Effects of tariff imposition on foreign goods to the US economy

Effects of tariff imposition on foreign goods to the US economy

Positive effects

Tariff imposition on imports protects the home industry against foreign competition. Home industry entails the infant and aging industries. This keeps off foreign companies from offering trading their products at lower prices lower than the costs. The domestic producers are also given a chance to grow their enterprises. protection on these domestic industries lead to manufacturing and also production through technology hence creating a long-term economic growth (Randle, 2017).

Another benefit is that it increases government revenue due to the collection of the tariffs. Tariff is a form of tax and therefore every import that has tariff has to be paid for to government. This increases the government revenue. In US Custom and Border Protection collects tariff in lieu of the department of Commerce. The revenue earned is used to develop the nation either economically, socially, politically leading to a developed economy (Radcliffe, 2019).

Negative effects

Tarif imposition comes along with its own disadvantages. Firstly, it will increase the prices of the domestic prices due to lack of competition. Tariff will increase the prices of imported products and due to this the domestic producers also tend to increase their prices causing the home consumer to suffer from inflated prices. This will lead to decline in imports and in turn alter with the economic growth (Amadeo, 2019).

Tariffs will also result to decreased exports due to retaliation by other countries. US for instance imposed heavy tariffs on Chinese products such as machineries and electronics. China in revenge, imposed soybeans, pork, liquified natural gas, whiskey. This means that the American producers of wine, natural gas and other product who used to export the products to China have to face huge losses since the products will be less consumed in China due to high prices. This will greatly affect the economic growth because of reduced foreign income (York ,2020).

References

Amadeo K. (2019, October 17). Tariffs Explained With Examples. Retrieved from https://www.thebalance.com/tariff-pros-cons-and-examples-3305967

Randle, J. (2017, Jan 27). Traffics help Domestic producers but can Hurt Consumers. Retrieved from https://www.voanews.com/usa/tariffs-help-domestic-producers-can-hurt-consumers

Tarver, E. (2018, Jul 2). How Do Tariffs Protect Domestic industries. Retrieved from https://www.investopedia.com/ask/answers/042315/how-do-tariffs-protect-domestic-industries.asp

York, E.  (2020, Feb 15). Tracking the Economic Impact  of U.S. Tariffs and Retaliatory Actions. Retrieved from https://taxfoundation.org/tariffs-trump-trade-war/