Pros and Cons of Tariffs Free Essay Example, 1750 words

This will promote employment as well as revenue. Moreover, they help the government to establish controls and checks against aggressive trade practices by the foreign firms. International competitors or sellers may decide to employ aggressive tactics in trade for example planning to flood the local markets with their goods in order to gain market share and put the available domestic producers and firms out of business. The government may therefore use the tariffs to reverse the situation. It also boosts environmental concerns the government might have. If the government sees that the foreign goods’ existence in its economy does not adhere to the environmental concerns, then it will take actions to prevent. If the foreign goods therefore do not adhere to the environmental standards then government will prevent them from entering the local market easily using tariffs. If the goods are not safe for consumption then they will increase the tariffs hence preventing the foreign firms from entering the local market easily. The government to secure the crucial and important industries in its economy furthermore, can use tariffs. One of the common examples is the defense industries. We will write a custom essay sample on Pros and Cons of Tariffs or any topic specifically for you Only $17.96 $11.86/pageorder now Such industries are always seen as vital and the most important in an economy therefore they usually enjoy some of the significant levels of security and protection. For instance, United States of America is well industrialized but it always protects all her defense-oriented industries. Countries may also set tariffs as retaliation if they feel that the partner whom they trade with has not fulfilled the set by rules, has gone against the set rules, or even has infringed against her rights of trade. This can also be used if a country in partnership goes against the domestic country’s foreign policy. Even though tariffs have advantages, they also have some limitations on the economy. Disadvantages of Tariffs First is that, they discourage trade. This is because individuals especially businesses and government will avoid tax (Asakura, 2003, pg. 3) stated that â€Å"when the domestic consumers decide to finally buy the cheap local products, the foreign businesses will become disadvantaged and even possible withdrew from the economy†. This will possible mean that they will stop trading with the country. This will lead to less trade within the country. However, foreign traders will be forced to reduce their own prices if in case they would like to compete with the local industries. Furthermore, these foreign investors may resort to import their goods to other countries.