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Assigment - Assignment Example

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Import tariff is a tax on a product that is imported into a country while export tariff is charged on commodities that are exported from a country. One of the reasons for export tariff is to regulate flow of…
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23 March Assignment The two kinds of tariffs are specific tariff and ad volorem tariff (Lukauskas, Stern, and Zanini 145).
Import and export tariffs differ in their scopes and rationale. Import tariff is a tax on a product that is imported into a country while export tariff is charged on commodities that are exported from a country. One of the reasons for export tariff is to regulate flow of commodities from the subject countries and this is achieved by increasing the total cost of the commodity in the global market, but not in the domestic market. The achieved high cost makes the product less competitive, based on price and relative to substitutes, and this minimizes flow from the subject country (Carbaugh 110). Underlying reasons behind regulating the movement could be to ensure exclusive availability of the target products for domestic use and to support local industries that rely from the target products. The tariff is also a source of revenue (Sinha and Sinha 236). Reasons for import tariff include protection of local industries from international competition, accumulation of government revenues, reduction of import payments in order avoid a negative balance of payments, and to influence formation of international trade agreements (Rani 118).
China would impose export tariff on its own industry in order to earn government revenues from the exports.
Governments that impose tariffs and protected interest groups are the main beneficiaries of tariffs. Consumers are, however, the losers because regulated movement of commodities that restricts access to diversified product brands and restrict competitiveness towards fair prices. These reduce utility level (Samuelson and Nordhaus 457).
True or false
1. False
2. False
3. True
Works cited
Carbaugh, Robert. International economics. Mason, OH: Cengage Learning, 2008. Print.
Lukauskas, Arvid, Stern, Robert, and Zanini, Giani. Handbook of trade for development. Oxford, UK: Oxford University Press, 2013. Print.
Rani, Saroj. Regional economic intergration: A comparative of Central Asia and South Asia regions. New Delhi: Gyan Publishing House, 2009. Print.
Samuelson, Paul and Nordhaus, William. Economics. New Delhi: Tata McGraw-Hill Education, 2010. Print.
Sinha, Pradip and Sinha, Sanchari. International business management. New Delhi: Excel Books India, 2009. Print. Read More
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