Question

In: Economics

2. What is the difference between a tariff and a quota? Discuss the impact of tariffs...

2. What is the difference between a tariff and a quota? Discuss the impact of tariffs on international trade. Include a discussion of the gains from trade and why nations trade.

Solutions

Expert Solution

Tariff and quota are the the weapons of trade war. Red wire is usually initiated when a national imposes tariff for Kota on imports and foreign countries retaliate with similar forms of trade protectionism as it escalates trade war reduces international trade. Literacy difference between tariff and quarters.
tarif is a financial charge in the form of a tax imposed at the the border on goods going from one customs territory to another custom territory.tariff applied to imports are usually collected by customs officials of the importing country when goods are cleared through customs for domestic consumption.tariff can also be imposed on exports also but the imports tariff are the most common type of tariff and have been the main focus of attention of GATT/WTO negotiations.

Where as in quotas countries use quotas in international trade to help regulate the volume of trade between them and other countries. Within the United States there are three forms of quotas. Absolute quota, tariff rate and tariff preference level. Highly destructive coaters coupled with high tariff can lead to trade disputes and other problems between Nations.

Impact of tariff on international trade:-
There are two main purpose of imposing tariff by governments in international trade

A. To protect their domestic industries from the competition of imports.
B. To collect revenue.
Tariffs levied on an imported product imposes cost on both the country exporting the product and the country importing that product and imposing the tariffs. Imposition of import tariffs increase the domestic price of the imported goods. This usually brings gain for domestic producers of the goods and the government in the important country. But also losses for or consumers and for other domestic producers who use that goods as an input.


tariff negotiations are not only about negotiating tariff reductions but also about negotiation tariff bindings. Tariff bindings provide predictability to traders by sitting and upper limit on the amount of duty that can be levied on a product.in other words traders know that the import tariff that they will have to pay for a product cannot be higher than the ground level recorded in a schedule of concessions for that product.


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