The Natural Flow of International Trade: Imposing Tariffs

International trade
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Introduction
A government-imposed tariff or quota is a tax on imports. A Tariff raises the price of imported goods about domestic goods. Tariffs are used as a means to restricting trade, as they increase the price of imported goods and services making them more expensive to consumers in the local market. Tariffs are one of the tools used to shape trade policy since they provideextra revenue for governments and local producers at the expense of users and foreign producers. Governments impose tariffs for various reasons for example protection of domestic industries from foreign competition.
Consumers are not legally prohibited from purchasing foreign goods and services hence tariffs make the goods more expensive thus consumers get an incentive to buy locally produced goods and services that are less expensive. Tariffs sometimes lead to trade wars since exporting countries reciprocate with their tariffs. World trade organization exists to help fight the use of extreme rates in tariffs. A quota sets a specific value on how much product can be imported into a country. It helps local producers from facing too much competition. The government imposed tariffs and quotas have different effects on the flow of goods and services on the international trade platform.
The US government imposed Steep Tariffs on Chinese Solar Panels in recent years where the commerce department began closing a chapter in a conflict with China over solar equipment by approving steep tariffs on imports from China and Taiwan. This decision was a form of closing loopholes that allowed Chinese manufacturers to avoid tariffs imposed earlier and the Chinese companies from China were benefiting from unfair s...