Answer to Question #266378 in Economics for Nalyn

Question

Do you think that tariff system should be abolished so imported products can reach broader audience? Why?

Answer 1

The customs tariff is an instrument of trade policy and state regulation of the country's internal market in its interaction with the world market.

Depending on which side of trade policy is considered important, there are several complementary definitions of the customs tariff.

The customs tariff, depending on the context, can be defined as:

an instrument of trade policy and state regulation of the country's internal market in its interaction with the world market;

a set of rates of customs duties applied to goods transported across the customs border, systematized in accordance with the commodity nomenclature of foreign economic activity;

a specific rate of customs duty payable when exporting or importing a certain product into the customs territory of the country. In this case, the concept of a customs tariff completely coincides with the concept of a customs duty.

Historically, the main controversy between proponents and opponents of protectionism has centered on the pros and cons of using tariffs as a means of economic policy. The arguments traditionally cited by the supporters and opponents of tariffs are used in various versions in almost all countries and therefore deserve an independent examination.

Tariff opponents usually base their arguments on the following:

Tariffs slow economic growth. An analysis based on general equilibrium theory shows that the economic welfare of a small country is reduced by the introduction of an import tariff in any case. The economic well-being of a large country also declines in all cases except one where the effect of an improved term of trade offsets the economic losses arising from the introduction of a tariff.

But since the import of a large state is the export of other countries or a group of countries, the terms of trade of a large country can only improve due to the deterioration of the terms of trade, and, consequently, the level of welfare in the countries that are its trading partners. Consequently, in any case, the impact of tariffs on the world economy as a whole is negative, since they lead to a decrease in the volume of international trade.

Unilateral tariff imposition often leads to trade wars that undermine the stability of international trade and the international economy as a whole. Trading partners of a country that unilaterally applied an import tariff to protect its producers from an influx of cheaper goods from abroad risk retaliating tariff sanctions, which most often affect their main exports.