Question

Tariffs can be used as political reasons to fight aggressive trade policies, to protect newly established local industries from foreign competition, to sustain internal employment opportunities, to fortify national defense programs or to protect the environment. It allows regulating the number of imports that flow into the country and also decides which foreign country will be given the utmost favorable trading conditions. Most countries will go to lengths to protect manufacturing particularly. In addition to potential corruption, do you think there may be some retaliation on the part of the foreign country? What implications does all of this have on consumer surplus and the ultimate competitiveness of a domestic firm?

Answer 1

As tariffs are imposed not for an individual aspect, can be used as political reasons but more for domestic safeguard.some retaliation can be observe in foreign country due to international pressures or for protecting eviroment but mostly countries impliment tariffs for domestic as it directly links to b.o.p which can effect directly .

the consumer surplus can be effected as the prices gone high will reduce saving and investment and domestic firm will not able to survive for a long.