Discouragements of Tariffs

MGMT 395 Research Paper

Discouragements of Tariffs

MGMT 395

Professor Blazey

Rani Guo

Apr 21st 2010

Looking at our present world economy, the hit from financial crisis has eased somewhat recently but the ripple effect from the down fall has become vast. Year of 2009 was a nightmare for many industries, corporations, and individuals which the world economy experienced a great depression. Some of the big corporations went bankrupt and left many workers unemployed and despairing. People lost their hopes and became disoriented of which directions they should embark on. As the great depression hit the world economy, some countries suffered more or less than the others. In an effort to help each other out during the hard times, some countries advocated more on free trade to increase foreign investment with the help from implementing tariffs and quotas to protect the domestic goods.

What do we know about a tariff? It is simply another form of tax or duty on consumer goods which are imported from foreign countries by the domestic government. Tariffs care similar to sales tax that usually is levied as a percentage of the declared value of the good. However, they have different rates accordingly for specific products and goods and they are only levied on the imported goods, not on the domestic goods. Does the implementation of tariffs benefit the trading countries? Not so much. My research paper is an elaboration of Brent Radcliffe’s article “The Basics Of Tariffs And Trade Barriers”, and Mike Moffatt‘s article, “Tariffs - The Economic Effect of Tariffs.” I will further argue that despite the good intension of protecting the domestic goods of infant industries and developing economies, tariffs discourage imports or consumers inside the jurisdiction and cause a decline in the economic health of a nation in terms of a net loss of the economy.

First of all, let us go back in the history of tariffs and the reasons of adopting tariffs. The Tariffs Act of 1789...