Common Used Trade Barrier Is The Tariff Essay

Common Used Trade Barrier Is The Tariff Essay

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The most common used trade barrier is the tariff. Merriam-Webster (2015), defines tariff as “a tax on goods coming into or leaving a country.” This is set by the government and the motives behind the tax can be either economic or political in nature. The tax can be based on the quantity of a product, the price/or by the value of the product (ad valorem), or a mix of the two. They increase the price of products for the end user. The tariffs levied against one country causes that country to induce tariffs on the other country. Tariffs make more tariffs. They also deteriorate relationships between trading nations. They can also limit the selections of products available to the end user.
There are three types of international tariffs, most favored nation (MFN), bound tariff (BND), and effectively applied tariffs (AHS). The MFN is when one country trades within their allied group and they treat the beneficiary of the trade the same way that they would treat their most favored ally. The goal is to treat them all the same, that way the concept of fairness within the coalition will help retain cohesiveness. A bound tariff is when a country places a maximum amount or percentage on the tariff of a particular good. It is akin to making a promise about their product never going beyond a certain price and then placing it into public record. Applied tariffs are the actual rates that are applied. One fact to note is that according to Suranovic (2015), “in general, less-developed countries have higher bound tariff rates than developed countries, reflecting their perception that they need greater protection from competition against the more highly developed industries in the developed markets.”
Other barriers are monetary strictly monetary in n...

... middle of paper ... its many users and if they are abused, they work to destroy the system that gives them life. Free trade is the trading of goods, where domestic and international goods are exchanged equally. The analogy that comes to mind is if free trade were the heart of capitalism, then protectionism-type policies are the low density lipoprotein (LDL) cholesterol, plaque which builds within the arteries, that is forcing it into cardiac arrest. Not all cholesterol is bad cholesterol. High density lipoprotein (HDL) removes fat from cells. They are a lot like these policies in that they are required for the system to work. These ideas come from a good place. All nations want to feel as though they are being treated fairly when it comes to international trading, but the fact is that production, regulation, and especially general business practices are different all over the world.

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