A negative result of high tariffs is that they can sometimes lead to reduced international trade.
International trade is one of the key aspects of globalization, as several nations engage in economic co-operation, which is also a key gesture of diplomatic co-operation.
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Further Explanation:
Tariffs are a tax or payment that is levied on the products that are imported from other nations, thereby effectively increasing the costs of such products. The increased costs make the value of these imported products often higher compared to that of the cheaper domestic variant, leading the consumer to choose the domestic variants of the product. While the main aim of high tariffs is to protect the domestic industries and having a buoyant economy, it has some negative effects. The high prices of imported goods become higher, which leads to consumers avoiding it entirely, leading to incurring huge losses. The impositions of tariffs are usually retaliated by the counter imposition of tariffs, which increases the costs of business for exporting industries.
The imposition of tariffs is accompanied by continued attempts on the part of the manufacturers to cut production costs. The manufacturers would often try to keep a high-profit margin, leading to decreased quality and production costs. Thus, imported products often fall short of the quality standards, and the ones that maintain them, are generally extremely expensive, which is beyond the purchasing power of common people. Moreover, the imposition of tariffs may lead to global economic trade to a halt, which leaves the consumers with limited options on the market. This may also lead to trade wars, which means countries that do not agree with each other, shall not engage in economic co-operation and may impose heavy tariffs on each other’s imports.
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Answer Details:
Grade: High School
Chapter: Tariffs and International Trade
Subject: Economics.
Keywords:
Tariffs, international trade, quality standards, trade war, global economy, trade barriers, domestic products, manufacturing costs.
Source: https://t-tees.com
Category: WHICH
