ECO 202 WK 4 SLP: Impact of Removing Tariffs & Free Trade

ECO 202 Week 4 SLP
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ECO 202 Week 4 SLP
Impact of Removing Tariffs
International trade heightens the number of goods than local consumers can select from. Such trade also reduces the cost of such goods through heightened trade and gives room for domestic companies such as Eaton Corporation to export their products abroad. While this seems like a good thing, free trade is not always encouraged. Governments often introduce tariffs as a way of protecting industries. If the tariffs on the kind of business that Eaton Corporation engages in are removed, a few things would happen. To start with, the removal of tariffs would see more companies start to export solutions for managing electrical, hydraulic, and mechanical power in a sustainable way. The removal of the tariffs would increase the level of competition from imported goods something that would be bad for Eaton. As a way of cutting the operational costs, Eaton would be forced to reduce the size of its workforce or even shift its operations to areas where there is cheap labor. While Eaton might not be directly affected since it is already an established company, the removal of tariffs would affect smaller industries in the same field since they would not be able to cope with the imported services (Franklin 2000).
Obstacles of Production in Foreign Nations
International companies face numerous challenges while trying to set up services in other nations. In order to protect their small industries, foreign governments impose various tariffs in order to discourage unfair practices from large corporations. For Eaton to enter the international market, it would have to pay hefty costs in order to be allowed to commence production in those nations. In some nations, the company would be forced to employ local employees in senior management something that would deny it the much needed autonomy to run its operations. In most cases, developing nations employ the Infant Substitution Industrialization ...