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20160122 200408

A tariff is a tax on the importing of foreign goods or a tax on or exporting goods to foreign Countries.

Protective tariffsEdit

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Import tariffs can be imposed as a "protective tariff" to shield domestic markets from foreign competition. Protective tariffs raise prices of imported goods so local producers can compete with foreign producers even if the foreign producers are more efficient and can produce their goods more cheaply. Protective tariffs help producers, (Workers and business owners) but harm consumers. Protective tariffs reduce overall efficiency because inefficient local producers stay in business while more efficient foreign producers can't sell their goods profitably and also pay the tariff. There can sometimes be a case for protective tariffs to improve national self sufficiency or to help a new industry get started in a nation. Still the main effect of protective tariffs is less efficient production and lower living standards.

Export tariffsEdit

Export tariffs can be used to localize goods in the event of an economic shortage or to complement a rationing program. Additionally, both types have been levied throughout history as a means of drawing revenue. The economic consequences of such actions can be very quickly felt by the affected industry, and as such tariffs can be levied strategically

United StatesEdit

The United States Constitution explicitly prohibits a federal export tariff, while granting the power to levy a "protective" import tariff. This has been exercised throughout American history to various controversy. However, if abnormally high tariffs were implemented in the US, many products would be inaccessible due to a lack of competing domestic manufacturing.

Free tradeEdit

One of the long-term goals of free trade is to severely regulate tariffs of all kinds due to their inherent ability to manipulate competitive markets and curry favor in international affairs.

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