How Tariffs Violate International Trade and Positive and Negative Effects of Tariffs

Tariffs and International Trade
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Tariffs and International Trade
Both developed and developing countries aspire to improve domestic trade despite international trade playing a pivotal role in their economies. Domestic trade, in this case, is used to refer to the trade between locals within a country’s boundary, whereas international trade involves two or more countries, and the transaction occurs across the border. In a bid to bolster the local trade, countries may impose some measures to strike a balance between international and local trade. One of those measures is the introduction of duties on imports and exports, which is the responsibility of the government of a specified country partaking in international trade. The duties imposed on commodities that are used in international trade or rather involved in the export and import business are referred to as tariffs (WTO, n.d.). Both import and export products are subject to tariffs; however, governments have made it a norm to impose tariffs on imports to bolster the locally sourced products. The introduction of tariffs in international trade has stultified international trade despite having both positive and negative implications.
Importation and exportation are the backbones of international trade. Countries imposing high import duties on products from other countries as a move to promote the locally manufactured products kill off international trade. Countries led by protectionists are using tariffs to curtail international trade with the pretext of promoting environmentally friendly manufacturing as well as national security at the expense of open global trade. Import tariffs sometimes escalate to discriminatory treatment where some countries may be lenient to other partners in their tariffs imposition while raising tariffs for other trade partners. This is in contrast with the principles of open global trade fronted by the World Trade Organization, where all member states are subject to similar custom duty for all member states exporting or importing a similar product. The open global trading system encourages both local and international products to be treated equally after entering the market according to the principle of national treatment (Smeets, 2021). However, with the high import tariffs, the expected prices for imported goods should be slightly higher than that of the local products to offset the costs of tariffs, thus conflicting with the principle of national treatment.
Besides the obvious outcome that tariffs give an unfair advantage to locally source products and services against imported products and services, they also have a raft of negative implications on trade. Tariffs, among other trade barriers, have a direct negative implication on the economic output and income of a country (York, 2019). This is because tariffs generally increas...