Protectionism (Tariffs) - 4.1.4
Tariffs - a tax or duty that raises the price of imported products.
Protectionism - is any attempt by a country, trade bloc or region to impose restrictions on the import of goods and services.
Dumping - Over-production in developed countries may be released into the markets of developing nations which undercuts domestic prices and domestic producers may be forced to leave the market.
Balance of payments = Exports - Imports. This explains the financial relationshio between the UK and rhe rest of the world.
A country may use protectionist measures, because of a concern about trade imbalances (too many imports compared to few exports), to protect jobs or to protect politically sensitive industries such as shipbuilding.
A tariff is a tax or duty that raises the price of imported products. The price rise is likely to reduce demand for the item and also encourage local entrepreneurs to produce more. For example, according to BBC News, in March 2016 the US imposed a 500% tariff on steel being imported from China to the UK. These tariffs were justified as being a response to unfair 'dumping' by Chinese steel companies selling below cost - perhaps with the intention of driving western steel producers out of business.
Tariffs can also be imposed to protect 'infant industries', for instance in countries such as India and Malaysia. Tariffs are used to allow for the growth of new industries so that they can gradually take advantage of technological developments and economies of scale which allow them to ultimately become competitive in the global market. Without this, MNC's will dominate developed countries and prevent the growth of new industries.
Protectionist measures might help to protect 'domestic employment' if infant industries are allowed to grow or local businesses aren't undercut by MNC's from developed countries.
Placing restrictions on imports may help to reduce 'balance of payments' deficit on current account
Benefits of imposing tariffs include promoting local industries and products by pricing them below the price of the imported good, increasing government revenue to spend on public services through taxation of the product, discouraging dumping or products and allowing infant industries to flourish. Drawbacks of imposing tariffs include discouraging trade, reducing consumer choice, pushing up prices and restricting competition. The latter may result in home producers becoming inefficient and ultimately may slow the growth of the economy.
Protectionism - is any attempt by a country, trade bloc or region to impose restrictions on the import of goods and services.
Dumping - Over-production in developed countries may be released into the markets of developing nations which undercuts domestic prices and domestic producers may be forced to leave the market.
Balance of payments = Exports - Imports. This explains the financial relationshio between the UK and rhe rest of the world.
A country may use protectionist measures, because of a concern about trade imbalances (too many imports compared to few exports), to protect jobs or to protect politically sensitive industries such as shipbuilding.
A tariff is a tax or duty that raises the price of imported products. The price rise is likely to reduce demand for the item and also encourage local entrepreneurs to produce more. For example, according to BBC News, in March 2016 the US imposed a 500% tariff on steel being imported from China to the UK. These tariffs were justified as being a response to unfair 'dumping' by Chinese steel companies selling below cost - perhaps with the intention of driving western steel producers out of business.
Tariffs can also be imposed to protect 'infant industries', for instance in countries such as India and Malaysia. Tariffs are used to allow for the growth of new industries so that they can gradually take advantage of technological developments and economies of scale which allow them to ultimately become competitive in the global market. Without this, MNC's will dominate developed countries and prevent the growth of new industries.
Protectionist measures might help to protect 'domestic employment' if infant industries are allowed to grow or local businesses aren't undercut by MNC's from developed countries.
Placing restrictions on imports may help to reduce 'balance of payments' deficit on current account
Benefits of imposing tariffs include promoting local industries and products by pricing them below the price of the imported good, increasing government revenue to spend on public services through taxation of the product, discouraging dumping or products and allowing infant industries to flourish. Drawbacks of imposing tariffs include discouraging trade, reducing consumer choice, pushing up prices and restricting competition. The latter may result in home producers becoming inefficient and ultimately may slow the growth of the economy.
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