Tariffs and Non-Tariffs Barriers - Research Paper Example

Control of imports is done through tariffs and non-tariffs barriers, which are part of global financing and exchange rates. A tariff is a form of trade barrier imposed on goods imported in that particular country by the government of the same nation in from of a tax (Saranovic, 2006). The tariff imposed, adds to the cost of the imported goods and can be adjusted at any given time. Such adjustments are meant to protect locally manufactured products from unhealthy competition from cheap imports.

Tariffs come in two types; ad valorem and specific (Hill, 2004). For the case of specific tax, it is meant to enforce a set barrier in form of tax to a specific imported product without considering the variation in the value. For instance, if a specific tax of 75 cents was imposed on mobile phones in the United Kingdom, then it means that the government will be gaining 75 cents on every mobile phone disregarding the price of the phone. For the case of ad valorem tax, it is imposed inform of fixed percentage on the value of the imported goods. . The first form is quotas.

Quotas refer to the limitations imposed on the quantity of imports by the government. This means that the government puts a limit to the quantity of particular goods that can enter a country in a given time; they are normally enforced together with the import tax where by if the limit is exceed, then the government will impose higher tax on the same. The second type on non-tariff barrier is voluntary export restriction; this refers to a situation where by the government restrict the quantity of goods being exported to another country.

Thirdly, there is anti-dumping barrier. This type is imposed on the commodities that have a harmful effect on the environment and might incur some dumping cost on the consumer. In this case, the goods are sold at slightly higher prices than they would have been sold in the home market (WTO, 2006). Lastly, there is subsidy. It refers to financial aid by the government to the local industries to make it possible for them to compete favorably with the international companies. In this case, the domestic companies are in a better position to manufacturer their products cheaply with aid of latest technology such that the imported products are out-competed.

Due to the analysis of tariffs and non-tariff barriers, it is evident that they have a great bearing in relation to the global financing operations. For instance, in the case of manufacturing operations, the company involved may chose to manufacture from the home country and then export the manufactured goods or manufacture its commodities from the country endowed with raw materials duce to high tax of importation of raw materials. In addition, the company may opt to manufacture the products from the country with the ready market then sell within