Tariffs Assignment Example | Topics and Well Written Essays - 750 words

Tariffs - Assignment Example Nevertheless, in some countries, tariff still counts much as source of government revenue. The government can also employ tariff as a measure to protect domestic industries. Sometimes global competition can harm the domestic industries which have not realized full economy of scale. Industrialized countries may have industry that can produce products at a low costs partly due to government subsidization. When those products are imported to a given country, they may bring unhealthy competition and make local industry collapse. In this regard, government may put trade barriers in terms of tariff duty to discourage importation of certain products and allow the growth of the local industry. As a matter of fact, a close examination of the tariff used by different countries has disclosed that, to a greater extent, the competitiveness of the industry is linked to the tariff imposed on the same products (WTO pp 1). When the states want to strike a balance between allowing imports and at the same time giving a chance for the local industries to grow, they use tariff quotas. Tariffs quotas work on the principle of assigning no or low duty to a given volume of goods imported and then charging higher rates to any imported goods above that limit. The World Trade Organization bans the idea of quantitative restrictions as a way of protecting local industries but it allows the system to be employed for this purpose. Lastly, punitive tariff can be used to remedy trade imbalance that results from measures used by other countries. For instance, Antidumping Agreement empowers states to use antidumping duties to rectify cases of proven dumping injurious situations. Equally, the Subsidies Agreement provides for other states to impose countervailing duties if an exporting country has subsidized its manufacturer (summer and Smith pp 4). Overall, tariff is an