The Effects Taxes (Tariffs) on the Elasticity of Products and Services

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Explain the effects taxes (Tariffs) on the elasticity of products and services
A tariff can be defined as the tax that is imposed on exports and imports between different states. Tariffs are a form of regulations on foreign trade. It is a strategy that taxes imported goods to protect the domestic trade. Tariffs restrict imported goods and services that are purchased from another state by increasing their prices. This makes these goods less attractive to domestic consumers. Tariffs have some side effects. For example, tariffs make domestic industries to be less innovative and efficient because the competition is reduced. Domestic consumers are also affected because when there is no competition in the economy, the prices of goods tends to increase. There are different methods countries use to depress the inflow and outflow of traded goods. Tariffs affect the elasticity of products and services.
Tariffs have implications on the supply of goods and services. Tariffs from one state can boost production in other countries in the world. For example, in the United States, there are steel and aluminum tariffs. Steel industry is taxed 25% while the aluminum industry is taxed 10%. The reason why the United States introduced this kind of taxation is to increase the prices of aluminum and steel. As a result, America will be able to to receive their products and production will be encouraged as well (Haucap, Ulrich, & Mirjam 751). Another example that can be used to explain this case is the case of China. China proposed 25% tariffs on U.S soybeans. The imposition of this tax discouraged the Chinese from buying soybeans from the United States. As a result China would turn to other states to import soybeans. This would boost the production of soybeans in other parts of the globe predominantly China and South Africa.
Tariffs affect the demand of goods in the economy. There are times when the impact of trade barriers are overlooked. When trade barriers are enacted, the prices of goods tends to increase. Increased prices in the economy will result to decrease in the number of goods and services demanded (Haucap, Ulrich, & Mirjam 750). The effect of the number of goods demanded is determined by two factors. The first factor is how large the impact of the price is? For example, if a country like China can be able to limit the number of tariff-bearing U.S soybeans it has to purchase, the effect...