers of that particular country to value or buy products from their domestic industries. These shifts of trade jargons based on taxes and tariffs can affect the economic status of different markets across the world and thus in most instances tariffs act as trade barriers (Bernhofen et. al 36). Effects of Tariffs and Taxes (Domestic and International Trade)

Tariffs and taxes can impact a country’s economy or the world economy in both negative and positive way. It is important to look at some categories of tariffs and how they affect both domestic and world

As mentioned earlier the main reason for tariffs is for the protection of domestic industries. In most cases, these protection turn into a nightmare for the consumers of a particular good and services (Handley & Kyle, 56). These suppliers of specific products and services may take advantage of the unavailability of competition and raise the cost of certain commodities. This cause an economic turmoil in a given country thus affecting the lives of ordinary citizens. On the other hand, international trade is modified in that inflations causes uncertainty that in turns dejects prolific activity, investing, saving and eventually diminishes the competitive factor of a country in international trade. Inflation is known to cause an economic depression which can lead to more adverse effects for example industries can run out of business, and employed people can be rendered jobless (Handley & Kyle,