One of the major disadvantages of tariffs is that they raise the price of imports, leading to a decrease in consumer surplus. Tariffs discourage competition, leading to decreases in product quality. In addition, high tariffs may lead to trade wars between nations.Continue Reading
Tariffs may make local industries less efficient due to reduced global competition. They may also lead to trade wars as exporting countries counter with their own tariffs on imported products. When trading counterparts reciprocate with their own tariffs, it raises the cost of doing business for exporters. This situation may also compromise the quality of goods and services as industries look for ways to cut production costs.
A tariff refers to a tax imposed on products and services. Tariffs are used to control trade, because they increase the price of imported products, making them more expensive to the end consumers. A specific fee is imposed as a fixed levy based on the product. In addition, an ad valorem tariff is imposed based on product’s value.
The objective behind tariffs is to decrease demand for imports while increasing demand for domestic products. Governments may also impose tariffs to protect local industries from foreign competition, because consumers largely choose imported products or services when they are cheaper. Tariffs provide additional sources of income for the imposing country at the expense of consumers and foreign producers.Learn more about Taxes
A Harmonized Tariff Schedule is a hierarchical and standardized system of imposing tariffs on imported goods. The Harmonized Tariff Schedule of the United States uses the Harmonized Commodity Description and Coding System established by the World Customs Organization and is updated regularly, most recently in July 2015.Full Answer >
The Underwood-Simmons act was a piece of legislation passed by Congress in 1913 intended to support the U.S. industrial sector by reducing tariffs on manufactured items and raw materials. It also mandated an income tax for the first time in U.S. history.Full Answer >
Sales taxes and tariffs apply at varying rates depending on the type of good and resulting categorical classification, explains CrossBorderShopping.ca. For instance, "Category 7" includes books which have a tariff rate of zero regardless of the country of export and an HST rate of 5 percent.Full Answer >
As of 2014, the Republic of Panama mainly imports consumer goods, fuels, industrial supplies, machineries and transportation equipment. The country's trading partners are China and the countries in America, including the United States, Mexico, Venezuela, Colombia and Ecuador. Panama also imports goods from Sweden, Spain, South Korea, Singapore and Japan. As of 2014, China is the biggest import partner of Panama, providing about 35 percent of the country' total imports.Full Answer >