Under what conditions are tariffs on international trade beneficial?

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Expert Solution

Tariffs are beneficial for the following reasons:

Increased government revenue: A tariff is a form of tax, an increased tax on the products increase the revenue earned by the government. That increased resources for the government can be used to decrease the budget deficit and utilize in other resources. This is most beneficial if the tariffs are applied to the imports of luxury resources.
Increased production in the local business: A tariff increase the price of the product and allows the local industry to increase production. these are the industries which would be out of business and can not compete with the various MNC and big international companies.
Nascent industries are supported: An increased tariff will help small industries in the local country to compete against the big companies abroad. This will increase the employment in the local country and allow the small businesses to grow.

Rahul Sunny answered 1 year ago

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