Tariffs

How do government tariffs impact on imported goods? What are the pros and cons of these tariff and what are the likely future trends.

Tariff is tax that a government collects on goods coming into a country. It is a tax which is levied on imports across national boundaries or other geographical regions and exports in a few cases (Lv, 2000). Originally, applying tariffs was first based on financial purpose, so it is a regular but most significant source of fiscal revenue to governments. Generally, a country with strong economy and lying in an advantageous position tends to pursue a free trade policy. At that time, the principal function of tariffs is tax collection. By contrast, a country with weak economy and lying in a disadvantageous position tends to pursue policy protectionism. Under such circumstances, Tariff protection may become the most important or even major function to governments. So high tariffs will barrier the imported goods and hinder the development of international trade. Moreover, with the heavy government intervention in the economy, tariff has been endowed with the function of economic regulation. Thus, tariffs have become an important macroeconomic policy. It follows that countries’ tariff level will directly affect their interests in the foreign trade. The essay argues that the government tariffs have a significant impact on imported goods in terms of changing their quantity, in addition to providing benefits to the national economy such as protecting domestic products and adjusting economic growth rate. Despite the disadvantages of tariffs on damaging customers’ interests and increasing smuggling cases, it will have positive future trends.
In the first place, one of the most important impacts of tariffs is the influence on the quantity of imported goods. On the one hand, levying tariffs may reduce the quantity of imported goods (Hu & Su, 2007). Zigmantavičienė and Snieška (2006) discover that a quota about tariffs on imported goods, a...