Title: What Are Disadvantages of Tariffs?
Headings: What Are Disadvantages of Tariffs?
What Are Disadvantages of Tariffs?
Content: 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.